Strategic Mediocrity in Investing

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(Edited)

Strategic Mediocrity in investing.

  • I was listening to a PodCast about a bond fund manager who purposefully tried not to be number one on the list of Bond Fund performance each year because he thought he would do better over time by focusing on preservation of capitol and small earnings opportunities.
  • The Podcaster interviewed him for the Podcast and several things he said about managing a bond fund seemed equally applicable to cryptocurrency investing.

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The first rule of investing is don't lose money.

  • Most of us are well acquainted with this famous first rule of investing.
  • This is of course followed by the second rule of investing: Don't forget rule number one.
  • It was within this framework that I listened to this podcast and the famous bond fund manager explained his strategy.

Study the big winners

  • He studied the performance of all his competition and noted that those that were in the top 3 performing bond funds on any single year were notably absent from the top ten year performance list, and many of them changed jobs frequently.
  • This was initially counter intuitive, as you would think that someone who achieved the ranking of top bond fund manager one year would also perform well the following years.
  • But math doesn't lie, and none of the leaders were in the top ten at ten years and they rarely graced the top ten again after getting there one time.

So whay would big winners win big one year, but do poorly over long periods of time like ten years?

  • So he set about to find out why, and to answer this question he looked at what they invested in over time, and read their articles which talked about what they invested in over a ten year time period.
  • And what he found was risky, and at times reckless behavior.
  • Unfortunately the bond fund managers who ranked number one on any random year were investing in projects with a low probability of success, but high return on investment projects if they succeeded.
  • And the year one project was successful the bond manager was on top of the rankings.
  • But because these type of projects are mathematically more likely to fail, they failed the majority of the time and lost money, lots of it.

Ouch...sounds familiar..why?

  • Now for those of us in the cryptocurrency market we commonly see people invest in 10 or more low probability of success, but potentially high reward projects.
  • This strategy can make you a lot of money.
  • It can even make your rich.
  • The big problem is most of the time it doesn't work, you lose money and you go broke.

Repeat after me: Math doesn't lie

  • The majority of people investing in low probability of success, high return on your investment projects lose all their money.
  • What part of low probability of success do people not understand?
  • The big problem is everybody in cryptocurrency knows a Guy, or a Gal who gotr rich this way... But more likely then not they actually know a Guy or a Gal, who knows a Guy or Gal, who knows someone who got rich this way.
  • And for all we know many people are Knowing the same Guy or Gal" who got rich betting on low probability of success investments.
  • Meanwhile most people, the majority of people, investing this way lose.
  • Investing in High Probability of success, and low percentage return on your investment wins the performance race overtime.
  • What part of high probability don't investors understand?

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Strategic Mediocrity in investing wins!

  • High probability and low return on your investment investing isn't sexy or exciting, but it is profitable.
  • And it respects the first rule of investing, Don't lose money, and the second rule of investing; Don't forget rule number one..
  • Perhaps you should seek sexy and exciting feelings in sexy partners, instead of investing?
  • So when someone tells you the return on your investment in HBD at 20% staking or 30% being a liquidity provider, is boring and not sexy..remember it's a safe and high probability of success investment, with a low probability of failure.
  • And thats what we want from our investments, boring, regular gains.
  • We will get our excitement and sex from other sources.

@shortsegments

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29 comments
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Well stated! Slow grinds usually are better than a big hit.

6 years in crypto, I've had one big hit, and it wasn't Earth Shattering and that was buying BNB when Binance was new, and I thought it would do well. I bought quite a few under $1.

Pretty much everything else has been a grind.

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(Edited)

I like the metaphor, you are talking trading right?
No sexual inuendo at all.
:)
Sorry you Americans intrigue me with your metaphors and idioms.
Love them and trying my best to learn them.

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I have to agree with @whatsup...
English is full of words with 5 or more meanings, websters dictionary is fascinating for the different meanings of written words, but I also think a lot of popular culture is sexually oriented because sex sells so it is used even in tire advertisements.... I could never figure out why there needed to be a woman in a bikini in a tire advertisement, but she was there to get me to look.. but I don't know if the=at added or distracted from the tire Advertisement...Ha Ha

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So true. they throw that message at us a lot, and so many things take on double meanings, because we are also afraid to just call it how it is, so we talk around it. Such a strange and amazing culture! lol

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I prefer it boring long but steadily bringing in passive income with compounding effect. As long as there's consistent growth, you wouldn't find me running after the hot sexy ones lol.

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I prefer it boring long but steadily bringing in passive income with compounding effect.

Yes, when it comes to investments...Boring is Good.
:)

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I think the first point is the most important point if you want to generate wealth and grow your funds. Protecting against losses is very important. If you lose 20%, you need 25% to get back to the initial starting point. The rest of the points are basically doing research.

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EXACTLY!

I think the first point is the most important point if you want to generate wealth and grow your funds.

Don't lose money.

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Good words of wisdom there. It makes it even easier to stick with the 'boring' consistent winners when it's on auto.. HBD anyone?? :P

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(Edited)

HA HA Ha
HBD is a perfect example, safe, secure, ample APR!

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True safe secure and ample APR...
see how that even has sexual inuedo such as ample bosom..now ample APR... Ha HA
Now you have raised my awareness and I will probably see it everywhere, because they say you find what your looking for...

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Focusing on good projects and grinding slowly with time everything will add up and time is most important factors there we all want to get rich quickly

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