Feels a bit like you missed my points willy
I’m going to go ahead and say this is where we seem to disagree most strongly (although it’s not the end of our difference of opinion). I don’t think any of the other bets you might consider are actually anything like this one or have anything like the same kind of risk-reward profile. Even BTC in 2011 pales by comparison and that was an infinitely better bet then than most other alt coins are now.
Again, I think you are analysing this opportunity in the wrong context. You are describing just another investment tool instead of what this really is - a very rare opportunity that is not really comparable with other developments in this space. It feels to me like perhaps you have not had as many eureka moments with SAFE as some of us yet. SAFE is nothing like the other projects that might look similar at first glance, so although 2% might be applicable for some, it is certainly not just another 2% shot to add to your portfolio imo.
Of course, one does not bet all of ones spare capital on one long-shot, but avoiding going ‘all-in’ very much depends on what you mean by ‘all’ and what you are trying to do with what you have (make quick money, make the world better by supporting the project etc, make diversified portfolio etc).
I’ll give you an example of what I mean from my own experience as a poker player to make the point a little clearer.
If I were in a casino with a few grand on my poker roll then I would likely be sitting on a small table playing for pennies and hoping my edge played out over time to a decent hourly rate and with enough bankroll management to handle the inevitable swings and downturns. The LLN (law of large numbers) dictates how I should handle my bankroll management to cope with the swings… once again I’m going to want 50-200 buy ins, so from 0.5-2% per table and quite similar to your recommendations above as every new game is a high risk proposition.
If a whale walks in with no idea how to play and a huge wad of cash then the context has changed and so must my decisions as a poker player. if I want to maximise my expectation for the day I need to adapt my usual bank roll management limits to account for this new opportunity… good gambling is all about opportunism, not just being cautious/sensible.
If you can’t sit at the table with the big opportunities then you will have to try to earn your way there from just playing the smaller tables… I’ve never met a poker player who really succeeded in a meaningful way like that (although many make some money doing it); all of the successful ones jumped on the bigger opportunities (in-game or game selection) and rode the wave to new levels. I have noticed that ‘truth’ also reflected in the world of investing, although reality is a complicated thing full of grey areas ofc.
If you are trying to protect the wealth you already have then certainly, be cautious, diversified and cynical. If you are trying to turn a modest amount of money into a large amount of money then you will likely never achieve that without being an opportunist. You can get lucky with a couple of 2% bets on things you don’t really understand, but you can equally achieve it with few larger bets on things you have put more effort into.
Things like BTC and NXT (and many more) have shown some crazy ROI. You can find examples in them to show how a couple of % gamble could yield a great return if you bought the bottom and sold the top… which never happens to anyone ;).
If you only have $2k in the bank and no portfolio then you give yourself a much better chance of success by jumping on really interesting opportunities with larger %s than you would chucking $40 at 50 things that all look similar but actually don’t offer anything like the same opportunities. In that context the 2% rule becomes terrible advice and I would suggest anyone doing that will likely lose it all over the long term.
Roger Ver went and stuck his whole $20k life roll into BTC and spun it into many millions that he reinvested into a load of BTC startups. He did that because he believed in it, not because he cared about being rich. Now, I would never recommend those kinds of life choices to others, but it is misleading to make out that there is a ‘best practice’ decision here or a one-size-fits-all investment solution. What you put in depends very much on your ability to tolerate risk, your objective, your future income opportunities, your current responsibilities, your interpretation of the competition and the market etc.
Personally, in my own situation, it would be pretty daft for me to stick 2% into something like SAFE given what I know about it and the crypto markets. I’ve been balls-deep at 60%+ and then able to hedge with trading etc to get myself into a position where I am already freerolling a bet that could have cost me more than 30% of my liferoll if I’d bought and held off the bat. /brag
My only point is this really… context is everything and there are NO sensible or blanket rules when it comes to gambling/investing/taking advantage of risk-reward opportunities that present themselves to you. The 2% rule is vague and perhaps useful advice designed for people who are new to bankroll managing/investing, but it still completely depends on how you have invested the other 98% and what the opportunity is that draws your 2%… if you were to stick 2% into 50 crypto projects you’d be taking on HUGE risk because they are all linked and could all fall together with a few legislative changes.
Context is EVERYTHING and there are no magic numbers to help you on the road to sound financial decisions. As with everything in life, common sense, luck and a lot of effort are required to make decisions that look ‘good’ with hindsight ;). The 2% rule is sensible in the right context, and for some people that will apply here… it doesn’t apply to most people though imo.
/degenerate gambler out