The Role of Digital Assets in a Mature Traditional Financial Portfolio

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Future Guardian,

If you’re not asking yourself about crypto now, you will be later. Perhaps you did before. Let’s get a few things out of the way:

1. If the questions you ask yourself change day to day based on the sentiment of the general market, you’re already in trouble.

2. If you wait until everyone else thinks it’s a good idea, you’re already in trouble.

3. We’re going to talk about [gasp] crypto in a market where the sentiment is [gasp] low.

We are not trying to convince you way one or the other. What we are doing, is suggesting you think deeply about things during times of sobriety so that you can make decisions that make sense for you.

So, we’re going to deep dive on crypto and the role it plays in a traditional portfolio.

This is a Capstone Project from a Guardian, Wolf Pup #1147. A capstone is one of the requirements necessary for an individual to complete on their journey to ascend to the final tier of TGA, Guardian. To learn more about what a Capstone Project¹ is we’ll leave a link at the bottom.

Abstract

In this capstone project, Wolf Pup #1147 presents the case that cryptocurrency’s role in a mature traditional finance portfolio is to collapse time towards your goals. If you found this article useful we’d love for you to share your thoughts with us and the author, the twitter links²³ will be posted at the end of the article.

Introduction

Does crypto have any place in a mature traditional financial portfolio? Or is it nothing but downside, an asset made up out of thin air and destined to go to zero?   

You’ll definitely run into this point of view when people know you’re interested in “that bitcoin stuff” or any other cryptocurrency. The discussion of the inherent value of cryptocurrency is well tread ground elsewhere, so for purposes of this discussion, let’s stipulate that cryptocurrency has value (if you must, you can even caveat it with “value .. for now”). Now we can explore how you might add it into a portfolio like any other risk asset that might go to zero.

One of the first videos I saw in early 2022 when starting my The Guardian Academy (TGA)⁴ journey proposed the idea: “Do you even need crypto in your portfolio?” My initial reaction was “Duh, Of course!  Is that a trick question? With such a huge potential upside of getting MORE, how could I not get involved? That’s why I’m here!” Looking back now, I see that reaction as a huge red flag. 

In this article, I’ll explore how crypto fits as “just another financial vehicle” in my portfolio. Let’s go slowly and establish some shared traditional finance vocabulary. I’ll do this via the “lemonade stand economics” ⁵ approach – rather than describe the complicated end result, I’ll build up to it via a story, then we’ll get back to crypto towards the end.