How do you quantify the risk to reward ratio?
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Whos buying crypto?
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Not your keys not your coins.
Crypto OGs been telling people this for years
Well with bitcoin it's all speculation so it's really based off of opinion, lets say it returns to all time highs, you get roughly 300% gain (3x), chances of that happening from what I see is probably in a few years if it happens at all, on the risk side it could go down and never recover.
Lots of stocks right now that could 3x from here in a few years in my opinion with very little chance of going lower based off of their business model, partnerships, shareholder equity, but then again anything can happen and they could go to $0. I prefer the lower risk, just a personal preference.
If you want to see the effects of having no cap on the max amount of coins look at Luna from a few months back. There are many projects without a cap on the amount of coins, and while they may take off in the short term, they will all suffer from the same inflation that FIAT does.
This timeline seems extreme. I can almost guarantee there will be another run in the 5years to come. Whether that will surpass the previous run, who knows. But there will be money to be made before then. The problem is, if you wait until it happens then you're already too late. Right now is the time to stockpile for the future while things are "on sale". The challenge is picking a project that can survive until that happens and then will go on a run. There's all kinds of strategies but it's also going to take a little luck.
There is MASSIVE risk in equities right now too. The average investor's portfolio is down on avg over 30%. But same as above, people's actions now are what will make money in the future. But please don't look at equities as if they are low risk. Especially when picking individual stocks which on it's own greatly increases the risk. On the equities side, I'm a firm believer in total equity ETF's. Even the very best of professional investors very rarely beat the returns of the total market on a consistent basis. So for a retail investor to believe they can do it year after year for life would be slightly crazy.
You've pretty much nailed it though. Right now would be a scary time to be in any sort of investment if you're getting closer to retirement age. Young guys in their 20s and 30s though who may not need that money for another 30-40yrs... now is a good time to set themselves up for a very lucrative future.
Your right. If you have money to invest and time to wait for your return then nows good to buy but I wouldn't expect any turn around that's worth cashing out for at least a few years. I don't know much about all this stuff though lol.
My buddy was involved in building this game I dont know anything about it but maybe some of you guys do
NFT2040: Arena
I really couldn't disagree with you more.
Equities have no guarantee of going back to previous levels. Study Japan's market for example.
I don't understand why you think bitcoins price is based off opinion???
It's based off a market just like anything else. It's worth what someone is willing to pay for it. Look at stocks like Tesla way overvalued but people still buy them.
Bitcoin isn't for everyone. The problem is people don't want to buy when it's down, it's always the same thing every bear market ( it could go to zero) it will never go to zero because there are many people like myself who would buy every single one of them if they could.
It's interesting you bring up the Japan market crash as that actually would go against bitcoin's value ever returning to previous levels. I am curious though, what is your reasoning behind bitcoin returning to previous prices? Is there any difference in the functionality of bitcoin working if the price is trading at $1 or $100,000? Bitcoin can still be around, work as it is working today, used for payments/used as a currency at $1 no? I'm not saying bitcoin is going to $1, in fact I think there is a good chance it will stabilize and eventually go higher than todays price, the question is if I compare the returns from bitcoin going to all time highs versus a companies stock and weight the risk, it seems like a suboptimal way of allocating my capital. It's only a 3x return to all time highs and theres no real reason why it will go back there. I can get the same returns with an investment in a companies stock with less risk.
If you understand how to value a company, the odds of an equity price not going up in the future is very low, of course anything can happen. If a company has $100M on it's balance sheet, 0 debt and cashflow, its market cap will be worth more than $100M and if it isn't, you could just buy the whole company and take the cash and get the company for free. Opposed to a cryptocurrency which has no real value other than what the next person will pay for it.
To each their own.
The risk in equities would be attributed to the company you're investing in and there is a way to calculate that risk, value and estimate future value.
The theory that the best of professional investors very rarely beat the returns of the total market on a consistent basis is true but it doesn't mean much, as the whole point of professional investing is to convince others to give you their capital to invest, while taking as little risk as you can trying to beat the index's by a few % and taking all the fees. So it's actually not in the funds best interest to take any risk or try to beat the market by any significant amount, in fact if they did take abnormal amounts of risk, all their investors would take all their money back (i.e Michael Burry). Mutual funds have a huge disadvantage as they're forced to be long with most of their capital at all times, so let's say they know the market will drop, mutual funds can't just liquidate their positions, they have to hold their positions and lose money, hedge funds tend to do better than Mutual funds but have less capital.
Anyways to each their own, I make/lose no money if crypto goes up and down so hopefully it goes up for all the investors in it, enough money to go around for everyone to make money.
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I'm not sure where you're getting your investment advice. The fact that professionals rarely beat the market (in fact the number the last stat I saw was around 94% of PROFESSIONALS do not beat the market), should be all the proof you need that individual stock picking is not a successful strategy. These people do this 40hrs+/week. You said it yourself, they have to convince people to invest in their fund. Who's going to do that on a fund that's not performing? Nobody! Not just that, since the fee's are a % of total amount invested, the higher they grow it the more fees they collect. Do you really think they're just going to do the bare minimum because they're happy making the minimum in fees? Of course not!
To believe as a retail investor that you stand a chance of outperforming the very small percentage of professionals who are able to outperform the market is absolutely insane. It'd be on par with thinking you'd be able to strap on a pair of skates for the first time in your life and outperform Connor McDavid just because you've watched hockey on TV a few times.
I feel you've got a grasp on some of the basic investing principles. But it's quite clear you've got a lot to learn. For what it's worth, there was a time I was confident I could make a ton of money picking individual stocks too. I picked lots of great and solid companies. Tried to predict market turns based on world events. Made some money. It was fun and exciting. Then I realized how much more money I'd have made if I just did the boring shit. I do still set aside some money for individual stock picking, it helps keep it fun. But what I've learned is that stock picking, no matter how smart you think you are, is just 1 step away from gambling. So the majority just goes into VEQT or VGRO and is absolutely as boring as all fuck but it works.
I've spoken to people that have run hedge funds, it's a complete different game than typical investing, they look for short term gains which is what shows up on quarterly reports and is sent to their investors, while trying to mitigate as much risk as possible, most of their longs are hedged with shorts, and vice versa, so their net gains are not going to be substantially higher than the index's as that isn't their goal. Their goal is to just beat the index's by a few % enticing investors to allocate their capital to their funds vs just buying an index fund, which gives them more fees/commission. Their goal isn't to make high risk bets and outperform the market by a lot. I mentioned Michael Burry earlier, you can see how his fund lost his investors after he made the bet on shorting the mortgage backed securities market in 08 financial crisis, he made a lot of money yet the investors were unhappy that he took excessive risk with their money and eventually divested in his fund. Let's say you had $1,000,000, would you prefer to invest in a hedge fund that beat the index's by a few % annualized on average, with very little risk, or would you prefer to invest in a hedge fund that returns 100% some years but other years they lose all your money? $1,000,000 compounded by 10% vs 15% over 20 years is a difference of $10,000,000 ($6M vs $16M) and with the latter fund, you'd have $0 in 20 years, I guess this is quite timely considering the 3AC Capital hedge fund fiasco. Bill Hwang was up big with his Archegos fund during covid until he lost everything, he turned $1.5 billion to $35 billion before losing it all in about a year.
This is the part you're missing. The thing is, over 95%+ of them are doing exactly this! Odds are very good the hedge fund managers you've spoken to are part of that 95%+. The truly elite, that less than 5%, that are able to do it consistently are likely so high up there that only guys like Elon Musk could afford their fees.
This is ridiculous
Lol do you think hedge funds are A or B
You make or lose all the investors money?
Top Hedge Fund Managers Made $15.8 Billion in 2021 Riding Volatile Markets
Here's how much the top hedge fund managers made last year during a volatile year for markets.
www.bloomberg.com
Here you can see the returns of some of the top hedge funds
A hedge fund From Montreal
Senvest
Relatively unknown
Anyone with a high net worth can go to as an accredited investor and join returned 75% in 2021
You don’t have to be Elon musk LOL
You have to have money but not be the richest man in the world
They all have different strategies
For them to go bust and lose all your money is very very very severe
The most severe and recent one being the crypto firm who was balls deep in excess leverage (three arrow capital)
Senvest
Relatively unknown
Anyone with a high net worth can go to as an accredited investor and join returned 75% in 2021
You don’t have to be Elon musk LOL
You have to have money but not be the richest man in the world
They all have different strategies
For them to go bust and lose all your money is very very very severe
The most severe and recent one being the crypto firm who was balls deep in excess leverage (three arrow capital)
2021 returns dont mean much imo. A monkey could of made 8-10% in 2021..lol