HomerJ wrote: ↑Mon Apr 19, 2021 11:31 am
Marseille07 wrote: ↑Mon Apr 19, 2021 11:08 am
qwerty123 wrote: ↑Mon Apr 19, 2021 10:06 am
I guess my point is - saying "I just wrote off the seed money, so I never need to rebalance out" may be true for now, but at some amount of growth you should reconsider that - if 1% turns into 90%, you should
probably sell a little.
Realistically though, if funny money trades starting at 5% becoming 90% of your NW, then you can pretty much retire at that point. And what I would do then is to simply make monthly withdrawals from the funny money side to nudge toward 50/50 with your Boglehead side.
That's what people did in the dot-com era. And then they had to go back to work.
You can't just retire with 90% of your net-worth in "funny money", because, by definition, that stock/investment is risky, and can crash as fast as it went up.
If your funny money account became so large that you go ahead and retire, the smart move would be to first rebalance nearly all of it back to a boring traditional Boglehead portfolio, not slowly take withdrawals to move yourself back to a balanced portfolio.
Well, again, it's not "funny money," unless you have no idea what you are doing and you are all in on DOGE. Then ok, whatever, gamble away. But the (admittedly high) number of people who do that should not detract from those that research and invest in a more structured, I believe more intelligent, way.
Also, I'm not so sure the "smart move" is to move it all back into a traditional Bogleheads portfolio right now, in one lump sum. With hindsight, perhaps, but then we are being results based and not looking at real EV at this point in time. What if I'm given 5-1 odds to draw to a flush in poker. Should I? From an EV standpoint, absolutely! But I'll still lose 65% of the time...
Let's say you have a portfolio that is 75% crypto, and you could sell it all today, pay your taxes, put the rest in your standard 60-40 portfolio, and retire. Not a luxurious retirement, but fairly solid (economy class flights, Dominican cigars). Should you? What if you believe your crypto portfolio is significantly undervalued at these prices, and hence think selling now is negative EV? What if you want to sell to reduce risk, but can't stomach selling Ethereum at a 260 billion market cap, when you are convinced it's a 1 trillion asset minimum, today (so 3-4x from here, even more longer term)?
Wouldn't the better strategy be to take some profits now, especially in more speculative tokens, but keep holding a large crypto portfolio until the market gets a bit closer to what you believe is fair value? You can say the market is already fairly valued by definition, but I would counter that the crypto market is incredibly inefficient, just look at DOGE or XRP... And hence "nobody knows nothing" does not apply to crypto. But I would say that, wouldn't I? I could be dead wrong. There's the rub!
Again, I have no crystal ball, in hindsight perhaps selling everything now could be the better plan. We just don't know. I'm only trying to balance risk with expected reward, and it's quite challenging. To say the best option is to sell it all is probably not the ideal EV approach. Even if it turns out to be correct, in hindsight.