Hi guys,

Currently I have a portfolio consisting of 90% S&P500 ETFs and 10% Short term gov bonds. This is based on my pretty high risk tolerance but nothing insane. I did do a test and scored 32/39 with regards to this.

I am 26 y/o, got around 50k, finance degree, play poker and make like 2k per month avg and rent a place in a west european country. Future plans would be to buy a house with low mortgage when possible, enjoy freedom etc.

So here my Q: lately I am looking into cryptocurrency and I want to invest some of my portfolio in it. What % would you pick in my situation and why? I will post my own opinion later but would like unbiased opinions.

All in.

Was consider writing in first post ''please keep the all in jokes for yourself'' but figured it would not be needed lol.

I'm not joking tho. If you had more assets I'd give different advice but I think all in is prudent here.

Sent from my Nexus 6P using Tapatalk

In that case, would you mind elaborating a bit?

Is it possible to move up in stakes for poker? I'm not as savvy as the other guys in here with regards to crypto currencies or market investing, but to my knowledge there is hardly any investment with as good of a ROI as a (good) poker player's bankroll.

stinkypete wrong for once, I guess miracles do happen

Some questions to better assess your situation:

- What does bustoville mean to you? Say I took all your money right now, pressed the doom switch so that you were unable to make money at poker for 18 months, what would happen to you?

- Have you thought of other ways of upping your income? $2K/month seems very low for a smart guy with a finance degree. In the long run, upskilling and getting a better paying job/activity is worth far more than investing. It will crush investing. I realize you might value freedom and not want to work a regular job, but even then there are possibilities. Adding a part time job to your poker, for example, will give you a capital return of 20-30% annualized on your $50K.

To answer your crypto question, there's zero reason to put 100% in. Putting 80% in is far preferable to 100%. $50K times (big return on crypto) has the same utility as $40K * (big return on crypto), yet $10K has for more utility than $0K on the downside.

I wouldn't put much into crypto now. I loved it at $250 because the downside risk was very low and the chance of upside very high:
But now the downside risk is high. You could lose 80% quite quickly if anything goes wrong, and not recover for years. $40K is a lot to lose. And the upside is uncertain. Bitcoin has a $25 billion market cap, which is a lot larger than the pool of money that flows through the illegal activity that sustains bitcoin. A decent portion is speculation right now.

The thing is, when you add up the various odds, I believe your EV is far higher buying after a crash than right now. One of the costliest things with buying in at highs, is that you miss the opportunity to buy in at a lows. And buying at lows is what makes you truly rich. The rest is just luck.

IMO if you want to play this, put in an amount of money you could bear to lose - $10K or $15K. 1/3*big number is almost as good as big number. But losing 1/3 of your wealth when you're on a lowish income is way better than losing all of your wealth.

If it was my money I'd keep it out with Bitcoin at $1500. I'd probably shove it in at $300 though.

I sort of am shifting away from online poker last 8 months. I am trying to harvest some cash now by playing more soft games and planning some live poker trips. I still enjoy poker but realize this is not my future. For example I am starting a website now about my passion but that is not for money purposes and is poker unrelated.

-Bustoville would mean I cry, cry and cry. I would never go all in. For example if you buy a house here for 200k and do a down payment for 20k you already have a lot more options. Therefore I would also never invest over 60% in it.

-Yes I did never get into poker for the big money. I had serious health issues when I was younger and decided to #yolo it once I got healthy and do what I enjoy instead. Did never do anything irresponsible but just realized I am not going to be part of the corporate world. Yes 2k a month is not enough indeed, part of the reasoning I am slowly transitioning away from it. I plan for example to build websites now and make money with affiliate income and possibly create my own book about my passion (it is health related, since I got healthy again I want to help other people now).

I guess I will tell now roughly what I had in mind myself: I did read Money Master the Game from Tony Robbins. He suggests 5% investing ''for fun'', aka trying to beat the market and taking high risk. This would equal 2.5k. I was considering investing 2.5k into it and then adding money to it untill I hit 15k in crypto, after which I start investing in my regular portfolio again.

The Ethereum project seems most interesting to me now, so that is where the 2.5k would go, after which the other 12.5k over time goes into like 50% ethereum, 25% litecoin and 25% bitcoin (including tokens that belong to it).

And as before, more opinions are more then welcome. I still did not make my mind up at all.

I can agree with this. 80% would be preferable to 100% in almost all cases.

I didn't really give a serious answer because OP just didn't provide enough information about his financial situation. He said he wants to buy a house but didn't specify whether that would cost $100k or $600k. Nor did he say anything about his spending habits or his desired future spending.

I don't think fundamentally in the long term $1500 and $300 are particularly different for bitcoin. The outcomes 5-10 years from now are basically busto or the moon. If cryptos succeed they will likely outperform every other asset class. There's definitely anchoring effects in the short to medium term (to past bitcoin prices) though. I also wouldn't go with a bitcoin only crypto portfolio. For a "passive" strategy I'd probably go with something like a market cap weighted allocation to the top 7-12 cryptos.

I just don't buy the idea that anyone can nail down the probability of outcomes and the associated future prices with enough precision to say that $300 is fundamentally a good buy and $1500 isn't. You're either a bull and cryptos are still super cheap or you're a bear and it's an irrational bubble.

House would be a house where I can live comfortable with 4 persons, a garden, reasonable neighbourhood. Where I live that would equal 300-350k right now. If this is realistic or not is something unknown right now. The minimum would probably be 225-250k. I would not buy a house for 500k though for sure the next 10 years since I would strongly prefer to invest a lot first.

Spending habits right now are low. 1k per month I would guess avg including everything.

If you need to know more let me know, appreciated. I did not know that you needed this info.

''For a "passive" strategy I'd probably go with something like a market cap weighted allocation to the top 7-12 cryptos.''. I like this, was thinking about something like this myself too including tokens.

I wasn't sure since you're the "300% long equities" guy as optimal strategy - which I agree with when equities are cheaper.

Well, apart from 5x the return whenever you choose to sell. If you think that's trivial, I contend you're not anchored to reality.

More generally, I strongly disagree. I don't think this is binary. I think the binary outcomes (moon vs <$100) make up less than 5% of all outcomes. I think the middle is comprised of a continued illegal economy which operates around the fringes, large enough for billions or maybe tens of billions, but not hundreds of billions or trillions. I'd argue 95+% of non-busto outcomes fall in that range.
I disagree again with mental anchoring effects. Bitcoin prices are ultimately fundamentals, after the speculation noise - how many people buy bitcoins with other currencies. If the velocity of bitcoin usage slows (because alternatives or regulation or flaws), it goes to zero, if it keeps rising, it goes higher. I think bitcoin is trending on a line that matches consumer adoption, not speculation.
Sure. The only problem with that imo is that all of the existing cryptos including are a dog to be the winner for a digital currency.
Sure you can. Buying behavior during pessimism, where it bottoms, the rate of transactions, the size of various illegal platforms (bitcoin gambling, for example), compared with the history of those vs price, give you a fairly good idea of where price should be relative to the throughput of money. If $100 million in bitcoin transactions happen a day from a diverse economy, bitcoin market cap is not going to be $10. Or $100 million. Or $1 trillion. It's going to be in the low billions to 10s of billions. The market cap really does match the throughput of money in a fixed supply currency once you take out the noise of speculation.
I disagree. I would love to see a rational detailed argument given for why this is likely to be true (moon or bust). Quote me in the bitcoin thread maybe if you want to reply.

Put as much as you can afford to possibly lose into Ethereum. Don't bother with litecoin it's not the real deal/a joke. The time to invest Btc was a few years ago. Your investment in crypto should be considered the more high risk/high reward part of your portfolio, so assuming you're not a life nit (not saying that's a bad thing, it's just some people are) yeah put some in.. but if you're actually considering litecoin as a long term investment I encourage you to do a helluva lot more research (because: lol) and live with the incoming volatility (eth will swing, don't sell)

This is why I can't take any of this seriously

Imo stinkypete is closer to right than wrong. Blockchain technology is not a fad or bubble

Sure, I agree with the bolded. I mean, my own probabilities put the most likely outcome for bitcoin as neither busto nor moon, but continued small fraction of global economy usage.

The thing is though, the bolded is lot less relevant than you think to investing choices.

There is currently $40 billion worth of assorted crypto-crap to buy into. Hundreds more coins will be minted. Entirely new technologies will come out. Digital transfer with banks, contracts etc will improve greatly, partly from technology and partly from competition from the blockchains. Regulations will pop up.

Blockchains are very useful and here to stay, and will grow, but which one will win? And do you keep putting more and more money in the new ones that come out?

Playing that game can be a bit like investing in tech in 1999. Sure, tech is going to grow eventually such that it own 99.999% of all new profits. But if you bought into every new venture that came along in 1999, you got your ass kicked, hard, for over a decade, and you massively underperformed discerning investors.

So it's not as simple as you make out ("the blockchain is here to stay and grow, hence buy the blockchain"). You could easily be right and lose or miss out on huge amounts of money.

Yes but the question is how much can you ''afford''. I mean if I go broke now I will still survive. What would you say based on what I described?

Of course a 5x difference is massive. I would never deny that.

I guess I'm looking at this more as a "cryptos when bitcoin was $300 vs. cryptos today (at $1500)" situation rather than a "what if i could buy bitcoin at $300 today" type thing.

I think where cryptos are today, I'm far more confident they'll go at least somewhat mainstream than I was the last time bitcoin was at $300. Probably more than 5x more confident. And I'm not saying this is what you're saying, but the "It's too late now, it was a better buy at $300" argument is a poor one. I think cryptos are a better bet today. As far as awareness and media exposure goes, Bitcoin/blockchain technology has gone pretty mainstream in that time.

While I don't like bitcoin itself as much as I did 8+ months ago, I'm more bullish on cryptocurrencies in general and think a decent sized portfolio allocation to crypto is a better idea today than it was at $300.


I actually don't think it's at all binary for cryptos as a whole. I think true busto status for all cryptos is incredibly unlikely at this point (though many alt coins will definitely go busto). I'm in the moon camp (possibly >10x over 5 years) with middling outcomes (-50% to +200%) being way more likely than true busto for a balanced crypto portfolio. Bitcoin itself is much closer to binary though.

Sorry about being confusing, I'm mostly just throwing together thoughts about bitcoin and cryptos overall without necessarily always making it clear which I'm specifically referring to.

To clarify, I don't think the all crypto bust scenario is likely at all today. I just think that's a pretty common perception among bears. 3+ years ago I definitely would have seen it that way though.

So would you still go by 80% based on the new information I proved for you?

Your goal is to buy a house with $50k on $2k income. That's hard to do. If you want to maximize the chances of that happening you probably have to gamble. But if you're still happy with other outcomes you might not have to gamble.

As far as portfolio optimization goes, so much of it depends on your return expectation for cryptos. If you're with the true crypto bulls 80% is probably about right. But in reality I'd never directly recommend anyone take on as much risk as I often think is optimal because it relies on high return expectations and doesn't jive with traditional views on risk management.

shove. not joking.

btc, eth, ripple, various icos

If I would buy something soon it would be with my girlfriend who makes the same and will have some savings too then so more like 4k income.

The allure of free money is nice, but money is money, and you can have a close to guaranteed 10x return on $10K in a couple of years - far more than you'll get out of cryptos - if you merely get a higher paying job. What's more, lifetime or even 10 year, getting a higher paying job now is going to crush - absolutely crush - any investment or speculation you could do with $10K now. And it'll give that massive return with far lower, almost nonexistent variance.

Since one of your goals is a nice house, and houses depend on credit, and credit depends on income, your earnings will also factor into how nice a house you get, far more than whatever bitcoin miracle you might pull off.

I realize this is off topic, but it's something to consider. Investing or speculating when you have little money is mostly a waste of time.

Look at this another way. You put in $10K and hit your bitcoin miracle - you get a 20 bagger.

Now what? You have $200K. You can take a smaller mortgage and lower your monthly payments, but you still have a crap income however you slice it, and are still going to struggle.

Unless you have a lot of capital to start with, job >>>>>>> speculative investments in terms of getting rich and getting the things you desire from money. And even if you're rich, you're still a huge dog to do well speculating (on anything).