How else you gonna land your lambo on the moon brah?
Read any “reasonable” investment advisor, they invariably suggest to not put more than 1–5% in any one investment.
Even Bitcoin Permabull Anthony Pompliano himself advises not to allocate more than 1–5%. But when asked about his own Bitcoin allocation, he turns around and says he has 50% of his net worth in Bitcoin.
Pomp is all in.
Kevin O’Leary, mind blown, says he forbids that high of an allocation. What is interesting is when Pompliano shoots back ‘How much of your net worth is in stocks?’ O’Leary skirts the question, saying he doesn’t allocate more than 5% to any single stock, never saying what the total of his net worth is in the stock market.
I’m guessing it’s more than 50%.
The Masters of the Universe don’t practice diversification. When you look at the big tech winners in the world, such as Steve Jobs, Bill Gates or Jeff Bezos, the vast majority of their wealth is in a single very successful company: Apple, Microsoft, Amazon. Something O’Leary would “forbid.”
It’s the opposite of diversification.
Mutual funds that track the performance of a collection of related stocks often suffer in performance when measured against a single high flying stock, but diversified funds calculate that the modest drop in top performance is in exchange for a reduction in drawdowns. Or, even outright disasters when too much capital is allocated to, for example, an Enron or Theranos.
Derisively known by the Masters of the Trading Universe as “Diworsification,” for the vast majority, a well diversified portfolio makes sense — maybe you don’t make the highest highs, but diversification also protects your nest egg in case the bad financial news comes in.
The problem comes when assets are too tightly correlated, leading the entire herd to fall off a cliff when financial disaster strikes.
Rule #1: Do not lose money.
Rule #2: Never forget Rule #1.
As a non-correlated asset that doesn’t rise and fall with the other investment vehicles such as stocks and bonds, Bitcoin may be a reasonable addition to your investment portfolio. Funds with some crypto exposure have shown that including some crypto can boost your returns.
In fact, the hedge funds that handily beat the S&P 500 benchmark are the ones with crypto exposure:
From Q1 2017 through Q2 2019, the CFR Crypto Fund Index has returned 1,430 percent. This easily bests bitcoin’s 1,022 percent return and narrowly surpasses the 1,413 percent of the CCI 30. ~ Coindesk
Given the astronomical returns of Bitcoin, many people consider a higher percentage allocation, calculating high risk with the potential for very high returns.
The refrain oft mentioned with Bitcoin investing is “don’t allocate more than you can afford to lose,” which is good advice for nearly all investors, and investments. Yet, in the realm of asymmetric trades, you can make relatively small bets, which have the potential for outsized yields.
An asymmetric bet, trade, or investment is when the potential upside of a position is much greater than its potential downside. ~Katusa Research
“Owning bitcoins is one of the few asymmetric bets that people across the entire world can participate in.” ~ Vojay Boyapati, Bullish Case for Bitcoin
If you only need a little in order to make a lot, then in what situation would you consider a higher allocation? It comes down to your tolerance for risk.
Risk is relative.
If you’re young, single with no kids, your risk tolerance should be higher that a 40-something married with 2.5 kids. You have time on your side to smooth out volatility, and higher risk is lessened over the time potential of higher returns. In fact age-defined mutual funds have a higher risk profile for younger people in their 20’s than those about to retire, weighting stocks and gradually moving to bonds as the investor gets older.
Good for the young…and old?
In that case, if you’re young, single, no kids, why not bet the farm? If a little can make a lot, what if you instead invest as much as possible in order to not just make more money, but to actually become rich.
Or, alternatively, maybe when you’re around retirement age, but don’t have much saved for retirement.
In fact, 25% of people in the US don’t have squat saved for retirement. A third of middle class adults can’t even afford a $400 emergency. Given its history of astronomical returns, a bitcoin investment may be seen as the hail mary pass for not just secure retirement, but an outstanding one.
Young workers aged 18 to 29 are less likely to have savings, with 42% saying they have nothing stashed away, while 17% of those aged 45 to 59 say the same thing. ~ CNBC
Go Big or Go Home!
That’s what a friend told me regarding the second tattoo I was considering getting. I had a bit of trepidation on getting a half-sleeve, a tattoo that extended from my shoulder to the bottom of my bicep. I was wavering between that one vs. a more discreet tatt about 3" across. Going big on permanent body art was a commitment I wasn’t sure I was ready for. But, I knew the artist was in demand, and that the artwork would be incredible, so I went for it and never regretted the decision I made.
Making a single large bet on a new technological currency such as Bitcoin could have the same life-changing result for an investor. And just like the decision of branding oneself with a largish tattoo, it should generate the same trepidation, if not more so.
’Cause money is money
Profit Potential through Capital Flows
When talking about the best investments in the last decade, there is not a single one that can touch Bitcoin. Not stocks, not bonds, not gold or any precious metal or mineral.
Starting at $.003 cents in March 2010, Bitcoin has done the long march full of volatility ending around the $10,000 mark today in Sept 2019. That’s a 333,333,233% return! $1,000 dollars invested in March 2010 would turn into over 3 Billion dollars.
If Bitcoin was a mutual fund, it would be the most popular in demand fund on the planet. By the typical 3, 5, and 10 years that mutual fund returns are judged by, the returns, even including the 2017 parabolic rise to 20k and subsequent drop — would be astronomical.
Future proof your life through Bitcoin
Macro events point to a perfect storm for the rise of Bitcoin:
- A deflationary asset (Bitcoin) dropped into an inflationary environment leads to Bitcoin going up in value as other fiat currencies supply inflates while simultaneously lowering in value.
- Large Financial organizations such as The NY Stock Exchange’s BAAKT, Fidelity and TD Ameritrade will provide crypto custody and trading for large financial institutions. Punchline: The BIG money will start to roll in.
- The “Halvening” May 2020 will reduce the block reward, leading to increased scarcity of Bitcoin.
- Financial turmoil: Worldwide inflation, China Tariffs, De-dollarization, Brexit…investors will look towards traditional safe havens, such as gold and increasingly Bitcoin.
The Perfect Storm for the Rise of Bitcoin
This latest Sturm und Drang between China and the US signals another fall for fiat currencies, with an accompanying…
He Went All In
Didi Taihuttu, a father of three, believed in Bitcoin so much he sold his house and put it all on Bitcoin:
Many have called him foolhardy and selfish, risking financial ruin not just for himself, but his entire family. He admitted on the video of losing around $500k after the drop from $20k to around $6,500, which means he owns around 50–100 BTC. His Bitcoin net worth now is anywhere around $500,000–One Million.
Not too shabby. If he bought around $1,000 each he made at least 10x his money. In only 2 years.
Who else went All In?
Who else besides Didi Taihuttu went all in on Bitcoin?
- Anthony Pompliano — 50% of net worth in Bitcoin
- Michael Novogratz — 30% of fortune in Cryptocurrencies.
- Eric Fineman on 2011, at age 11, investing the $1,000 his grandmother gave him. At $12 each, he later started selling them in 2013, 2 years later for $1,200 turning $1,000 to 100,000. He later started an online education company and was given the choice of $100,000 or 300 BTC. He chose Bitcoin (now around $3 Million at today’s prices).
- The Winklevoss Twins reportedly cornered 1% of the BTC market, which would work out to 210,000 BTC.
- …and the list goes on.
Nothing in this article is to be construed as investment advice. Neither the author nor the publication takes any responsibility or liability for any investments, profits or losses you may incur as a result of this information.