How do you know when an asset is overvalued? And are buying commodities like Crypto and gold good long-term investments? Today’s article answers both these questions through a personal example. That’s right, you’re about to discover my $10,000 BitCoin bet and what it means for buy and hold investors.

If you’ve ever been curious about thinking big and making predictions for the future, this is an article you can’t afford to miss.

Don’t Bet It All On Innovation

A few weeks ago I was asked the following hypothetical question:

If you had $10,000 and could only buy one long-term asset, what would you choose? Also, long-term means you can’t sell it for at least 10 years.

My answer: Weyerhaeuser.

This is a boring business (they own forests and process lumber for building materials), it’s operated for 100+ years, and the dividends are terrific. I don’t see them going out of business anytime soon, and their shares are currently depressed due to a bear market within the timber industry.

When I mentioned this, several people got mad. They wanted to know why I wouldn’t go all-in on BitCoin, gold, random Cryptos, or other precious metals (like silver). The answer is pretty simple and goes back to a previous article about disruptors vs blue chip companies. However, I’ll quickly recap a major point: It’s hard to pick a winner during periods of great innovation.

The 1990’s had a pets.com or 360networks for every Amazon or Google.

The same is true for railroads, cars, telegraph companies, airlines, etc. Picking winners is tough, especially during a bubble or frenzy. Whenever BitCoin goes up, markets get flooded with fair-weather investors. And whenever prices sag, Crypto becomes a ghost town. As such, I wouldn’t bet 100% of my networth (or investible funds) on something so volatile.

Likewise, I wouldn’t buy gold simply because the price relies heavily on speculation or market timing. Precious metals (unlike stocks) don’t have the cushion of dividends or splits. One bar of gold will never magically multiply itself or payout smaller nuggets on a quarterly basis.

That’s why (in this completely silly hypothetical situation) I’d invest in a solid blue chip company with history and an impressive dividend.

Now, with this out of the way, I’ll share a more realistic approach.

Low Risk, High Reward

In the real world there’s no need to put 100% of your money into one asset. And there’s no rule saying that you have to hold something for at least a decade. Because of this, I suggest you diversify as much as you want to.

Personally, I own some precious metal (silver). And I’m not the only one, metal hater Warren Buffett did this in the past. Same goes for BitCoin, Crypto, and other assets. I own as much or as little as I feel comfortable with, and I suggest you do the same. Diversifying is great (as long as you’re comfortable with it) and a few small risks can yield high rewards.

Final Thoughts On The $10,000 BitCoin Bet

Making a $10,000 bet is fun. Arguing with other investors or swapping ideas is always a good time, and I you feel strongly about an asset, put your money where your mouth is.

That said, investing isn’t a game of absolutes or black and white convictions. If you want to own stocks, gold, real estate, bonds, BitCoin, or rare art, go for it!

Build your portfolio however you want and don’t limit yourself with silly mind games or self-imposed rules.

There are many paths to success, and I urge you to find the one which best suits your style.

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