Do People Understand Diversification Anymore?
I honestly do not think so. At least, not this new age of investors who know about crypto currency.
So what is diversification?
Simply put it is spreading your investments across a wide array of assets.
Too many of my clients and friends tell me they want to diversify their portfolio by having multiple crypto currencies. Now, if they are just talking about their crypto portfolio that would be fine...but they're not.
As they say:
In case you knuckleheads can't figure out where I'm going with this post yet, owning different crypto currencies is not diversification.
Think about those people we can generally agree are rich. They own real estate, gold, stock, bonds, other commodities, other passive income earning companies, other currencies even, and so on and so forth.
If you think putting 100% of your money into crypto because it will make you rich, well, it might. I'm not saying it won't. But wouldn't one sleep better at night knowing should some coin you took a risk on go to zero, you won't be left high and dry? I know I do.
Hell, if you are young and with a good job, be an idiot. And I mean that in the most positive way. Screw diversification. Take risks and hopefully you'll reap the rewards. Just remember, maybe in the future, after you have made you millions you can buy a few income earning properties to begin diversification.
Or a yacht. Because bitches love yachts.
A lot of folks in crypto don't need to diversify, as you correctly state.
These "investors" are young, and playing with money they can lose. A lucky pick can change their lives, but being too safe will just get them a bit more play money.
This current gold rush will dry up soon. So I say, be bold and take risks. Just don't use borrowed money, or gamble next month's rent!
Absolutely! No one every changed their life playing too safe. I think mostly I'm speaking to the gamblers who act like investors. Then again, no one ever regretted laying it all down on number 37 and winning.
You're totally right, another good thing about it is it forces you learn and find new opportunities. I would suggest it's never to early for someone to start looking into mutual funds, blue chips, and real estate as long term investment.
Yes! It can be tough for a new investor to develop a solid strategy, and unfortunately getting sound advice is tougher than it looks. Diversification is not sexy, it just works. :)
It's funny you mention that, the sexy part. I don't know where the idea that finance is sexy came about. Maybe Wall Street, or wolf of wall street. Sure, anything can be sexy if you have millions of dollars...but generally it's a bunch of long boring hours doing nothing or getting yelled at.
BTW welcome to SteemIt!
I would never keep all money in crypto because a solar flare or high altitude nuclear explosion will destroy anything electronic. Keep cash cold and condoms on hand for bartering.