Always Understand the Tail Risk!!

I like to discuss my investing practices on here from time to time and I was watching an interview with a famous former trader and I had a few ideas I figured I would share on the blog.

This main idea is about understanding your tail risk.

If you don't know what tail risk is, then let me define it simply for you: it is risk of the improbable but still possible...

It's an unlikely event that will unexpectedly happen at some point, but nobody knows when and nobody knows exactly how likely it is to happen at any given time.

And so, if you want to have a healthy and diverse investment strategy that works for the long-term, you need to have some sort of understanding of these tail risks and how you can hedge against them.

For me, hedging my tail risk as an investor in the traditional stock market comes deeply into play with what I enjoy doing with crypto and the Steem blockchain in particular.

I look at the income that you can earn from STEEM and other cryptos to be a fantastic hedge against a potential (tail risk) collapse of traditional financing and the traditional ways of doing business.

I see a fundamental change coming in the way that businesses transact with consumers and other businesses.

Thus, I see a fundamental shift in the culture of corporations and centralized entities and startups and the economy as a whole.

Even the dollar isn't untouched in all of this... The whole system is changing and will likely continue to do so as blockchain tech improves and becomes more integral into our lives!

Thus, I'm hedging against the tail risk while also improving my own knowledge and having a shit load of fun learning about blockchain!

What are you doing to hedge your downside?