Chamath Palihapitiya, chairman of spaceflight company Virgin Galactic who bought one million Bitcoin (BTC) in 2013, is outlining his investing strategy for spotting the next big trade.
Palihapitiya says great investors focus on slugging percentage, which considers risk management and position sizing, rather than on batting percentage that focuses only on the returns and does not consider the level of risk involved in achieving them. He says smart investors find one big winner and then ride it hard.
“Investing 101: Don’t confuse slugging percentage with batting average. The former is being the cool kid in high school – you’re a rare thing and everyone wants to know the secret. The latter is like going to the prom with your mom. Everyone talks about it, but not kindly.”
“[Savvy investors] know when to capitulate, buy up, when to be ‘risk on’ and ride the winners. They care more about owning a big piece of one winner vs irrelevant pieces in many winners.“
Palihapitiya made a big bet on Bitcoin in 2013. At the time, the price of the king coin was only around $80. With the flagship cryptocurrency currently hovering at over $10,000, his investment is now worth over $10 billion.
For example, I’ve made some great bets before but nothing compares to my bitcoin bet in 2012 and sizing up…
PS, HODL. ?
— Chamath Palihapitiya (@chamath) September 23, 2020
Palihapitiya also says that since the traditional approach of investing in equities and bonds for retirement no longer works, it is a good idea to increase exposure to alternative assets like crypto, art, cars, and baseball cards.
He says most people currently have between 0% to 5% investments in alternative assets, but this may change if bonds continue to return zero.
Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Featured Image: Shutterstock/Tithi Luadthong