1/ Thread: Limits to the asymmetric payoff for Bitcoin
Most of my friends who bought btc tell me the asymmetry embedded in the payoff for buying bitcoin.
Just buy 1% of your portfolio; you really don’t need to understand anything.
Most of my friends who bought btc tell me the asymmetry embedded in the payoff for buying bitcoin.
Just buy 1% of your portfolio; you really don’t need to understand anything.
2/ If btc reaches a million, you are set for life. If it’s zero, you won’t lose much sleep.
It makes perfect sense and for a long time, I agreed with them. The math is undeniable.
It makes perfect sense and for a long time, I agreed with them. The math is undeniable.
3/ Yet, the more I thought about it, the more I realized the real concern is not that whether btc reaches zero or a million when you have 1% exposure.
The real concern is what happens AFTER it reaches a million.
Here’s I think what will happen.
The real concern is what happens AFTER it reaches a million.
Here’s I think what will happen.
4/ After some moments of euphoria, I will lament the fact that I only had 1% exposure.
What was I thinking? Why didn’t I put 10%? At least 5%?
God, I was so stupid! Wasn’t it SO obvious?
Trust me, it will seem VERY obvious to everyone regardless of whether it's 0 or million
What was I thinking? Why didn’t I put 10%? At least 5%?
God, I was so stupid! Wasn’t it SO obvious?
Trust me, it will seem VERY obvious to everyone regardless of whether it's 0 or million
5/ Then I would probably meet some “dumb” guy who didn’t buy btc and I would come to my senses.
"Well, at least I have a million dollar."
Now what do I do with this million dollar?
"Well, at least I have a million dollar."
Now what do I do with this million dollar?
6/ With this newly minted cash, I would probably have to come back to the boring world of public markets.
What is the expected return in public markets in general? 7-8%.
What is the expected return in public markets in general? 7-8%.
7/ After making gazillion times money in btc, do you think I would put up with those saggy returns?
Absolutely NOT. I am much smarter than that.
with my big brain, I will chase the next "btc". This time, I won’t make the same mistake. I would keep 10% of portfolio on this "btc"
Absolutely NOT. I am much smarter than that.
with my big brain, I will chase the next "btc". This time, I won’t make the same mistake. I would keep 10% of portfolio on this "btc"
8/ Let’s say this next “btc” will work as well. What’s next?
Whatever it is, I’ll put 50% in it.
At some point, I will run out of my luck, and the music will stop.
Whatever it is, I’ll put 50% in it.
At some point, I will run out of my luck, and the music will stop.
9/ So much of investing is behavioral that if I were given the option to choose either top 1 percentile intelligence and 50 percentile temperament vs top 1 percentile temperament and 50 percentile intelligence, I would choose the latter every single day.
10/ Losing your discipline for every FOMO out there is not a strategy that’s going to be successful.
End/ I would be indifferent whether btc goes to zero/million/billion.
Intellectually, I am far more interested in understanding real businesses than figuring out the big macro topic of the day.
I will leave it for the smarter people out there.
Intellectually, I am far more interested in understanding real businesses than figuring out the big macro topic of the day.
I will leave it for the smarter people out there.
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