Does Diversification Become a Pitfall for Investment? Autism Capital: Investment Involves Risk and Diversification Does Not Guarantee Profits
Youtuber and blogger Alex Voigt’s argument against diversification in investment has sparked heated discussions since his post on January 7th. He believes that Bill Gates, following the advice of the stock market guru Warren Buffett, gave up most of his Microsoft shares for diversification, which ultimately led to a significant decline in Gates’ assets in the future.
The majority of comments below Voigt’s tweet criticized his viewpoint, and Ethereum founder Vitalik also retweeted the article, stating that it was terrible advice.
(Regarding the debate over Buffett’s diversification investment, what financial advice did Vitalik provide?)
However, some members of the crypto community believe that this blogger’s investment philosophy is fully applicable to the crypto field.
Autism Capital: Taking on risks and diversification won’t make money
Nick Drakon: Gambling without risk control
Autism Capital’s tweet states that so-called risk management and diversification cannot make big money, especially when the amount of funds is relatively low. Even if you earn 2 or 5 times the amount, it won’t change your life.
Therefore, investors tend to take higher risks in their operations, such as holding Bitcoin early on, participating in Ethereum ICOs, and so on. He said:
It is wrong to diversify investments when you are bankrupt. You must take risks, whether it is participating in new public chains, using leverage, or obtaining substantial funds. Those who give advice on diversification have gone through this themselves. Although scammers love to exploit this speculative psychology, we need to be more cautious when engaging in high-risk investments. If you truly want to enter this game, you cannot diversify your investments.
Nick Drakon: Gambling without risk control
Podcast host Nick Drakon from Defi Sparks retweeted Autism Capital’s tweet and disagreed with the above viewpoint.
He said that during his professional poker career, people around him were always looking for ways to get rich quickly. However, the idea of small bets leading to big wins is completely wrong. He believes that it is a path of lifelong suffering, a marketing myth created by brokers, exchanges, and gambling companies.
If you engage in high-risk trading and use high leverage, the most likely result is that you will repeatedly deplete your small amount of funds. Diversification and risk control are key measures to ensure your survival in a highly volatile market. If you don’t have an investment process that can withstand the test of time, you are just gambling.
Vitalik
Diversification
Diversified investment
Bill Gates
Further reading
Bill Gates AMA | Views on Web3 and Metaverse, explains why he became the largest landowner in the US
Bill Gates comments on the current economy and Boring Monkeys: Rapid economic changes in a lifetime, pictures of monkeys won’t improve the world.
