THIS. As much as I wish I put all my money into NVDA when I bought it, I’m happy to have a lot of diversity in high tech IT. The daily swings are not nearly as bad and aim not biting my fingers all day long.
Sure, but not diversifying is also one of the most efficient ways to go broke. Which is something that diversifying will make much more difficult.
Also, full baloney. I was not diversifying for many years and it indeed made me great money (thanks MSFT). But when I started getting spooked and diversified, guess what?
I still ended up doing pretty well, even if it wasn’t on the same level as before (look up MSFT share price change between the start of 2017 and 2021). But it was so much safer and reliable, going broke wasn’t as much of a concern, and I knew I was much more secure in case of a downturn. Winning on risky triple digit percentage gains feel great, but I would rather take much safer diversified 50-60% gains over a 3 year period instead.
Not saying that those 50-60% gains are even close to what I would expect from truly safe plays. But safety and risk is a spectrum, and you have more choices than just “fully diversified super safe index funds” and “all-in on one single ticker.” You can adjust and make things diversified and safer than all-inning on a single ticker, while still maintaining some amount of risk that would allow for outsized gains.
Wealthy folks aren't diversified, because they have _control_ (and knowledge) over their particular investment (ie company founders).
Stock investors do not have the luxury of control, thus they must diversify.
And generally that's what the wealthy do. They go all-in on their own company, grow it to incredible returns, then use those returns to be invested in a diversified manner to grow further. Other stocks, realestate, angel investing, etc.
Most of the billionaires are like this. Or if you're Warren Buffet, you invested in a diversified manner, because he didn't control the companies he owned.
bdangubic|1 year ago
filoleg|1 year ago
Sure, but not diversifying is also one of the most efficient ways to go broke. Which is something that diversifying will make much more difficult.
Also, full baloney. I was not diversifying for many years and it indeed made me great money (thanks MSFT). But when I started getting spooked and diversified, guess what?
I still ended up doing pretty well, even if it wasn’t on the same level as before (look up MSFT share price change between the start of 2017 and 2021). But it was so much safer and reliable, going broke wasn’t as much of a concern, and I knew I was much more secure in case of a downturn. Winning on risky triple digit percentage gains feel great, but I would rather take much safer diversified 50-60% gains over a 3 year period instead.
Not saying that those 50-60% gains are even close to what I would expect from truly safe plays. But safety and risk is a spectrum, and you have more choices than just “fully diversified super safe index funds” and “all-in on one single ticker.” You can adjust and make things diversified and safer than all-inning on a single ticker, while still maintaining some amount of risk that would allow for outsized gains.
UncleMeat|1 year ago
itchyouch|1 year ago
Stock investors do not have the luxury of control, thus they must diversify.
And generally that's what the wealthy do. They go all-in on their own company, grow it to incredible returns, then use those returns to be invested in a diversified manner to grow further. Other stocks, realestate, angel investing, etc.
Most of the billionaires are like this. Or if you're Warren Buffet, you invested in a diversified manner, because he didn't control the companies he owned.