In this video, I will help you avoid the #1 mistake that people make in cryptocurrency which I believe is taking too much un-calculated risk.

Most people do not understand portfolio allocation and expected return.

They also do not understand the 6 other things to consider when gauging your risk tolerance that I speak about towards the end of this video.

I think this video may have the most positive impact out of any of my videos so please share it with someone!


Good evening! Good morning! Good afternoon! Wherever you are I’m in Miami Florida and it is the morning it’s 9am and in this video I want to share with you how to not lose money in cryptocurrency because if you manage to not lose money you’re likely to make a lot of money because very rarely do we ever see a new asset class come out and not to mention the fastest growing most exponential asset class.

We’ve ever seen and I think we have a lot of growth ahead and before we jump in I’m telling you this video is going to be really important so watch to the end but people have been saying that my view in my content room is a green screen guys it’s not a green screen this is reality all right and you can have a pretty cool reality if you listen this video all right.

So let’s go ahead and jump in this is likely going to be the most impactful video you ever see within cryptocurrency so if you get value from it it’s likely that other people will get value from it so please share this with other people that are investing into crypto because I’m telling you if you can avoid this one mistake you are likely to do very very well and the thing I love about crypto is it has the ability to change the everyday person’s lives and retail investors lives because essentially we’re pretty much front running these corporations and elitists and all the people that have too much regulation for them to put capital into crypto.

So right now retail has a huge opportunity to actually kind of close this wealth gap and get ahead of the majority of the large sums of capital so I’m telling you I think this is going to be the most impactful video let’s go ahead and jump in so this is the biggest mistake that people make most people say hey what is the quickest and easiest way to 10x my investment.

I have literally worked with over a thousand people with the crypto I’ve got tens of thousands of questions and this is a very very common question and one of the most common questions I just got or actually one of my favorite questions I’ve ever got was from a girl named Sarah in our group it was about a week ago she said hey how did you make most of your money.

Did you hit a home run with an ICO so like an initial coin offering or like a random meme coin and my answer was no I spent 3.5 years focusing on business and income investing back into myself through self-education through masterminds through books courses mentors and everything that was left over after I invested in myself I then put into a well diversified portfolio that was value driven within cryptocurrency and obviously that’s done very very well and our our funds have also done very very well for hundreds of our investors so why would you even want to diversify your portfolio.

Well it’s to balance the trade-off between risk and reward the wealthiest people in the world understand how important it is to take calculated risks to ensure they have the highest expected return so what is the highest expected return or what is an expected return I should say it’s the profit or loss that an investor anticipates on an investment that has un or has known historical rates of return.

It is calculated by multi multiplying the potential outcomes by the chances of them occurring and then totaling these results so I’m gonna show you some great examples here right now so this is what most people do okay they hear about these people hitting absolute home runs with these meme coins oh my god this meme coin did a 20,000 return right in three days and if you would have perfectly bought here and perfectly sold at the very top you would be worth x amount of money right.

There’s things like that all the time so they hear that and they’re like wow I need to go buy meme coins or I need to go buy these really really small capitalized coins but they don’t realize is the further you go and this is anyone can go to this site the further you go it sorts all these coins by the market cap list and if you actually look up here in the top left hand corner there is now more than 14,000 coins out right now and it sorts it by market cap right.

So the further you go down in the market cap list the more risk that you’re taking because there’s less capital right number 31 has a 6.4 billion dollar market cap but if you keep going down the market caps get smaller and smaller so that really shows like the conviction within the market right the lower the market cap likely the higher the risk the project has and you can sort it you know by page like if we went to number 100 this is audio it has a 1 billion market cap but if we go all the way down to like you know whatever this coin is right that has a you know 208,000 return .

Well what’s the market cap we don’t even know the market cap and we don’t even know the circular the total supply we don’t even know what the circulating supply is right now so this is likely really high risk it probably has a really small amount of capital because in the past 24 hours only I had you know 323,000 go through it right so that’s what you need to understand is the further on the market cap list that you go the higher the risk because there’s less capital in it less people that believe in it and less conviction by the market okay.

So I’m going to share with you this this is what most people do they were like they buy bitcoin first and then they realize oh my god let me actually sell my bitcoin and go buy meme coins and go buy all these low capitalized coins that’s what low cap stands for so most people are designing their portfolio like this right they put like 80 of their wealth and they’re they’re not even well it’s just crypto exposure into meme coins 15 into you know low capitalized coins because they think oh my god I’m shooting for the next 10,000 x and then they put you know maybe five percent into bitcoin so this is how you would calculate the actual expected return for that portfolio.

So bitcoin right let’s say that it has an 80 chance of doing a 500 return over the next five years okay I think that’s honestly pretty realistic to be honest given growth curves I’m not going to go into that but this is just an example right so an 80 chance of a 500 return so that’d be 0.8 times 500 which would give bitcoin’s expected return would be 400 okay the small caps let’s say they have a 1 chance of doing a 5,000 return oh my god a 5,000 percent that would be amazing right that’d be way better than bitcoin’s 500 return well not really because if you multiplied the probability of that happening multiplied by the percentage return the small caps expected return is actually 50 right.

You got to factor in the probability of these returns actually playing out and let’s go look at meme coins okay we would look at meme coins that has a point zero one three nine percent how Jeff how did you get that number all I did was I went to the coin market cap I looked inside the top ten we have two you know meme coins that have made it actually Sheba’s are now outside of the top ten but let’s say they’re both in the top ten all right.

These two meme coins have made it right which is very rare and I’ll show you how rare you multiply or you divide two by the amount of crypto currencies which I don’t know why coin market cap’s kind of glitching right now you guys saw earlier it was 13,000 coins right so I took the 13,000 coins they must be adding a lot of you know Cryptos right now to this platform so I multiplied the or divided the number of meme coins that have actually made it that high up and divided that by the total amount of cryptocurrencies right now which gave me a 0.0139 percent chance and let’s say it was a 15,000 return or whatever it was right.

It doesn’t matter I’m showing you how to calculate your actual portfolio so that would be point triple zero because you move the decimal places two points one three nine times fifteen thousand so you’re the mean coins expected return is actually 2.08 percent okay so now you need to calculate that’s of each coin or each sector within your portfolio now you need to actually identify what is the expected return of my total portfolio so your expected return would be that 400 expected return for bitcoin multiply by five percent right because you only allocated your for your portfolio but five percent bitcoin.

So five percent which gives you a 20 return for bitcoin’s allocation within your portfolio the small cap same thing it would give you a 7.5 return because you only had a 15 percent allocation to that and then meme coins had an 80 allocation to that and only had an expected return of 2.08 so that would be a 1.66 so your total portfolio expected return is 29.16 okay so that’s what you could expect to get based on the returns and based on the probabilities of those things playing out now this is what more of like a prudent investor would understand okay.

In here’s the thing, you guys can create all different types of allocations and be in different sectors this is what I do in in some of our like paid groups and this is what I do for myself and for our funds as well it’s like maybe something for a beginning investor you just hold you know the top five in all coins eighty percent of bitcoin if you got more like of a growth oriented portfolio.

Maybe you do have some small caps you know three percent small caps 10 like mid caps 25 larger cap you know all coins and 60 into bitcoin or let’s just say you keep it simple and you understand these different sectors and you’ve done research into these different sectors and you believe that smart contracts have the most value which is honestly my belief that’s the majority of what we hold in our funds that’s the majority of what I hold in my own portfolios as well I really do believe that smart contracts are the best and the reason is because you can actually identify and get some some type of sense of the value that this protocol has because you can go look at their transactions right.

You can go look at how many transactions they’ve had over the last 24 hours how many transactions they’ve had total this is just and you can go look at a bunch of different assets you can also say oh my gosh well let’s go look at dogecoin and see you know why should I not own dogecoin well I probably shouldn’t own dogecoin because let’s go look at the the number of the different wallets that actually hold dogecoin and if you look there’s 30.9 billion one wallet has 30.9 billion the next wallet has five billion, four billion, four billion one point eight billion so like the top like six wallets here for dogecoin own like 30 to 40 of the total supply of dogecoin right which presents more risk you know and then we’ll go back to like you know Cardano.

We can see are the transactions increasing what these are these different blockchains and smart contracts in particular there’s so much utility for the coin because every transaction actually generates a fee on the blockchain which is they use their native coin for that transaction so the more transactions the more adoption the more developers building on top of their unique blockchain the more that the coin is actually being used which tends to we tend to see an increase in the price of the coin right so like with harmony we can see oh wow the number of wallets is dramatically increasing right over time.

We can also see their transactions per day or over 2 million very very consistently right so that’s something that we’re looking at it’s like the growth of transactions the growth of the wallets you know the number of NFT’s being minted on the chain you know all those things right so that’s why I invest in the smart contracts and believe they have the most amount of value so let’s say you understand that because you actually educated yourself and you do something like this right you hold you keep it very simple you know you hold sixty percent of the bitcoin and you hold the top five smart contracts well what are the top five smart contracts.

Well you can just go to another site which is you can go to screener you can click on smart contracts you can see the top five smart contracts right here so let’s say you just buy the top five Ethereum, Solana, Cardano polka dot and avalanche right you buy those top five and you’re you know your portfolio and you calculate it so let’s say that bitcoin again has that 80 chance of a 500 return that would give you 400 you know percent once again smart contracts let’s say they have a 60 chance of doing a 2,000 return and you’re probably like dude that’s so stupid there’s no way a 2,000 return well.

I mean I’ll just show you with you this is the total crypto mark cap for all coins I mean let’s go look at from like where we were at literally in in 2017 right if we go look at this we had a a 514 return from today which is November 17th in literally 48 days the altcoins had a 514 return okay and and if we zoom out that’s absolutely minuscule to where we’re at now right and we’re not even into this last growth phase the most growth we’re likely to see within crypto so to have these type of returns.

It’s not it’s honestly not crazy and I think that you know the market cap of of where we’re at in crypto is very minuscule to likely where it’s heading and if you know you don’t believe me just go ask the world economic forum that’s predicting it to be about 12.6 trillion over the next about four years and the total value of crypto is still under three trillion right now so I believe we’ve still got a lot of growth so anyways right sixty percent chance of a two thousand percent return that gives you an expected return of twelve hundred percent.

Let’s multiply by the actual allocations we had in the portfolio and we did you know sixty sixty percent of the portfolio of the of bitcoin which is you know two hundred forty percent expected return this the larger caps of the smart contracts that we had I have a 480 expected return so the actual expected return of the portfolio is 720 relative to someone that was shooting for the home run of the meme coin you know their expected return is 29.16 percent would you rather a 29.16 percent expected return or would you rather a 720 expected return these are the types of things.

You need to understand is asset allocation within cryptocurrency another big mistake that people make is like hey I feel like I need to trade and be in and out of these this coin and that coin and I need to like actively manage everything like you can keep it simple you could dollar cost average into your own like investment portfolio or invest into like different funds that practice proper portfolio allocation and asset allocation and maybe they actively manage part of their portfolio because what you need to understand is this.

There’s a balance between risk and reward this is the thing you need to balance and if you consistently lose money you’re going to be on this hamster wheel where you just keep losing and losing and losing and you’re never going to get to the point where you even see any type of a compound effect with the investments that you make so you need to understand this balance of risk or reward and understand when these meme coins.

They have a really high rate of return oh my god 15,000 return right when they have a higher rate of return well guess what the probability of that actually playing out is likely lower right we’re on a a seesaw here you need to understand this image to actually make a difference in in your expect to return your portfolio so now you’re probably wondering okay.

How much risk do I take the different sectors have different types of risk right you can go like you need to find out what avatar you are right maybe you do want to go more high growth and you want to trade with some of your portfolio you want to have maybe you know you allocate more towards mid caps more towards large caps you know you’ve got a aggressive strategy like this where you’ve got like 50 into large caps.

You hold a 20 bitcoin allocation and then you’re more heavily into mid caps and small caps as well and then you also need to understand like your total portfolio right like a traditional financial advisor might recommend for like a young person oh let’s say you know put seven percent of your your portfolio in crypto I have much more than that but and I’m not a financial advisor so I have no idea what what you should do but you gotta put this into a visual for yourself and say how much money do I want to have in crypto and the reason is because you need to understand this.

So if you’re this guy down here in the bottom left-hand corner all right and you’re worth ten thousand dollars today okay let’s say you want to be worth a hundred grand in 20 years well you could easily invest that 10 grand in like the s p 500 in 20 years you’ll have more than 100 grand okay just based on previous you know growth right so that’s very easy to do so that would be this arrow in the middle.

That’s the gap that you need to bridge which is about 90 grand right over 20 years though so that’s very very plausible but let’s say that you have that 10 grand right now you’re this guy in the bottom left-hand corner but you want to get to one billion right you up here is one billion dollars so the gap is from the 10 grand to the one billion dollars that’s a much bigger gap so what you need to understand is if you want a much higher return you’re probably going to have to take more risk to get that higher rate of return.

So you need to understand but there’s always a balance right that you need to understand of this risk and reward but if you’ve got higher goals for yourself you likely need to take more risk so maybe you were to you know maybe your financial advisor you recommend that you only have one percent exposure to crypto but you have conviction in the asset class and you really want your net worth to you know go from 10,000 to 1 billion.

Well maybe you do increase that amount of allocation within your investment portfolio to have a higher potential expected return right those are questions you just need to be asking yourself and that’s not the only question I think this is the most important one is your goals because if you get to the end of your life and you realize that wow I didn’t do anything that actually would even get me close to my goals.

That’s a really really big mistake I think that’s probably the worst mistake is you get to the end of your life and you realize wow I was doing the wrong things my entire life right so you need to be asking yourself these things and a few other questions you probably need to ask is when evaluating how much risk you want to take is you know your goals which we just went over your understanding of the assets right so if you don’t have conviction and even understand the assets it’s probably not a good idea to invest in because you’re going to make emotional decisions which is number three when it gets really volatile which obviously crypto is very volatile.

I mean let’s look at what you know not just look at the upside let’s look at reality as well it’s like after we went up you know 500 percent in 40 days we also went down about 91 percent after from the very top obviously to the very bottom but then if you look over time right we I mean it’s not even not even comparable.

So you need to understand that but like if you don’t understand what you’re investing in you’re likely to make a really big emotional mistake you know buying highs and selling lows which is obviously not what you want to do so you got to have some ability to control your emotion if you don’t you probably need to invest with someone that does and specializes in that do you have dependents right.

Do people depend on you right if you you got an entire family you know maybe your your the amount of risk you take is less your level of income right if you have a really high level of income you can take more risk because you’ve got income coming in if you’ve got low income you probably can’t take as much risk because if you lose that money there’s not money to replenish what you just lost and then also your entire investment portfolio risk which is what I was talking about like how much is in real estate stocks crypto bonds.

All that stuff right and then your risk tolerance which this whole video is trying to get you to think about your risk tolerance all right so what you need to understand is this still applies even though Warren Buffett thinks like crypto is rat poison which I completely disagree with because I what we found is really intelligent people and successful traditional investors they don’t understand investing into protocols.

They understand investing into you know free cash flow in a business because they’re value investors and that’s what they’ve done their whole lives they can’t even comprehend crypto is investing into a protocol it’s not investing into a business this is a whole new shift of investments that we’re seeing right so and by the way I believe most crypto is nonsense it’s completely worth it’ll likely be worth zero but there’s a lot of cryptocurrencies that will actually in blockchains that will absolutely revolutionize the world and how you know the world and business operates.

So anyways rule number one never lose money rule number two don’t forget the first rule so you need to do your best job to stop losing money so that the compound effects can start to take place and you can be in a much better spot in your future okay if you got value from this video I greatly appreciate you hitting the like button leave a comment down below subscribe to my channel we’re working to get over 25 000 subscribers hopefully this video does it and again if you got value from this video there’s likely someone that will get value too so why not share it with someone that would anyways have a great day and I’ll hopefully see you here on this next video. 

Published On: November 18, 2021 / Categories: How Tos / Tags: , , , , /