One Reason not to be "All Inn" on any Single Investment for Long

[xuan87]

Yes, putting all of your money in one basket is a dangerous thing, like we know there is a risk in investment, so we can't expect everything can work like we wanted, so it will be wise to only invest your extra money and put your investment in different investment, so you won't lose too much if one of your investment failed

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[DrGuns4Hands]

I'm not usually investing on one thing with all my money i usually split it atleast into three and after a month of observation I can know where am i gaining more profit and after that im gonna pull out my investment in the other two and put it all in in the other one that gaining profit really well but also remember investing is a very risk part of us because there's no assurance that you could gain profit monthly it's all about the performance of the one you've invested.

[deisik]

My reason not to be all inn on any single investments for long time strategy is high risk losing money (include on digital coins),
in all of instrument of investments always there are risk must be taken by investors
the good investors always calculate about risk in investments, they don't just think about the profit.

While this is true there's also another way of seeing it. If you put your money in a number of high risk contracts the total risk-gain ratio remains the same. For instance if we assume that one altcoin has 50% chance of success and you split your money (1USD) between 2 of them, your chances of earning money decreases along with the chances of going broke.
Normally it would be 50% that you make $2 from your $1 and 0 if it fails. Now you will need both of them to succeed to reach your desired $2, but also for both of them to fail to be completely broke

What you suggest is basically a martingale in disguise

And you didn't specify what are the chances of success with your second coin. You only said that "one altcoin has 50% chance of success", so what about the other coin? If you assume that it has the same risks, it is essentially six of one and half a dozen of the other. Thus your chances of both winning and losing remain the same and equal to 50%. It would be the same if you had just one coin but only invested in it half as much

[Zicadis]

The reason we should not go "All In" in any promising investment plan is to cushion any loss

or should be taken as a contingency plan to allow us to divert funds into other projects we feel can reward with a good return and avoid losing everything in one bad investment project.  .

[avikz]

That's true! diversification is the key to healthy investment and it's far more safer that any other form of investment no matter where you are investing. It is always better to have a healthy mix of good assets if you are planning to invest all your invest-able surplus funds. So that if one asset price goes down, the other assets can compensate the losses.

Using this diversification method, the mutual fund companies are working worldwide. I also keep a healthy mix of bitcoin and bank deposits as my investment. So even if bitcoin price goes down, I will not have to worry about my savings. 

[pinkflower]

It depends. If youre a person who doesnt have enough money to make diversifying make sense then going all in in one stock or one altcoin and hope for the best is your only ticket out and create a meaningful amount in your life.

Huh I think that people should have money and then do research and have at least 2 or 3 investments.

If you have only money to invest in one place, I suggest you do not knife it, wait until you have the money to make 2 or more investments.

If you think your investments can wait, then thats ok. But what if the train is leaving? For some situations it would be better to take the risk now than doing nothing. Life is short and much of it shouldnt be spent waiting around in order to be safe. If the risk is only money, go for it.

[Yuuto]

It depends. If youre a person who doesnt have enough money to make diversifying make sense then going all in in one stock or one altcoin and hope for the best is your only ticket out and create a meaningful amount in your life.

Huh I think that people should have money and then do research and have at least 2 or 3 investments.

If you have only money to invest in one place, I suggest you do not knife it, wait until you have the money to make 2 or more investments.

If you think your investments can wait, then thats ok. But what if the train is leaving? For some situations it would be better to take the risk now than doing nothing. Life is short and much of it shouldnt be spent waiting around in order to be safe. If the risk is only money, go for it.

It actually depends what is the amount of "only money".
If it is 10$ it is obvious that nobody will be afraid of the risk, but in the moment you risk 100,000$ it is totally different thing.

That is why diversification is a very important factor to consider when making any investment.
If your bankroll is 10,000$ total, it is a wise idea to invest 500$ in some currency pair, while having about 5000$ in some steady income investment, which will at least cover up the losses from the 500$ investment.

But it is not a very good idea to get into too many assets, especially as a new trader.
Try to keep everything as simple as possible, and hop in only when you are sure about your decision.

[bitcoinisbest]

Yes, putting all of your money in one basket is a dangerous thing, like we know there is a risk in investment, so we can't expect everything can work like we wanted, so it will be wise to only invest your extra money and put your investment in different investment, so you won't lose too much if one of your investment failed

Well said. Never put all the money in one instrument type. Always diversify your portfolio as even all the fund managers in the world do the same. Though the exposure in each asset class could vary depending upon the risk associated and your interests.

[Amph]

my strategy rely on diversification but only for very cheap coins and in any case not a big amount(33%), that can return a great investment, the remaining amount, is with the strongest coins, and usually only 3 at best no more

too much diversification can lead to more danger and loss of capitalizzation than actual more possible profit, especially in crypto where only 1 out of 100 coins is lucky enough to give you a good return of investment

[Betwrong]

...

I have long written that diversification is a very smart idea.  No one can predict the future, etc.  But discussed below is another reason not be 100% in ANY investment, at least for long.  I ran into this argument at a gold blog.

Imagine that you are 100% invested, "All Inn", in gold.  Even if the price of gold were to go way up, there is still a big risk that many don't see.  Namely what happens if there is a big price drop JUST when the owner might NEED to sell (eg, an unexpected emergency).  If our imaginary friend bought in at $1275 gold (approx. price today), and then price drops to $900 (Martin Armstrong predicts a sharp price drop like this, prior to a big price rise, a "slingshot" price rise after its initial drop).

And then, just at a bad time for the gold owner, he might need money (US dollars) to cover an unexpected $200,000 medical bill.  And he if forced to sell his gold at a 25% loss to cover his bills...  Ouch!  It would hurt even more should gold then go to $2500 per ounce.

So, it is unwise to be All Inn on gold, even if we were to be very sure that $2500 gold is coming.

The above scenario would hold for Bitcoin as well, or anything else to be held long-term.

Some of us gold owners have a saying: "Protect the precious."  That means keep some powder dry (CA$H on hand) for the unexpected.

I pretty much agree with the last sentence, it's better to have some cash on hand always. But I have in mind a scenario which probably could put into question the logic of all the above.

Say you've invested in two things, gold and Bitcoin. And now you urgently need money. How can you know for sure which of them to sell?  Say this happened in April 2013 when Bitcoin hit all times high $250 at the moment, and gold just dropped from 1,780 USD/oz in October 2012 to 1,430 USD/oz in April 2013. Wouldn't you think then that it's better to sell Bitcoin while it's on its peak and hold gold because it has been seeing better times? But as we all know gold has dropped since to 1,287 USD/oz, and Bitcoin has risen big time.

[Oilacris]

my strategy rely on diversification but only for very cheap coins and in any case not a big amount(33%), that can return a great investment, the remaining amount, is with the strongest coins, and usually only 3 at best no more

too much diversification can lead to more danger and loss of capitalizzation than actual more possible profit, especially in crypto where only 1 out of 100 coins is lucky enough to give you a good return of investment

3 Diversification would be the best range and more than enough on that number would really be hard already unless if you do still have some spare cash or money to invest on then its sky on the limit but better to focus on few things so that you wont able to confuse your mind later on regarding on your investments.Going all in is not really advisable even you do know that you are sure on your decisions because going all in is very risky not only on trading but all other stuffs.

[deisik]

...

I have long written that diversification is a very smart idea.  No one can predict the future, etc.  But discussed below is another reason not be 100% in ANY investment, at least for long.  I ran into this argument at a gold blog.

Imagine that you are 100% invested, "All Inn", in gold.  Even if the price of gold were to go way up, there is still a big risk that many don't see.  Namely what happens if there is a big price drop JUST when the owner might NEED to sell (eg, an unexpected emergency).  If our imaginary friend bought in at $1275 gold (approx. price today), and then price drops to $900 (Martin Armstrong predicts a sharp price drop like this, prior to a big price rise, a "slingshot" price rise after its initial drop).

And then, just at a bad time for the gold owner, he might need money (US dollars) to cover an unexpected $200,000 medical bill.  And he if forced to sell his gold at a 25% loss to cover his bills...  Ouch!  It would hurt even more should gold then go to $2500 per ounce.

So, it is unwise to be All Inn on gold, even if we were to be very sure that $2500 gold is coming.

The above scenario would hold for Bitcoin as well, or anything else to be held long-term.

Some of us gold owners have a saying: "Protect the precious."  That means keep some powder dry (CA$H on hand) for the unexpected.

I pretty much agree with the last sentence, it's better to have some cash on hand always. But I have in mind a scenario which probably could put into question the logic of all the above.

Say you've invested in two things, gold and Bitcoin. And now you urgently need money. How can you know for sure which of them to sell?  Say this happened in April 2013 when Bitcoin hit all times high $250 at the moment, and gold just dropped from 1,780 USD/oz in October 2012 to 1,430 USD/oz in April 2013. Wouldn't you think then that it's better to sell Bitcoin while it's on its peak and hold gold because it has been seeing better times? But as we all know gold has dropped since to 1,287 USD/oz, and Bitcoin has risen big time

There are a lot of factors at play here

First, it depends on the liquidity of the asset, i.e. how fast you can convert it to fiat in case of emergency. Obviously, with Bitcoin it is a matter of a few minutes in most cases, though in some specific cases you can just take your gold and bring it to a pawnshop, thus getting cash that you may need so urgently. Further, the price movements won't be relevant if you are really in an urgent need for money, so you will just act in the direction which is most effective and efficient at reaching your end, but the specifics will obviously vary greatly depending on your situation

[naidray]

Well one thing is for sure that you are afraid of what you are investing in. Can you imagine the opportunity that will be lost if you have diversified your portfolio? Don't get me wrong on this one but if you spread your money to a lot of investment you just lessen the risk but did not maximize your profit also you added a lot of things to be manage by you. I still believe that you can always go " all in" in the investments you are sure will pay you the most. Just my two cents.

It is a proven point statistically and economically that diversification is much safer than all your investment in one thing.

It may seem like you are missing out on the high gain you get from risky investment but in the long run the risky investments do not pay back as often as the safe ones and you end up having less money than if you had all your money in separate investments. Although in the short run you don’t see amazing profits in the long run you earn much more.

[staggerpines]

Go all in on one if it is Bitcoin. Thats why we are all here on this site, no?

[webtricks]

...

I have long written that diversification is a very smart idea.  No one can predict the future, etc.  But discussed below is another reason not be 100% in ANY investment, at least for long.  I ran into this argument at a gold blog.

Imagine that you are 100% invested, "All Inn", in gold.  Even if the price of gold were to go way up, there is still a big risk that many don't see.  Namely what happens if there is a big price drop JUST when the owner might NEED to sell (eg, an unexpected emergency).  If our imaginary friend bought in at $1275 gold (approx. price today), and then price drops to $900 (Martin Armstrong predicts a sharp price drop like this, prior to a big price rise, a "slingshot" price rise after its initial drop).

And then, just at a bad time for the gold owner, he might need money (US dollars) to cover an unexpected $200,000 medical bill.  And he if forced to sell his gold at a 25% loss to cover his bills...  Ouch!  It would hurt even more should gold then go to $2500 per ounce.

So, it is unwise to be All Inn on gold, even if we were to be very sure that $2500 gold is coming.

The above scenario would hold for Bitcoin as well, or anything else to be held long-term.

Some of us gold owners have a saying: "Protect the precious."  That means keep some powder dry (CA$H on hand) for the unexpected.

Oh, I thought I would get something fresh in my plate. But you killed my expectations by giving me similar dish with somehow different recipe.
Well, yes. It is obvious. Diversification or Portfolio building is first lesson in investment world. This is done to ensure maximum gain from high-yielding securities like Gold as well at the same time to remove contingencies of unexpected losses by investment in debt securities.

[OROBTC]

...

I have long written that diversification is a very smart idea.  No one can predict the future, etc.  But discussed below is another reason not be 100% in ANY investment, at least for long.  I ran into this argument at a gold blog.

Imagine that you are 100% invested, "All Inn", in gold.  Even if the price of gold were to go way up, there is still a big risk that many don't see.  Namely what happens if there is a big price drop JUST when the owner might NEED to sell (eg, an unexpected emergency).  If our imaginary friend bought in at $1275 gold (approx. price today), and then price drops to $900 (Martin Armstrong predicts a sharp price drop like this, prior to a big price rise, a "slingshot" price rise after its initial drop).

And then, just at a bad time for the gold owner, he might need money (US dollars) to cover an unexpected $200,000 medical bill.  And he if forced to sell his gold at a 25% loss to cover his bills...  Ouch!  It would hurt even more should gold then go to $2500 per ounce.

So, it is unwise to be All Inn on gold, even if we were to be very sure that $2500 gold is coming.

The above scenario would hold for Bitcoin as well, or anything else to be held long-term.

Some of us gold owners have a saying: "Protect the precious."  That means keep some powder dry (CA$H on hand) for the unexpected.

I pretty much agree with the last sentence, it's better to have some cash on hand always. But I have in mind a scenario which probably could put into question the logic of all the above.

Say you've invested in two things, gold and Bitcoin. And now you urgently need money. How can you know for sure which of them to sell?  Say this happened in April 2013 when Bitcoin hit all times high $250 at the moment, and gold just dropped from 1,780 USD/oz in October 2012 to 1,430 USD/oz in April 2013. Wouldn't you think then that it's better to sell Bitcoin while it's on its peak and hold gold because it has been seeing better times? But as we all know gold has dropped since to 1,287 USD/oz, and Bitcoin has risen big time

There are a lot of factors at play here

First, it depends on the liquidity of the asset, i.e. how fast you can convert it to fiat in case of emergency. Obviously, with Bitcoin it is a matter of a few minutes in most cases, though in some specific cases you can just take your gold and bring it to a pawnshop, thus getting cash that you may need so urgently. Further, the price movements won't be relevant if you are really in an urgent need for money, so you will just act in the direction which is most effective and efficient at reaching your end, but the specifics will obviously vary greatly depending on your situation

deisik and Betwrong are closest to the actual point I originally was trying to make.

I have long written positively about the benefits of diversification.

The "One Reason..." (thread title) is with holding just one asset that fluctuates in price, you expose yourself to a BIG RISK, an involuntary liquidation of the asset if two things go wrong:

-- You have an unexpected emergency, for example, where you need to raise LOTS of cash (medical emergency, bailing your brother-in-law out of jail, etc.), cash that you do not have lying around because ALL of your money is just in gold (or Bitcoin).

and

-- Your asset may indeed likely will go very high in price in the future (which I believe will happen with both BTC and gold), but their prices can have big swings down too.  And if a sharp price drop happens AND the unexpected emergency comes up, you would be forced to liquidate some (or more) of your investment at that low price...  Only to watch that price shoot for the moon later on...

"Protect the precious"  <=== Keep some cash around because you never know.  No one knows what will happen.  NO ONE.

*  *  *

deisik has a useful comment that I bolded above in red, if you have two or more assets to cash in.

[pinkflower]

It depends. If youre a person who doesnt have enough money to make diversifying make sense then going all in in one stock or one altcoin and hope for the best is your only ticket out and create a meaningful amount in your life.

Huh I think that people should have money and then do research and have at least 2 or 3 investments.

If you have only money to invest in one place, I suggest you do not knife it, wait until you have the money to make 2 or more investments.

If you think your investments can wait, then thats ok. But what if the train is leaving? For some situations it would be better to take the risk now than doing nothing. Life is short and much of it shouldnt be spent waiting around in order to be safe. If the risk is only money, go for it.

It actually depends what is the amount of "only money".
If it is 10$ it is obvious that nobody will be afraid of the risk, but in the moment you risk 100,000$ it is totally different thing.

That is why diversification is a very important factor to consider when making any investment.
If your bankroll is 10,000$ total, it is a wise idea to invest 500$ in some currency pair, while having about 5000$ in some steady income investment, which will at least cover up the losses from the 500$ investment.

But it is not a very good idea to get into too many assets, especially as a new trader.
Try to keep everything as simple as possible, and hop in only when you are sure about your decision.

Please check the post history. The conversation came to be because I said that its possible that not all have enough money saved to make diversified investments. Meaning its limited and small.

"Only money" would depend on your financial situation. But the idea is an amount that can be easily replaceable by you in case you lose all of it.

[cellard]

Well I think the only way to get rich is to be all in in an investment since the beginning. For example, imagine if you were all not even in bitcoin but in an altcoin like DASH, XMR, PIVX... you would be rich already.

The problem is all those alts are now past 1 dollar.

How do we find the next coin to hold long term that pumps big and makes us rich?

[NetFreak199]

The main reason not to put your money in one investment Is to prevent the loss of your  money once. When you lose of it in one investment only it will hard for you to recover it back not like you have other kind of investment you still have more chances to get it back.

[Teraboy]

It depends. If youre a person who doesnt have enough money to make diversifying make sense then going all in in one stock or one altcoin and hope for the best is your only ticket out and create a meaningful amount in your life.

Huh I think that people should have money and then do research and have at least 2 or 3 investments.

If you have only money to invest in one place, I suggest you do not knife it, wait until you have the money to make 2 or more investments.

If you think your investments can wait, then thats ok. But what if the train is leaving? For some situations it would be better to take the risk now than doing nothing. Life is short and much of it shouldnt be spent waiting around in order to be safe. If the risk is only money, go for it.

No one are want to get lose for his amount, I think you've kidding me dude. In order to avoid lose and they should be decided the right analyzation before but what do you mean about investment can wait?