Many are excited about the pHBD-USDC liquidity pool. Certainly I am in that camp. However, I was asked why I am not moving my HBD across for a better return?
This is an excellent question which is worthy of an article. It all has to do with investment approach. Perhaps some will gain an understanding of the methodology I utilize in building a portfolio.
One of the biggest components to investing is risk management. We all have to design a program that suits us. This is going to vary based upon the individual. Factors such as age, income bracket, financial needs, and a host of other aspect come into play.
It is best to come up with a plan and stick to it.
Bottom Up
The approach that I utilize is to work from the bottom up. That means my focus is on the most conservative aspect of things. This is the foundation.
Obviously, I understand. We all want to YOLO (You Only Live Once). It is really exciting to set your hair on fire (if you have any) and let it all go. High flying assets with huge volatility can be exciting.
It can also leave you broke.
That is not to say there is anything wrong with these type of investments (trades). We just have to keep them in proportion.
Too many want to focus upon the big money hits to start. To me, this is backwards. The less capital one has, the more risk averse one needs to be, especially when younger. Start with the foundation and build from there.
One thing about age. If one is younger, the ability to come back from financial screw ups is there. Time is an ally. For those who have some age on the body, well time can be an adversary.
The foundation for me is reducing risk. This is where the base can from. Something like HBD, in my view, is a very low risk, high return asset. It is true there are options that could be more profitable, but the risk model changes.
Baseline
HBD in savings is paying a 20% return. This is an outstanding baseline figure. In fact, much of the traditional world would love to get this return. It simply is not there. To get even half of this one would have to dive in junk bonds. That is how bad the returns are in the traditional fixed income market.
Is this as good as the Polycub LP is offering? No it is not. However, there is little risk of hack (wallet or smart contract), rug pull, or massive drop in token price. We probably can eliminate the rug pull from this situation but the point is clear. There are increased risks with pHBD.
This is why the return is greater. One needs to be compensated for taking that on. Certainly those who are getting into the pool should benefit in that manner. After all, risk deserves a premium.
For me, adding risk to a baseline is not smart at this time in my life. To get involved I have to move assets from other areas.
Yield Versus Speculation
In the world of cryptocurrency, we see a lot of speculation. That is mostly what the industry is about, at least up to this point. We are starting to see things changing. However, most of our crypto portfolios are still mired in that framework.
Here are some of my holdings:
- BTC
- ETH
- LTC
- HIVE
- LEO
- CUB
- xPOLYCUB
Do you see a pattern?
If we go into my retirement accounts we have:
- GBTC
- Tesla
A lot of speculation there. Some of this is obviously placed so it is earning a return. However, my portfolio is still based upon prices going up. If the bears come out, things will get a bit messy.
Here is where portfolio management enters the picture.
Am I Negative On pHBD-USDC?
Not at all.
To me, this looks like a sensational opportunity and terrific addition. It helps both Polycub and HBD.
So why not get involved?
In addition to what was mentioned above, we also have the variable of being paid out in POLYCUB. Here again, this adds speculation. Personally, at this point in time, the upside versus downside risk in this token is low in my opinion. It looks like, with all that is going on, there is a lot more upside potential.
That said, we can still see a move to the downside. There is nothing that says we cannot see 15 cents or even 10 cents.
What is required is some honest appraisal of one's situation. It seems like people are always out chasing new things. Again, with a little play money, tossing it at different things can be fun and sometimes even profitable. Hell, even YOLO once is a while keeps things interesting.
That said, a portfolio made up of exclusively of penny stocks is probably not the best idea. While the payoff might be huge, the risk with this will likely overwhelm almost all portfolios.
My approach is to free up other funds to get into the pHBD-USDC pool. I still am adding xPOLYCUB each day since my belief is a lot of upside there. Nevertheless, the ole *investor's dilemma comes up. The options are presently outnumbering the capital I have available.
Alas, this is one of the goals of Leofinance. As we can see, there is already an ecosystem with a lot of viable options. The best part is more are going to be added.
This is why I am excited about the potential over the long run. Keep providing people with different investment options and capital will keep flowing. It is just a question of what part of the platform gets it.
Hopefully this helps some others to understand risk management and how to build a portfolio.
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