Risks vary based on the mitigation strategy and the time available for preparation. Only S&P can distantly resemble the volatility of a pure speculative asset which depends on psychology and the amount of extra money in the markets. But even S&P depends on a lot of factors which don't trigger overnight for a knowledgeable investor. It's a snowball but not an avalanche.
BTC has shown itself magically profitable indeed, but its value could only be kept by the ability of holders to keep the asset. Most marriages and some jobs will endure even in the toughest times.
Spouse is an idea in your head though. Very hard to measure. Because she used not to be a spouse before getting married right. One day she became spouse. So it's an idea. Not tangible.
Yeah, that’s true. We invest in a lot of things, hoping for future value. But I guess I still treat those differently. I only hold enough USD for upcoming purchases. And I struggle to understand how investing in my marriage is speculative. For a variety of reasons I can’t (or wouldn’t want to) manage that risk like I would in normal speculative investment. I can’t hedge, size up, size down.
So I think I’m missing something. I feel like you’re suggesting that we should be more comfortable speculating because we do it all the time, but I’m not seeing how those are all the same.
I think that's right. At some level, any anticipation of a future state has to be measurable in some kind of confidence level.
I suppose where I get lost is that, at least subjectively, I end up treating different anticipated return distributions differently. I want a mixture of risks, both in terms of their covariance and the absolute properties.
When I think of "speculation", I am intentionally shaping only a small portion of my personal portfolio toward high risk, high reward activities. And I only really feel comfortable doing that because a larger fraction of my personal risk is in safer vehicles.
Atop that, I also think a lot about liquidity time bounds. I want access to a reasonable amount of highly-liquid, low-risk investments. I need that flexibility to be safe in the event that I need to buy something.
To my eye at least, I qualitatively differentiate between speculative investments and these liquid/low risk ones. If I felt I only had one kind of risk, I would seek out the other in some proportion.
Your marriage is a speculative asset that your wife doesn't cheat on you in future and actually loves you.
S&P is a speculative asset that it will perform like it has been performing in last 30 years.
USD is a speculative asset on US not going bankrupt.
Your career is speculative asset that you don't get fired tomorrow and you can find another job if you do get fired.
Bitcoin is a speculative asset that a decentralized cryptocurrency is better than relying on coins issued by bankruptable nations.
You are a speculative asset of your ego.