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There's a meaningful difference between putting <10% of your portfolio into a speculative investment versus 100%. If your speculative investments moon anyways,
by 88913527 4y ago
There's a meaningful difference between putting <10% of your portfolio into a speculative investment versus 100%. If your speculative investments moon anyways, 10% * a large number = still a large number, and you didn't bet the farm. It's a good way to fulfill one's desire to be an active investor, while largely acknowledging most of us won't beat the S&P-- I know the active portion of my own portfolio (no crypto) has underperformed the index.
- yieldcrv 4y agoOne of my experiences is that nobody tells you what to do next. They don't know. If your speculative investment moons then your portfolio has risen to 95-99% speculative investment. At least thats a consistent case in crypto or a super quick and awesome private equity exit, both of which have multiple thousands of percentage gains. So the people following that kind of risk allocation advice might already be starting from that second state. Rebalancing is an option, but its lame when everything has such high correlations to each other. And rebalancing when? Anytime the speculative investment goes over 10% of the portfolio? After you let it ride and its price got stable for a few days? Waiting a year or more for lower tax treatment on the rebalancing sells?
- cableshaft 4y agoYes, there are people who rebalance when that happens. I'm not one of those people (I probably should be, but I'm not), but there are people who definitely do rebalance their portfolios whenever it gets out of whack.