Exponential growth in your portfolio: the rule of 10
The following was recently posted on reddit cryptocurrency:
Is it a good idea to buy every crypto out there or at least the top 10, and add when a promising one is created ? The goal is to profit or not from the volatility. Thing is, I’m already invested in the stock market with my SP500 ETF, and I have an emergency funds and some spare money.
I was thinking of creating a portfolio of 1000$ by buying 100$ of the first top ten cryptocurrencies (excluding bitcoins, because I already have some) and adding every month.
Tell me the flaws in this or what can be changed.
I like this post and I like many of the replies in the reddit thread, my answer is: it depends on whether you are aiming to invest or trade. For investing, you can expect 6% growth of the top 10 market caps currencies within a day (yes, a day, just see the image below) to 6 months, so it makes for a nice buy and hold strategy.
However for long-term investing, you want 10 promising currencies that are currently undervalued. For that you need to look at new projects with great promise whose value will grow exponentially by powers of 10.