Quote from: Bitcopia on May 12, 2014, 05:11:26 PM

Quote from: MahaRamana on May 12, 2014, 04:49:08 PM

Quote from: rpietila on May 10, 2014, 06:52:01 PM

But if you are moderately invested (<50% of total assets), and want to buy more, this is a good time.

this raises the interesting question of the optimal % of total net worth to invest in BTC.
I believe this is a much more important question than determining exactly when to buy. Yet most of the discussion goes in timing, not wealth allocation.

Of course it is a question that each person has to reply for himself depending on his circumstances. But most people lack the framework that would help them to make a rational decision based on their investment profile.

It is useful to help people assess the value of bitcoin against the trendline to optimise timing. But it would be even more useful if we could help people understand for themselves how much BTC they should own relative to their wealth.

I am saying this because I am asking this question for myself. When I see the terms "moderately invested" for a BTC position of less than 50%, I am a bit jumping on my chair. Do you really believe that someone entering today and taking a position of 33-49% of his total assets would be only moderately invested ? I see it as very heavily invested.

If you saw BTC rise 100X or more while holding it, and BTC went from being 5% of your assets to 90% and you diversify away from BTC, it feels like getting down to "only" 50% BTC is a moderate position. But when you initially enter BTC, it is a very different thing.

Take someone who has for exemple 1 million USD in total assets and 100K yearly income. He has a house valued 600K fully paid. He has a car valued 40K. He has precious metals for 150K. He has other real-estate investments for 100K. He has liquid investments and cash for 110K.

What you are basically saying is that the guy would have to sell everything he has including metals, and take a partial mortgage on his house, and put everything in BTC, to be more than moderately invested in BTC ? This sounds way too much, don't you think ? I mean, it's maybe more than a winning bet, but is it a reasonable, responsible one ?

My personal view is : 0-1% of net worth being a small position, 2-5% moderate, 6-10% big position, 11-25% very big, 26-50% huge position, 51+% extreme position.

I would be interested to hear what people here think is a good % of total assets to hold in BTC today.

This is a very reasonable view point. I have about 50% of my total assets in BTC, but I don't own much and when I originally started buying, I think I had put in about 5%. Anybody who puts in 50% up front has an incredible appetite for risk and is probably a heavy gambler. Yet, if you have a true understanding of how revolutionary this technology is, pitted against the archaic methods it will replace, coupled with the dominance of its first mover advantage that has secured an unsurpassable hashing power, consistently increasing investment in infrastructure, and the recent sidechain revelation, it almost seems foolish not to take an otherwise extreme position. I know I wish I had understood all of this better when I first started trading. You can bet I would have put in much more than 5% of my assets.

Thanks for your reply. What if you didn't invest back then and you understood all this today, looking at the past rise. Would you invest more than 5% ? Would you invest even 50% of a smaller total asset base ?

There is a lot of psychology in this. It's easy to hold a 50% total asset position if it became that much through the rise. Mostly because you have not "worked for" and gradually built your life around these 50%.

I am interested in the reasoning for a newcomer as I am one and there are many others who see the posts of Risto Pietila. Risto gave a great Bitcoin Savings Plan, but no help in determining how much should be put in. I read often : as much as you are able / willing to lose. This is a wise advise for the gambler, but not for the prudent investor : it does not say enough.

I guess multiple replies to this question would satisfy my appetite : "If you would never have invested in BTC yet and didn't experience the wealth increase provided by BTC, what % of your total assets would you consider your optimal position now ?"

I think a regular poll with this question presented to the more senior btc holders would be very interesting for newcomers.