Three Elements of Investing
In the previous article, I have shared with you some of the views in the new book "Value" by Zhang Lei of Hillhouse Capital.
Zhang Lei is a venture capitalist I have been paying close attention to. Many of his views are very inspiring, some of which I have personally experienced. Yesterday I saw a video of Zhang Lei being interviewed. In this interview, he talked about the three elements he summed up in the investment process:
The role of asset allocation in investment accounts for 70%, the role of product selection in each asset track accounts for 20%, and the investment time accounts for only 10%.
What does this passage mean? It means that what field to invest in, and how to allocate and distribute in each field play a role of 70% in the return of investors' wealth, which is almost overwhelming; Only 30%, only plays a small role.
When I heard this passage, I immediately took a look at my investment, and the development was indeed the same.
I have invested in many fields (including stock market and digital currency, etc.), and the initial investment in each field is basically the same. But to sum up, digital currency has brought me the greatest benefits, and this field has brought me far more benefits than any other field.
This is exactly what asset allocation does.
If I think about the process of investing in these varieties in the field of digital currency, I find that the returns of many varieties invested in this round of bull market are not as good as Bitcoin and Ethereum. Bitcoin and Ethereum are recognized as big white horses by almost all investors in the currency circle. Investing in these two big white horses does not require a deep understanding, let alone a wealth of knowledge.
In other words, for ordinary investors, investing in digital currency does not require too much knowledge, nor does it require much effort to choose varieties. It is enough to invest in these two big white horses.
This seems to show that the selection of varieties in this field does not play a big role, just choose the simplest and easiest varieties.
Next, I thought about the process of investing in Bitcoin and Ethereum.
From the perspective of hindsight, it seems that investing in Bitcoin and Ethereum does not even matter when it enters the game. Counting from the launch of Bitcoin in 2009 and the launch of Ethereum in 2015, until 2020, buying Bitcoin and Ethereum at any point in the past few years (even at the peak of the bull market) is now making money .
Of course, if we analyze in detail, we can definitely say that if you buy in the XX bear market and sell it in the XX bull market, the profit will reach XX times, which will be much higher than the blind investment method I mentioned above. But this method of choosing an opportunity to buy still needs to improve cognition, overcome psychological obstacles, and do a lot of homework.
So brainlessly buying at any point of time and getting it now can make a profit. This almost reduces the importance of choosing the investment time to zero, and it is applicable to fools.
So to sum up, in the past 10 years, as long as our ordinary investors choose to invest in digital currency, they are 70% sure that they can achieve a huge increase in wealth. Among digital currencies, they only need to choose the easiest Bitcoin or Ethereum. It is a sure win. If you spend a little more time thinking about when to buy and when to sell on this basis, it will be the icing on the cake.
Zhang Lei's analysis of investment in this passage is really incisive.
We can even extend this principle to other areas of digital currency, such as DeFi, which I am extremely optimistic about. I found it applicable as well.
As long as we chose the DeFi track last year, we can grasp the main wave of this wave. On the DeFi track, as long as we catch its biggest big white horse, Uniswap, there will be good returns. As for investing in Uniswap, during the period when it issued coins, any point of buying and getting it is now profitable.
This once again proves Zhang Lei's summary of the three elements.
If we continue to expand this idea and think about the future investment layout, it seems that we can outline a picture in advance: seize the potential track, lay out the top projects in it, buy when the price bubble is not serious, and then follow the trend Forward. This is enough to ensure that we have a good return on investment.
