What we often see from Crypto investors:
- Comparative returns from the last highs and lows in the market represented a variance in portfolio 10x higher than the client intended
- There is no adequate exit strategy in place, when the clients “dream outcome” was realized, no return was crystalised
At Caleb and Brown, a key part of our service is to ensure our clients are equipped with the knowledge to make the best, informed cryptocurrency investment decisions. To bridge this gap, our team of specialised analysts are made accessible to all of our clients. In this, we are able to provide value by alerting clients of their asset performance and inherent risk in their portfolio balance.
In this article we will outline an example portfolio risk assessment…
Over time, we have found that the average investor tends to overlook the inherent risks they are taking in their chosen portfolio.
Understanding your relationship with risk and balancing your portfolio accordingly is an integral part of successful investing, cryptocurrency or otherwise.
In general, the more risk, the more upside potential. However at the same time, the higher chance of loss.
Isaac, a new client of Caleb and Brown, approached us to conduct a risk assessment on his $225,000 cryptocurrency portfolio.
First, we established Isaac’s existing strategy and what he envisioned for his portfolio. Like many other crypto investors, Isaac was attracted to the prospect of high returns, his existing expectations were aligned with his ‘dream outcome’. We noticed Isaac’s position was too exposed in especially high risk projects, which meant his potential upside was higher, but also the risk he was taking was greater. Isaac was risking more than he needed to.
In reality, the ‘dream outcome’ is an ambitious goal, but it can be realised with the appropriate portfolio. It was not necessary for Isaac to be so exposed to historically volatile projects (past performance does not necessarily indicate future performance) to achieve his goals.
Through consultation with his broker and other Caleb and Brown analysts we were able to assist him with a portfolio restructure, effectively increasing the likelihood of Isaac reaching his desired results.
The risk review process covers a number of factors, including concentration, market risk, risk deviation and liquidity risk.
“Clients are often unaware of market liquidity constraints. Small capitalization tokens can often see 20-30% below market prices when trying to liquidate large volumes. A diversified portfolio can reduce your exposure to this risk…”
– Bee Weck, Broker
As a direct result of this assessment, Isaac now has access to new information that will better guide his future financial decisions. More importantly, Isaac has the piece of mind of knowing his investments are optimally positioned to maximise his potential gains for him and his family.
Caleb and Brown is a well-established service that brings with it a variety of cryptocurrency knowledge. With over 20 years in collective crypto experience, we provide this expertise to you through free consultation so you can better understand this complicated asset class.
Bee is a broker and trading analyst for Caleb and Brown. Bee holds a Bachelor of Science in Pure Mathematics and has worked previously for high profile exchanges in analysing the risks and screening of cryptocurrency projects for exchange listing. Bee frequently speaks at Women in Blockchain events and has been actively engaged in the crypto market since 2016.
Whether you are new to the market, or a seasoned trader, Caleb & Brown can help to realise your goals. Call us on +61 1800 849 149 or Contact Us to discuss further.