Question:

"Bit Brain what do you think of the Buffet idea that diversification is a bad idea? That all the good positions and bad positions average out so you never make a profit? I'm sure you'd disagree..."

Answer:

I think Buffet is an absolute buffoon. I'm sure the word "buffoon" was derived from his name.

Okay, I'm kidding, but in all seriousness: Buffett is no doubt a very experienced and knowledgeable trader, I just can't understand why the man keeps commenting on crypto. He knows nothing about it (by his own admission), and it really shows. I've said 100 times that applying a traditional mindset to crypto simply does not work; this guy is the epitome of applying the wrong mindset to crypto.

I lose a lot of respect for people who are willing to tramp on other to get want they want, as well as people who attribute their luck to skill. Buffett is a shrewd investor, no doubt, but he's not scared of a hostile takeover or two. When people say "it's nothing personal, it's just business" it send a chill down my spine. Perhaps they forget that the purpose of a business is to serve its community. "Just business" is a weak excuse to bully others, I look down upon those who use it and I call their integrity into question. Even Trump can run a business that way (so it can't be that hard). Ironically sociopathic tendencies seem to help in a world that rewards those who don't care about stepping on their fellow man. I want nothing to do with such people. Buffett has also had more than his fair share of good luck. Had Berkshire Hathaway failed for some reason, he would be a nobody. This is also similar to Trump.

But for whatever reasons, Buffett did make it big. I don't believe it was all luck and backstabbing, I think the man does have real business acumen.

Diversification is another, more broad subject. My long intro above is to give background to what I say now. Buffett made most of his money through only a few companies. He also had a lot of say in those companies. The companies succeeded. It's not hard to see why he believes in focussing on one place. But to the other 7 billion people on Earth it isn't that simple. Most of us have little say and even less purchasing power. I have almost no chance of getting a decent amount of shares in a major growing company within my lifetime. People like Steve Jobs or Bill Gates are the exception, not the rule. "If they can do it, why can't I?" is a lie that we like to tell ourselves. There are millions of reasons why the average man can't do it, but wrong place and wrong time are probably the two most important of those.

I diversify to improve my odds. I need to try to get the wrong place/wrong time equation working in my favour. If I put all my money into e.g. Litecoin, then I am only in one place (and at one time). If Litecoin doesn't "Moon", I've wasted my time. Might as well have put in in a fixed deposit at the bank.

I see what Buffett means though and he IS right - with typical asset classes. Not with crypto. Crypto does Moon. Often. BUT: right place and right time still apply. Almost every crypto coin Moons. Seriously. If it's more than a year old, it's Mooned. If I buy $100 of 10 crypto coins or tokens and hold them for a year, at least one will probably Moon. When it does, it is likely to become worth more than everything I put in to start with. So if my one coin becomes worth say $2000, then it really doesn't matter if my others go to $0. I still make a profit. My holdings don't cancel out. Don't try that in the non-crypto world, it won't work.

Not to be an optimist but...

If you hold 10 cryptos for a year you'll probably have a few of them Mooning. In fact - I pick many of my coins specifically because they haven't mooned recently (a coin can Moon several times) or even at all. With crypto it's often just a matter of time. I hold many coins that I expect to Moon in the short to medium term: CargoX, Covesting, LociCoin, MyWish, HOQU. Those have all never Mooned and are still new. Other coins I've held for longer, or they're older, but I'm just holding and waiting patiently: TenX is probably the best example of this. Bitcoin Gold is another good one. THEKEY is a more recent one. Then there is NEO, always NEO. When that coin gets recognised for what it is...

There is more method to my madness

I have another trick up my sleeve to further weight the odds in my advantage. I don't buy average coins. There are over 1000 shitcoins out there. Literally 1000+. I don't want those. And yes, the Litecoin investor thinks that Litecoin is great (it really isn't, even it's creator sold his holdings) and the Ripple investor thinks that Ripple is fantastic (he's an idiot buying that centralised rubbish) and the Cardano investor thinks that having a coin made by guys with thick glasses and lab coats is the way to go (Cardano is still good, but not nearly as good as they think it is). I don't have a particular affiliation to any coin. I'm coin agnostic. I buy what is a genuinely good deal. This puts me in a better position to pick up the potential "Mooners" and further improve my odds. It's hours and hours, scratch that, days and days of hard work, but it should pay off when the market booms properly.

And then there is NEO. Always buy NEO!

Conclusion

Buffett is right in principle, but only in traditional markets. Test my hypothesis. Pick any 10 coins over a year old and see how they have done over the last year. Work out what you would have made by splitting your investment into the ten of them a year ago. I have no doubt that you will sit with a tidy profit especially if you consider that you would have sold, or partially sold a coin that was in the "Mooning phase". Then consider that you may have missed out had you only picked one.

Advice for the day: listen to everyone, but filter what you hear. There is a lot of bad advice out there and a lot of not applicable advice too. If in doubt, come ask Uncle Bit Brain. Or just buy NEO (which I will probably suggest anyway).

Yours in crypto,
Bit Brain

DISCLAIMER:
I am neither a financial advisor nor a professional trader/investor. This is not financial advice, investment advice or trading advice. Unless otherwise stated, all my posts are my opinion and nothing more. Crypto is highly volatile and you can easily lose everything in crypto. You invest at your own risk! Information I post may be erroneous or construed as being misleading. I will not be held responsible for anything which is incorrect, missing, out-of-date or fabricated. Any information you use is done so at your own risk. Always Do Your Own Research (DYOR) and realise that you and you alone are responsible for your crypto portfolio and whatever happens to it.