$ Solidifying Your Asset Worth - How to avoid Dobson's Fetish from ruining your portfolio

Philosophy Phil

God-King of Denmark Dimension
kiwifarms.net
You finally did it, after a long life of accumilating lots of digital currency, you finally have all the proverbial hotdogs.
Then it happens.
The value of your portfolio goes from 250,000$ down to 2,500$ and all the hotdogs you've fought so hard for are now dead.

What in the world happened? Well, you essentially were flash panning , aka "Solely investing in a volatile non-liquid foundation." A better way to put this is that you converted your money to casino in house chips only, and you gained a ton of casino chips, but never converted them back into cash. Since the chips were only applicable to that casino, when the casino shut down, your chips had no value! Sounds pretty common sense though right? No, not really. Flash Panning is incredibly common nowadays in digital investment, and in general investment as well. Let's take a look at normal investment before tying everything together.


Normal Investment keywords:
Volatilty: This is a spectrum of Variability in Exchange rate and value ranging from "Metamorphic to Adamant" [0-100]
Liquidity: This is a spectrum of ease of exchangeability ranging from "Pure Liquid to Adamantite." [0-100]
Form: VL 50,50--> The value changes occasionally, and the ease of exchange is moderate.

There are variations in this, and a good investor knows to build their portfolio in multiple things as not to ruin their lifelong value.
Example:

George Gallant has a portfolio of VL 60, 5 Assets (USD) in a Checking Account worth 10,000$ and in a savings account that returns 2% per year worth 20,000$; Gallant also has invested in a VL 70,30 asset of Gold Bullion worth 12,000$, and also a VL 80-50 property investment worth 250,000$. His total portfolio is worth 292,000$.

Gus Goofus has a portfolio of VL 60,5 Assets (RUP) in a Checking Account worth 250,000$ and also has invested in a VL 10,80 of digital video game items worth 42,000$. His total portfolio is worth 292,000$.

Now what is the difference between Gallant and Goofus? Well; it all revolves around the Volality and Liquidity of their total assets. There are risks with Instruments of Exchange, the more liquid something is, the more likely it is to be Volatile to outside forces. Take for instance Government Issued Currency Notes: The USD Dollar is seen a less risky compared to other global notes as its value is denoted by its general worldwide acceptence; however a revolt in acceptence could drive the worth of that currency down. Compiled with internal issues such as debt and Cost of Living, a government note can skyrocket up or down, (prominent examples; The Zimbabwae Dollar, The Soviet Ruble, The Iranian Dinar). To combat the volatity of value, investors will seek out more solid assets, that still have a relative ease of exchange, such as investing in precious metals, stones, property, trusts, and bonds. While there is always some form of flucuation in value in these assets, (as there is no true Adamant assets) a happy mix of easy exchanged assets, compiled with solid value assets that grow over time is the golden ring to strive for.

Essentially: Gallant has a means to easily exchange assets with his Checking Account, while also letting a side sum grow in value over time. Even if worse came to worse with inflation/government note worth over time, he has a backup investment in Bullion, and if he takes care of his property, can sell the property for greater than its current worth.
Goofus has put all his trust in a government note that does not grow upon itself in the future, and his backup is in a temporary market that can be altered at the drop of a hat, which also does not have an easy way to liquidate into cash in hand.

Now that we've taken a look at Normal Investment; how does this apply to Digital Investment?
Well, digital currency itself is alot like the Stock Market; It is Volatile, and can be difficult to Liquidate to those who are not in the know.
There are multiple digital currencies to invest in, Bitcoin, Etherium, BAT, Lumen, etc; and their prices change hourly, we can give the whole sum of Digital Currency a Volality rating of 10. (Highly Metamorphic)
The Liquidity of these assets is variable depending on your knowledge and ease of "Pulling the asset". If you use a portfolio investment website such as Coinbase, the Liquidity is essentially 5, (Extremely Liquid) because with the click of three/four buttons, you can translate your portfolio to Liquid Cash. However; if you have alternate means of "Pulling" (Such as the Brave Browser) You have to go through additional steps to pull your asset. We'll mark this at 20, since it is not difficult. However; if you are invested in digital item markets (Such as Steam) the ability to turn an item into pure liquid cash into your own hands is much more difficult, due to the additional steps not built into the market. (You put 5 dollars into Steam, buy an item. It's value goes up to 10$, you sell it for 10$, however that is still within Steam and not in your own hands, to get the 5$ profit in your hands, you have to use a third party negotiation site [which often has fees] or set up your own private sale via paypal [frowned upon] We'll mark that as an 80.

So, now that we've gotten all that out in the open; "How do I maintain my asset worth in a digital market?"
Well, its simple.
"Invest in what you will as per digital currency is concerned, find a good time to buy/sell, translate these into Liquid Cash, and translate the Liquid Cash either into a Savings Account or into a Solid Asset that is less likely to lose value over time.

Essentially "Don't horde your assets into an extremely metamorphic market, ESPECIALLY when its Liquidity is greater than 30."
You'd think it common sense, but again, I see this mistake being done constantly, and likewisewould be investors finding themselves poorer in the process.
To fully utilize the digital market, keep an eye on government regulations/policies, market trends/rumours, and always know that a market can shut down instantly if the noses that be deem that they aren't winning.

Good luck on all investment endeavors, and I hope I don't see any of you jumping from windows when your portfolio goes to shit, and that you have backups in solid assets.
 
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Philosophy Phil

God-King of Denmark Dimension
kiwifarms.net
Tl;Dr edition:
"Don't be a dumbass, Translate your Volatiles into Non Volatiles, and don't over-invest in Volatile Non Liquids."
 

An Account

kiwifarms.net
The long and skinny of it is: don't put all your eggs in one basket, and don't choose exceptional baskets.

Don't invest in TF2 hats or CS:GO skins, idiot. Crypto goes up and down like a roller coaster, and you're going to get burned playing with it.

Find the highest yield savings account you can (I personally use Barclays, but there are plenty of good options) and try to get about one month of living expenses in there, and don't touch it unless it's an emergency. Bullion (gold and silver, and less commonly platinum and palladium) are easy, non-stupid ways to diversify. Mutual Index Funds are simply a collection of stocks that track the market closely, and the market historically goes up. They're the safest way to get into the stock market. Contrary to media depictions of some super nerd gaming the system and making billions, the stock market is more like a slot machine.
 

Disgruntled Pupper

True & Honest Fan
kiwifarms.net
Diversify and always take your gainz, yo.
In short...
Excuse me, but as an A&H poster I must tell you that diversity is always bad. I don't want no darkie hotdogs in my herd. Now if you'll excuse me, there's a man promoting "stinky linkies" a few threads down, I think I'll take my value internet time and robust BAT wallet to him.
 
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Spasticus Autisticus

kiwifarms.net
The long and skinny of it is: don't put all your eggs in one basket, and don't choose exceptional baskets.

Don't invest in TF2 hats or CS:GO skins, idiot. Crypto goes up and down like a roller coaster, and you're going to get burned playing with it.

Find the highest yield savings account you can (I personally use Barclays, but there are plenty of good options) and try to get about one month of living expenses in there, and don't touch it unless it's an emergency. Bullion (gold and silver, and less commonly platinum and palladium) are easy, non-stupid ways to diversify. Mutual Index Funds are simply a collection of stocks that track the market closely, and the market historically goes up. They're the safest way to get into the stock market. Contrary to media depictions of some super nerd gaming the system and making billions, the stock market is more like a slot machine.
To expand on this:

If you're just starting out with investing, a great way to get started is to open up a Roth IRA at a brokerage of your choice (I like Fidelity but there are plenty of good options) Set an automatic contribution to however much you think you can afford. Set the contributions to go into a total US stock market index fund with a low expense ratio. VTSMX (Vanguard Total Stock Market) is a good option here but there are plenty of others. Instead of a mutual fund you could also use an Exchange Traded Fund, which trades like a stock and generally has lower expense ratios. VTI is the ETF equivalent of VTSMX.

Why a Roth IRA? You can't deduct contributions from your taxes, but you can withdraw your contributions at any time with no penalty, which is handy in an emergency. You can't withdraw earnings without a penalty until you turn 59 1/2, but after that you can withdraw tax-free. So by placing your contributions in a high-growth asset (stocks) you can, in theory, get massive gains and not have to pay the taxman a cent. (Caveat: some future socialist government might change the rules on you.) Also, you can only contribute up to $6000 a year, and that limit starts to drop when your income starts to exceed a certain limit (but if you're fortunate enough to exceed that income, you can use the "backdoor Roth")

This approach is not very diversified, it's just 100% stocks. This is risky, but this advice also assumes you are young and don't have much already invested. Bonds are the most common diversification asset since they tend to have little correlation with the stock market. Just like stocks, it is too risky to buy individual bonds (except for Treasury bonds and savings bonds). After you start to get some significant savings (however much "significant" is for you) then you should look to add a total US bond market fund to your portfolio. Gold/silver is a good diversifier but you have to consider how you are going to secure it physically which is not a responsibility to be taken lightly. Avoid crypto, avoid CS:GO skins, avoid Iraqi dinars, etc. If you absolutely must play individual stocks, don't make them more than 5% of your portfolio.

Bogleheads is a great resource for learning about investing. They are a bit fuddy-duddy over there but their advice isn't going to blow up your portfolio and ruin your finances, unlike the idiots at r/wallstreetbets.
 

Skeletor

Premeditated Worder
kiwifarms.net
“Investing” in precious metals is mind-meltingly stupid unless you have like multi-millions in your portfolio.
 

MichiganWagon

kiwifarms.net
Why does a lower Liquidity number correspond to a more liquid asset? Seems a bit counter-intuitive. Same goes for the Volatility number.

Maybe there's a legacy reason for this (like how in astronomy, a "planetary nebula" has nothing to do with planets, but the name stuck)?
 
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