RE: The UTRUST ICO - Where Cryptos Finally Go Mainstream Retail?
Hi @icoexaminer, thank you for your comment.
I agree 100% with you on buying for the long time and not putting too much emphasis on speculation.
My suggestion does not involve short term positions but only some rebalancing and only works on the long term like yours. The only difference between the Buy-and-Hold strategy you employ and this is Rebalancing to the original weights at regular intervals.
So if we have 100$ invested in 2 coins both at 50% and after a period (say 1 day, bout could be a week or a year), if the first increases by 20% and the second makes zero returns, then the portfolio will become $110, of which the coins will be 60$ and 50$ (or 54% and 46%)
- with HODL, you leave the position as they are
- with my suggestion you rebalance, sell 4% of the 1st coin and buy the second coin, spreading the total 110$ equally
Now if the 1st coin continues to outperform then you lose out in opportunity gain, but if the returns balance out and in the future the second coin which was underperforming recovers, then you are better off with my suggestion.
So in principle we are trying to do the same thing and no approach is really better then the other all the time, it depends on your idea of the evolution of the prices:
- if you think outperformers will continue to outperform then HODL is better
- if you think there is some mean-reversion in returns and coins' return even-out over long periods of times then rebalancing is better
Your approach will also have the same benefits in terms of diversification of idiosyncratic risk and reduction of portfolio variance (even if a Buy-and-Hold portfolio has a higher variance usually than a rebalanced portfolio).
HI @belgarath, thanks once again for the post. I'm somewhat familiar with the concept of rebalancing after having once spent eighteen months working with a portfolio benchmark data services team. Given the inherent volatility of the crypto markets, I honestly think that a diversified token portfolio that incorporates reasonably high frequency rebalancing over the long-term would probably be the best way to take advantage of the general upward trend in the crypto-markets whilst minimising risk. On the other hand, I've never seen a product like this out there although I have heard of some attempts by several banks to go down that route which were blocked by regulators. So, ultimately, this is something someone would have to manage themselves, it seems to me - which maybe complicates matters?
Hi @icoexaminer, at the moment it must be done manually by the investor.
I have personally beeing doing this at the moment and I use:
I rebalance every day or every shock and so far it is doing pretty well.
In the future we need for iconomi or melonport or blackmoon or possibly bitshares to be used a platform to manage portfolio of cryptos.