@cryptographic so here you came with an extraordinary post. I have learned something new here. Redistributing itself in the way as shown in the crypto example is leveling all the portfolio to the initial percentages of 10% and by doing that you will be buying low and selling high.
Simply amazing.
Thanks for sharing this great knowledge.
Upvoted and resteemed.
Regards, @gold84
That's the basics from where you start. The 10% equal distribution is highly theoretical. You might decide to "overweight" your favorites and "underweight" others. For example, I've got some really speculative long shots in my portfolio that started out at 2.5%. A couple have gone down, and one almost reached a 10% of total portfolio position. For a 2.5% holding, that was way out of line and I should have sold something but I chose not to since I really like that particular crypto. Essentially I'm overweight a particular speculative investment. You might say I'm overweight my core holdings as well since my portfolio doesn't make it to 10. I'm doing this because I think I've made very good picks and I don't need to spread the risk. Of course, the risk I'm taking is higher by doing that, but it's still in line with my risk tolerance since my crypto cost basis is extremely low. Finally, on the total net worth level, I'm actually very overweight crypto! Again, that's because my cost basis is so low, but someday, if I keep to best practice portfolio management, I'm going to have to take something out of crypto and probably put into traditional stocks, which I am extremely underweight right now. So yeah, it's simple to begin with, but there are lots of factors to take into account and decisions to be made (both initial and ongoing). Glad you liked it.
@cryptographic I really appreciate your further explanation on this. When you actually start using it, it is a very objective and powerful tool/strategy to help your portfolio grow, by puting emotions on a side.
In my current situation I know the cryptos I want for the long term, but at the same time have others that I believe will give me profit in the short or mid term.
The only thing I don't know how to do, is put the correct percentage weight to each of the cryptos I own. I know this is really personal, and perhaps the solution will come to me in terms of research, as @taskmaster4450 mentions in this reply.
Thanks for the follow up.
Regards, @gold84
I've currently set my core holdings at 15% each, the more speculative, long shots at 3% each, and a USD cash equivalent at 25%. The hard part is deciding where to set your rebalancing levels. 20% or 25% for the core holdings? 10% for the long shots? Nah, 10% for the long shot is too conservative, that's why their long shots, so 25% is more appropriate since that's where they become less "long shot" and more "core". Had a long shot almost hit 20% a couple of months ago and I didn't rebalance because I really believe in it. It fell back to 8% and is now rising again. That's okay though; we can't catch them all. Perhaps we need to explore this topic more.