💾 Archived View for tilde.cafe › ~stack › gemlog › 2023-08-17.diversification.gmi captured on 2024-03-21 at 15:29:58. Gemini links have been rewritten to link to archived content
⬅️ Previous capture (2023-09-08)
-=-=-=-=-=-=-
In a broken society, pretty much all axioms repeated over and over by 'experts', are falsehoods. Diversifying your investments is one of them. Diversifying your investments, or efforts, is just plain dumb. You should focus on what you understand - or love doing - instead.
The only thing diversification accomplishes is that you only lose about as much as the rest of the sheeple -- be it time or money.
How can that be true? Wouldn't anyone notice by now? Well, a few of us did. But the reason diversification looks good is yet another consequence of our broken economy: inflation. Inflation, unlike what they tell you, is not greedy businesses gouging poor customers. It is a simple monetary phenomenon: when money is being debased by a corrupt government, all assets prices rise in ever-increasing _nominal_ terms. The numbers are higher, but not the actual value. So you get more 'money' from your investments, but it buys less then what you started with. Where does that stolen money go? The State gives it to some billionaire via a bailout or through some 'program' that looks good on paper. Capital-ism.
If there was a strategy that generated positive returns with zero effort, wouldn't you think Wall Street would find a way to game it? Or would Wall Street exist if anyone could put money into a box and take more out, as many times as they wanted? Clearly, diversification as a winning strategy is a myth.
Have you ever played poker? There is a saying that if you don't know who the patsy is at the table, you are it. Speaking of poker, a game of skill, the only way you win is through careful management of your resources. Do you diversify? No, you wait until you know what's going on, and then you go ALL IN!
IRL, the winning strategy is likewise, stay out of things you don't understand, and focus on one or a few things you can actually be good at. Then go ALL IN.
An interesting corollary: you should stay out of real estate, unless that is your business. All in (or worse yet, deep in debt) on something you don't understand is by far the stupidest thing to do. But that is another story.