You do both, surely? Not every youth player works out, but it's usually a gamble worth taking because you can make your money back at worst, usually turn a profit.
The kids coming through now like McConnell, Clark, Bajcetic, etc are all proving wise investments when we brought them in.
Being a good investment is a bit of a double-edged sword though. You bring in good young players and they fill squad places or you then sell them on at a profit. The low-risk option is to bring in more young players and a couple of Moneyball signings. You end up with a low wage bill, a low Net spend and you are not reliant on having to be successful on the pitch to turn a profit. If it comes off like it did in 13-14 and you almost win the League and qualify for the Champions League then you have hit the jackpot financially.
The thing is if you want to compete at the highest level then you can't really afford to keep investing in 16-20 year olds and keep waiting for them to develop.
I would say the different paths we took after we sold Suarez and Coutinho illustrates the point.
When Suarez left we took the lower-risk option and spread the money about. We signed eight players and spent a fair chunk on prospects like Markovic, Moreno, Can and Origi.
When Coutinho left we for players who were far more proven like VVD, Ali and Fabinho. For me we need to be careful of falling back into the trap of playing it safe and spreading the money around on prospects. The structure we are setting up massively favours the analytics-recruitment team over a new manager. Personally I think we need to do what you said which is keep on recruiting at all ends of the market.