7 Suggestions on ICO and Crypto-assets Portfolio
Charles Xue, a famous angel investor in China, posted a photo with Lao Mao, ex-COO of Yunbi, to his 11 million weibo followers, saying “I am learning ICO from Lao Mao”. From the happy face, it seems that they have found something really exhilarating. It could be “the path to financial independence”.
“An investment portfolio is a collection of investments. Ideally these investments were chosen to work in harmony to help the investor achieve their goals and also to provide a certain degree of diversification so that you are not putting all your eggs in one basket.” –Investopia
A well-balanced portfolio could be the key for survival in the highly volatile market of cryptocurrencies. But how to allocate the funds? Lao Mao recently shared his opinion on ICO and presented seven suggestions on crypto-asset portfolio, especially for rookies that are holding fiats right now.
1. Embrace the fact that Bitcoin is the “hard currency” of all crypto-assets. Make sure 50% of your portfolio is in BTC. That’s the bottom line.
2. 5-10% goes to the #2 token in terms of market value. It is a “defensive strategy”.
3. Throw 5-10% of your money to your favorite coin. If you favor more than one project, it is ok to invest 5% at each coin. But I sincerely suggest that 15% should be the top.
4. Reserve 5-10% cash for ICO, which is still one of the most important source of profit in blockchain industry.
5. Keep your portfolio robust and dynamic, but never invest in projects that you couldn’t understand.
Develop your own sense of judgment. Even failure will help you grow. If you are only a follower of other people’s opinions. You are bound to lose in most cases.
6. Be patient with long-term investment projects. Each blockchain projects has its own life cycle. Some projects could last forever and some are doomed in a few years or less. For some long-term projects, you can leave it there and look for update from time to time.
7. Don’t put your eggs in one basket. It’s risky to place all your investment in one token only. BTC is no exception.
If one is determined to participate in ICO, Lao Mao suggested that the following questions must be answered:
What practical problem does the project solve?
Does the solution have to be based blockchain technology?
Could the project be solved with fiats?
Is the solution highly cost-effective?
All in all, the general principle of investment is “value”. Lao Mao’s philosophy could be best summarized as:
“If I couldn’t see a bright future for the project in three years, I wouldn’t hold it for 3 minutes.”