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> Don't go too hard on crypto > 11.2% of NW is tied up in crypto

by cheeze 5y ago

echelon 5y ago
If it was stocks, you would diversify more by sector according to your risk, but in general ~10% in a broad asset class seems fine. I don't think we would question 10% of net worth in real estate.
- UncleMeat 5y ago
  But crypto doesn't function like a broad asset class, at least not for very long. Is there are future where there are 10,000 different cryptocurrencies? I don't see it. I think even crypto bulls believe that most coins will go to zero at some point. You don't get the same benefits of diversification in crypto as you do with equities.
  - hackingforfun 5y ago
    I don't think most coins will go to zero at some point, some will, but most is too broad. I also don't see any reason why new coins wouldn't keep getting created. Basically, what's been happening will continue. This is what I see. You can diversify in crypto, but you have to educate yourself and pick and choose. For example, you could diversify into payment systems, metaverse tokens, smart contract platforms, oracles, prediction markets, cross-chain interoperability, DeFi, NFTs, etc. There aren't as well defined categories as in equities, but there are some ways to categorize them. Are there equivalent protections like in equities? No. Is crypto as mature of a market? No. Is crypto high risk? Yes. However, cryptocurriences, or at least specific ones, like Bitcoin, are increasingly being considered an asset class [1]. [1] https://www.nasdaq.com/articles/jp-morgan-wealth-ceo-says-clients-see-bitcoin-as-asset-class-to-invest-in-2021-07-20 https://www.nasdaq.com/articles/jp-morgan-wealth-ceo-says-cl...
- mikeyouse 5y ago
  > I don't think we would question 10% of net worth in real estate. No, but there's no chance of real estate going to zero. The global financial crisis housing bust saw US house prices decreases by something like 20%. There's a non-insignificant chance of most Crypto 'investments' losing 99% of their value. I think it's very dangerous to start talking about crypto as an "asset class". People are going to lose their shirts and hardly anyone understands where the value is supposed to come from.
  - javert 5y ago
    There is something wrong with grouping all "crypto" together. It's like having an asset class called "coinage" that includes gold and silver coins, copper pennies, and everything in between.
gnicholas 5y ago
It's quite possible that he started out putting 1% into crypto (or even less), and it just grew much faster than his other asset classes.
- OJFord 5y ago
  If you're concerned with balance initially, why wouldn't you rebalance?
  - OldHand2018 5y ago
    The author of the article states that he rebalances out of crypto because of the growth rate.
  - gnicholas 5y ago
    Yep, sounds like he does. It's still possible that he would suggest someone getting started now not put in 10%, and that the reason he has so much is partly because of the historical growth. That is, he might have held onto this much partly due to the tax implications of selling appreciated assets. If he were starting fresh, he might not choose to put in this much.
- jhickok 5y ago
  that's a good point, and seems very likely given recent history.
- Cicero22 5y ago
  > I try to keep Crypto around 10% Seems like he's actively rebalancing it to ~10%
jakey_bakey 5y ago
Even Benjamin Graham's The Intelligent Investor says you're fine to YOLO 10% of your net worth in speculative high-risk assets.

> Don't go too hard on crypto > 11.2% of NW is tied up in crypto

by cheeze 5y ago

> Don't go too hard on crypto > 11.2% of NW is tied up in crypto

If it was stocks, you would diversify more by sector according to your risk, but in general ~10% in a broad asset class seems fine. I don't think we would question 10% of net worth in real estate.

UncleMeat 5y ago
But crypto doesn't function like a broad asset class, at least not for very long. Is there are future where there are 10,000 different cryptocurrencies? I don't see it. I think even crypto bulls believe that most coins will go to zero at some point. You don't get the same benefits of diversification in crypto as you do with equities.
- hackingforfun 5y ago
  I don't think most coins will go to zero at some point, some will, but most is too broad. I also don't see any reason why new coins wouldn't keep getting created. Basically, what's been happening will continue. This is what I see. You can diversify in crypto, but you have to educate yourself and pick and choose. For example, you could diversify into payment systems, metaverse tokens, smart contract platforms, oracles, prediction markets, cross-chain interoperability, DeFi, NFTs, etc. There aren't as well defined categories as in equities, but there are some ways to categorize them. Are there equivalent protections like in equities? No. Is crypto as mature of a market? No. Is crypto high risk? Yes. However, cryptocurriences, or at least specific ones, like Bitcoin, are increasingly being considered an asset class [1]. [1] https://www.nasdaq.com/articles/jp-morgan-wealth-ceo-says-clients-see-bitcoin-as-asset-class-to-invest-in-2021-07-20 https://www.nasdaq.com/articles/jp-morgan-wealth-ceo-says-cl...
mikeyouse 5y ago
> I don't think we would question 10% of net worth in real estate. No, but there's no chance of real estate going to zero. The global financial crisis housing bust saw US house prices decreases by something like 20%. There's a non-insignificant chance of most Crypto 'investments' losing 99% of their value. I think it's very dangerous to start talking about crypto as an "asset class". People are going to lose their shirts and hardly anyone understands where the value is supposed to come from.
- javert 5y ago
  There is something wrong with grouping all "crypto" together. It's like having an asset class called "coinage" that includes gold and silver coins, copper pennies, and everything in between.

gnicholas 5y ago

It's quite possible that he started out putting 1% into crypto (or even less), and it just grew much faster than his other asset classes.

OJFord 5y ago
If you're concerned with balance initially, why wouldn't you rebalance?
- OldHand2018 5y ago
  The author of the article states that he rebalances out of crypto because of the growth rate.
- gnicholas 5y ago
  Yep, sounds like he does. It's still possible that he would suggest someone getting started now not put in 10%, and that the reason he has so much is partly because of the historical growth. That is, he might have held onto this much partly due to the tax implications of selling appreciated assets. If he were starting fresh, he might not choose to put in this much.
jhickok 5y ago
that's a good point, and seems very likely given recent history.
Cicero22 5y ago
> I try to keep Crypto around 10% Seems like he's actively rebalancing it to ~10%

jakey_bakey 5y ago

Even Benjamin Graham's The Intelligent Investor says you're fine to YOLO 10% of your net worth in speculative high-risk assets.