undefined | Better HN

0 pointsgopuck163y ago0 comments

What you've stated here is your experience, now if you try to extrapolate the thinking/investment model you've used to large number of people - there is very limited upside and very high downside.

0 comments

koonsolo3y ago

No it stays the same if you have an investment portfolio and only invest max 5% in high risk assets.

Assume you invest 1% of your portfolio in Bitcoin. What is your downside? 1%. Not that high, is it?

What is your upside? Maybe x100, so double your entire portfolio.

Right now, you came late to the game, so don't expect a x100. The risk is probably still the same, but the upside way lower. But when Bitcoin was still young, the upside was definitely worth the risk. And it didn't even live up to its original intent. Imagine the price if it did!

SketchySeaBeast3y ago

If we think like this why wouldn't I invest 1% of my portfolio in lottery tickets? At worst lose 1%, at best x1,000,000 upside?

prottog3y ago

You could consider lottery tickets as an OTM option expiring in a week with those payoffs, I suppose. If you spread 1% of your portfolio over a year and buy lottery tickets every week, you're effectively losing 1% per year with a very small chance of becoming very rich.

There are probably better places to put your 1% on. ;-)

1 more reply

koonsolo3y ago

The reward/risk ratio of lottery tickets is very well known. And it's obviously not in your favor. So it's basically a no brainer not to invest in them.

Things like startups for example also have a very high risk rate, but also potential high payouts. There it actually makes sense since the ratio is way better.

2 more replies

j / k navigate · click thread line to collapse

0 comments

koonsolo3y ago

No it stays the same if you have an investment portfolio and only invest max 5% in high risk assets.

Assume you invest 1% of your portfolio in Bitcoin. What is your downside? 1%. Not that high, is it?

What is your upside? Maybe x100, so double your entire portfolio.

SketchySeaBeast3y ago

If we think like this why wouldn't I invest 1% of my portfolio in lottery tickets? At worst lose 1%, at best x1,000,000 upside?

prottog3y ago

There are probably better places to put your 1% on. ;-)

1 more reply

koonsolo3y ago

The reward/risk ratio of lottery tickets is very well known. And it's obviously not in your favor. So it's basically a no brainer not to invest in them.

Things like startups for example also have a very high risk rate, but also potential high payouts. There it actually makes sense since the ratio is way better.

2 more replies

j / k navigate · click thread line to collapse