Topic: One Reason not to be "All Inn" on any Single Investment for Long - page 4. (Read 3778 times)

I pretty much agree with the last sentence, it's better to have some cash on hand always. But I have in mind a scenario which probably could put into question the logic of all the above.

Say you've invested in two things, gold and Bitcoin. And now you urgently need money. How can you know for sure which of them to sell?  Say this happened in April 2013 when Bitcoin hit all times high $250 at the moment, and gold just dropped from 1,780 USD/oz in October 2012 to 1,430 USD/oz in April 2013. Wouldn't you think then that it's better to sell Bitcoin while it's on its peak and hold gold because it has been seeing better times? But as we all know gold has dropped since to 1,287 USD/oz, and Bitcoin has risen big time.

my strategy rely on diversification but only for very cheap coins and in any case not a big amount(33%), that can return a great investment, the remaining amount, is with the strongest coins, and usually only 3 at best no more

too much diversification can lead to more danger and loss of capitalizzation than actual more possible profit, especially in crypto where only 1 out of 100 coins is lucky enough to give you a good return of investment

Well said. Never put all the money in one instrument type. Always diversify your portfolio as even all the fund managers in the world do the same. Though the exposure in each asset class could vary depending upon the risk associated and your interests.

It actually depends what is the amount of "only money".
If it is 10$ it is obvious that nobody will be afraid of the risk, but in the moment you risk 100,000$ it is totally different thing.

That is why diversification is a very important factor to consider when making any investment.
If your bankroll is 10,000$ total, it is a wise idea to invest 500$ in some currency pair, while having about 5000$ in some steady income investment, which will at least cover up the losses from the 500$ investment.

But it is not a very good idea to get into too many assets, especially as a new trader.
Try to keep everything as simple as possible, and hop in only when you are sure about your decision.

If you think your investments can wait, then thats ok. But what if the train is leaving? For some situations it would be better to take the risk now than doing nothing. Life is short and much of it shouldnt be spent waiting around in order to be safe. If the risk is only money, go for it.

That's true! diversification is the key to healthy investment and it's far more safer that any other form of investment no matter where you are investing. It is always better to have a healthy mix of good assets if you are planning to invest all your invest-able surplus funds. So that if one asset price goes down, the other assets can compensate the losses.

Using this diversification method, the mutual fund companies are working worldwide. I also keep a healthy mix of bitcoin and bank deposits as my investment. So even if bitcoin price goes down, I will not have to worry about my savings. 

The reason we should not go "All In" in any promising investment plan is to cushion any loss

or should be taken as a contingency plan to allow us to divert funds into other projects we feel can reward with a good return and avoid losing everything in one bad investment project.  .

What you suggest is basically a martingale in disguise

And you didn't specify what are the chances of success with your second coin. You only said that "one altcoin has 50% chance of success", so what about the other coin? If you assume that it has the same risks, it is essentially six of one and half a dozen of the other. Thus your chances of both winning and losing remain the same and equal to 50%. It would be the same if you had just one coin but only invested in it half as much

I'm not usually investing on one thing with all my money i usually split it atleast into three and after a month of observation I can know where am i gaining more profit and after that im gonna pull out my investment in the other two and put it all in in the other one that gaining profit really well but also remember investing is a very risk part of us because there's no assurance that you could gain profit monthly it's all about the performance of the one you've invested.

Yes, putting all of your money in one basket is a dangerous thing, like we know there is a risk in investment, so we can't expect everything can work like we wanted, so it will be wise to only invest your extra money and put your investment in different investment, so you won't lose too much if one of your investment failed

Diversify obviously is a good idea, my brother told me he was forced to sell his ICN because he was ran out money in the first days of this coin distribution, He sold all his ICN at 0.00014600 today the price of 1 ICN is worth 0.00034873,  that's why I'm always trying do diversify In my investments. Currently, I'm holding ETH and DASH and I'll wait until forever if I don't see the price rising.

I agree but that doesn't apply to mining though, because mining is a risky investment and an investment non the less, when you want to go invest in mining you are buying either GPUs or ASICs and that will take time for your ROI, unless you have a better idea and something more profitable than Bitcoin to mine or how does it work if you'd wanted to diversify your investment in mining hardware?

Trading is also either you buy to hold for long term=like mining=risky. or day trading which you can eliminate any possible extra risk in matter of hours or even minutes.
Did you know ETH will pump from sub $7 up to $40? but guess who could've guessed it? someone already holding %40 of the supply and then investing $200m to start buying the tokens starting from $7 easily up to $30 and by that time other investors were entering because of FOMO and actually were buying his %50+ of total supply now.

Right now if someone puts $500m into buying LTC starting from $10 can successfully pump the price to $20 and by that time others will put more than $500m because of FOMO and they in turn will further pump the price up to $30 and so on until big whales and big holders wake up and see the opportunity then the dump starts.

Unlike Bitcoin which it's growth over time is very natural and not artificial like alts and there is a real demand for it, so I don't see any reason why not going all in with Bitcoin.

that is true, and maybe it is just me but whenever i am talking about investment or say all in, diversify, all eggs in one basket,... i am automatically talking about the investment money and investment money is not all your worth.

you have a life, some money as your "rainy day" funds and then have some extra money that you don't need and you make the investment with that money. and as far as i can tell this is what majority of people in the world are doing. so it doesn't need mentioning. all in means investing all that money which i say can be a good thing.

The only one reason not to be all in on any single investment for long is just because "It is risky". As Warren Buffet says that "Never depend on single income. Make investment to create a second source." in that saying, we can really realize that even the one of the most riches person in the world believe that it is best to have a second source of income rather than sticking to just one investment because we all know that it is not good because if an investment will go down then you don't have any escape from that and you will suffer from loss, so it is better to just spread your money in different investments.

I agree that all in on long run is very risky, million things can happen in time of waiting, and that puts investor in very bad situation for him. Going all in is strategy that almost no one recommends, but I saw (and others I`m sure) people that had balls to risk and some of them made profit. We all have a chance to do something in this life, how much someone is smart to notice opportunity and brave to grab it with all in can be rewarded with some very high reward. Of course bankruptcy is always a possibility when someone is going all in, that is the thing, if its easy everyone would do it.

While this is true there's also another way of seeing it. If you put your money in a number of high risk contracts the total risk-gain ratio remains the same. For instance if we assume that one altcoin has 50% chance of success and you split your money (1USD) between 2 of them, your chances of earning money decreases along with the chances of going broke.
Normally it would be 50% that you make $2 from your $1 and 0 if it fails. Now you will need both of them to succeed to reach your desired $2, but also for both of them to fail to be completely broke.

Even the holy scripture said " scattering your bread on many waters then few day you will find them" it is very unwise for one to put all his investment in either bitcoin or gold e.t.c. Diversification is the key to long term investment success. With the hope that bitcoin will get to $2000 before the end of this year is not a guaranty for me to put all my risk capital into bitcoin.

I do agree with you to some extent.I would rather invest 60% of my money into an asset or bitcoin and would keep the remaining 40% as cash in my hand.And i would chose bitcoin for that 60% to invest and not gold as bitcoin could give me more returns than gold.More over,bitcoin price is yet to increase more in future.

And how does it relate to (not) "putting all your eggs in just one basket"?

If markets usually grow (as you say), you could just buy a market index and (allegedly) get done with that. While in reality markets grow as well as collapse, so all your baskets of eggs will get crushed if the latter happens. After all, isn't that what we use different "baskets" for, i.e. to avoid crushing? I guess putting eggs in random baskets doesn't actually decrease the chances but you may hit a jackpot, of course (just like a broken clock is correct twice a day)

Yes, we never can be sure about the future. Even for short-term investment, financial experts never suggest to go "all-in", because no one could foresee the future.

One investment must be based on calculated risks like we should not always think about profits but we should always be ready to face losses too. I believe no one will be ready to lose all his wealth just with the one investment opportunity. Hence "all-in" should be avoided.