One of the biggest haters of Bitcoin has to be Warren Buffet, one-half of the sugar pimps who made their billions speculating on selling industrial sludge as a food substance. Now I am no fan of his investing style or choices and I think he become so engrossed in the ability to access cheap capital his investment perspectives are completely off the boil.
He does still apply some of those old tried and true methods, but in a world where value has been crushed and it's all about flow trading, it becomes harder to see real opportunity. It's no wonder he liquidated so many positions and is sitting on billions in cash.
Waiting for the next big investment opportunity, when it's sadly right in front of his eyes and along with his late flurry into the apple, will probably be one of Warren's biggest investment faux pas to date.
Just because I think Warren is a bit of a dinosaur, doesn't mean he doesn't have some valuable information to share with us.
Warren's words of wisdom
There's an old saying that taken hold in the mind of normies, that states don't put all your eggs in one basket, a lot of people repeat this tired old cliche and think they're passing off some ancient wisdom, but has that really been a successful strategy for maximising your returns? I don't think so, would it have been better to invest in Amazon, or split between all its competitors equally? No you invest in Amazon.
Diversification is the simpleton's idea of investing, it's for people who have not done the work, who are not willing to do the work or have no idea of what they are investing in. That's why index funds are so popular, people just feel there is safety in numbers and in diversification but is that really true?
I don't think so, I think if you don't understand something you have less conviction so you spread your seeds of doubt all around hoping for one lucky strike.
When you are confident in your thesis you concentrate all your economic power behind it and it rewards your work with CAGR.
Image source: - valens-research.com
Diversification in its purpose
If you're looking to preserve wealth I can understand wanting to wind down your concentrated position into non-correlated assets to try and build an all-weather portfolio you can sit on an extract value. But very few people are in the business of preserving wealth because they've got fuck-all to preserve.
If you're looking to build wealth you need to consider what is the most powerful bet in that asset class and have the conviction to support that thesis with your purchasing power.
Image source: - flipkart.com
There is no second best
Sadly there are very few people who understand this concept and even fewer who are willing to practice it that's why very few succeed and that's okay. If you want to run around the field chasing third, fourth 195th best by all means have at it, but when you realise second is just the first loser, things start to become a lot clearer.
Have your say
What do you good people of HIVE think?
So have at it my Jessies! If you don't have something to comment, "I am a Jessie."
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