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RE: Coin Money Management Lesson

in #crypto6 years ago

Hey farnadas, good to see that you have a strategy. I have some critical points

Why diversification at all? Its no hedge against a tail-event. USDT is a good point but why no fiat on a broker account? its 100% uncorrelatet so there is zero risk-exposure except the inflation.

I see the point in the 30/70 heuristic but what is the allocation from total investment capital? This is what determines the exposure to a possible blow-up.

When there is a real crash, we have the problem with the brake even fallacy: a 50% loss, does not simply need 50% gains to get back to break even, it needs 100%. If your total is 1000$ and you allocate 700 in to Crypto and 300 in to a Stable-Coin like USDT or Fiat than your base after the crash is 350$+300$=650$. Now when there is a bounce back with 20% its +130$ so total Protfolio Value of 780$ and it will be a net loss. Your right its a faster way to recover (if there is a bounce and no "bear-trap") but it will be a net loss anyway. what do you think?

P.S. welcome, i will resteem your post. You can use the "#introduceyourself" hash tack to get some viewers.

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Thanks. for advice. its my own strategy. you can edit or change as per your need.