Sunday, November 2, 2014

Diversified Investments without a Cryptocurrency?

Lots of people have investments in all sort of stocks, bonds, GIC's, currencies, and so on.  I won't dwell on the varieties because that's not the issue.  The general wisdom is that to compensate for variability to spread out your money into all sorts of investments. 

The problem is that all these "diversified" investments are still based on the value of a dollar.  In most cases, the US dollar.  Even in resource stocks, the businesses rely on pre-negotiated commodities contracts - providing x amount of resource for y amount of dollars.

But what if the US dollar collapses?

In that case, all those businesses will suffer the same collapse.  They are all interlocked and all based on the same valuation.  So your value in diversified same-model investments is an illusion.

What you need to compensate for that catastrophic (potential) eventuality is to have an investment that is not linked to the same valuations. 

I have started to invest in cryptocurrencies is a hedge against that same-system shared risk.

I own small amounts of Bitcoin and now StartCOIN.  I am just testing the waters but I plan to continue to acquire truly diversified investments.