Quote from: JayJuanGee on July 09, 2019, 08:25:02 PM

Quote from: bkbirge on July 09, 2019, 08:08:59 PM

Quote from: mindrust on July 09, 2019, 07:12:29 PM

It is just a game of risk management.

You buy some risky assets, some less-risky assets, some solid assets, some barbaric relics... All has its spot in the game.

Sounds about right to me. I always get a chuckle on these boards when posters (present company excluded of course) recommend diversifying and their idea is to buy as many different tokens as possible.

There is some validity to diversification, but the concept is taken to an extreme with shitcoins, and there seems to be hardly any justification to diversify into shitcoins.

Another thing, the concept of diversification is to attempt to diversify into assets that are not likely to be correlated and represent some fundamental differences. Frequently altcoins are merely following bitcoin, so they are not really a different asset class.

Finally, there is a pretty god damned low probability that any altcoin would be able to take over the slack if bitcoin were to fail, and so a justification to diversify into a world of altcoins based on a kind of bitcoin failure theory has a very faulty premise.

I am not opposed to people coming to their own conclusions regarding what kind of diversification would be good for them based on their personal situation, and I understand the temptation to completely diversify out of traditional investments; however, if an employer offers any kind of 401k, it would likely be a good idea to invest into such 401k at least up to the matching funds (if matching exists) and perhaps up to the tax deferrable limit, but that might be a question of how much money would be left to invest into bitcoin, because most young people should consider having some investment into bitcoin, even if such bitcoin investment only ends up being 1% to 10% or so of their total investments.

I don't usually cite myself, but I will make an exception because I wanted to make some further points about problems of diversification with regards to crypto, and of course, I am not much of an advocate of keeping much if anything in any other cryptos besides bitcoin, but I can see why there could reasonably be some interest from younger folks, especially, in putting up to 30% into other cryptos, which o.k. fine, we can come to reasonably different conclusions about the prudence of that.

Another problem that I wanted to point out, though, is that the more that a young person might end up diversifying, then the smaller and smaller becomes the stake in each particular investment asset, and one of the dominant problems with younger peeps is that there does not tend to be a whole hell of a lot of capital to play with, and the more that such young person diversifies, the less and less is invested into each of the assets. Such lack of capital could be the case with older people too, but with younger people lack of capital would logically be more common as an issue and having had little time to accumulate wealth and value retaining assets.

In other words, it takes a long fucking time to: 1) reasonably live within your means, 2) accumulate investment capital and 3) refrain from temptations to buy depreciating assets (such as too many non-utility consumption items)

In my own situation, I had not bought a new car until I was in my 40s, and yeah, I may have waited a bit too long, because I had accumulated a decent amount of wealth by the time I was in my mid-30s, but I was still on a relatively frugal behavior pattern, and I did not feel comfortable cashing in on what seemed to have been a decent accumulation of profits and a decent projected income stream. I continued to want my money to work for me, and I thought that buying a new car would throw away too much potential working capital on a quickly and clearly depreciating asset. So, anyhow, part of my point is that it can take a decent amount of time to build up enough wealth to be able to diversify a lot of it, and if you are working with a smaller base of money, then you are spread thin and your profits will not seem like a lot of money. You also might be tempted to borrow, which sometimes can work out well if used prudently in order to attempt to get capital that you do not have to work for you.. and to be able to rotate it or to pay it back before penalties might kick in.

Even when I got into bitcoin, I had a decent amount of capital that I had available to me and that I could put into bitcoin, but I did not feel comfortable spreading out the money that I had available very much, and even after my bitcoin value grew 28x and shrunk back down to 8x and is currently at about 15x, there remains a kind of lack of confidence within my own thinking about spreading that value that I have accumulated out into alt coins, which I suppose is stemming from my earlier conclusions that bitcoin was the best investment and not to dilute my funds into crap, and even if I currently feel that I have enough funds that I could diversify, so dilution is not really the issue anymore, I still have residue feelings that I don't want to diversify into shit, just for the sake of diversification...

but another part of my personal situation/problem remains that I have a decent investment in traditional investments such as a 401k that even though my 401k is valued at less than 25% of my overall investment portfolio, such 401k was serving as my kind of back-up plan if BTC totally went to tulips (as searing might say). I had always figured that my 401k was enough to sustain everything as a backup - even though I had been tempted in late 2014 to withdraw about 50% from that 401k and to transfer it into BTC (which I did not do).. and even though I would have made a killing, I am kind of glad that I just left that 401k alone, too (maybe for the sake of maintaining some spreading out of risk, aka diversification into nonbitcoin assets?).