"The way to become rich is to put all your eggs in one basket and then watch that basket." - Andrew Carnegie

[The Sovereign Individual]

What do you think about this quote ?

Andrew Carnegie was a Scottish-American industrialist who led the expansion of the American steel industry in the late 19th century. During his lifetime, Andrew Carnegie had a peak, inflation-adjusted, net worth of $310 billion. That's enough to make him the 4th richest human being of all time.
Source : Andrew Carnegie Net Worth

 

[Golden Fleece]

There are a number of investment myths widely assumed to be irrefutably correct. Diversification is one of them.

If you are an average investor, then proper diversification is usually a wise choice. But if you are an astute and knowledgeable investor, you can become filthy rich by placing most of your wealth into a single investment when you are absolutely certain that you are correct. The film "The Big Short" proves Andrew Carnegie correct.

His long-term bet, exceeding $1 billion, is accepted by major investment and commercial banks but requires paying substantial monthly premiums. This sparks his main client, Lawrence Fields, to accuse him of "wasting" capital while many clients demand that he reverse and sell, but Burry refuses. Under pressure, he eventually restricts withdrawals, angering investors, and Lawrence sues Burry. Eventually, the market collapses and his fund's value increases by 489% with an overall profit (even allowing for the massive premiums) of over $2.69 billion, with Lawrence receiving $489 million alone.
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https://en.wikipedia.org/wiki/The_Big_Short_(film)

 

[Mercury]

Golden Fleece said:
But if you are an astute and knowledgeable investor, you can become filthy rich by placing most of your wealth into a single investment when you are absolutely certain that you are correct.
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Are you referring to Dogecoin? smi(&%

 

[Golden Fleece]

Mercury said:
Are you referring to Dogecoin? smi(&%
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No, I said "you can become filthy rich by placing most of your wealth into a single investment when you are absolutely certain that you are correct." That is a reasoned decision based on superior knowledge of the market.

No one can legitimately say that they are absolutely certain that they are correct in regard to any crypto speculation. Moreover, by its very nature, crypto is a speculation, not an investment, so you would never place all your eggs in one basket in regard to a mere speculation.

Last edited: May 10, 2021

 

[troubled soul]

I believe in 7 sources of income. Rather than put in one Basket.
I believe most wealthy people and media/book literature show us a half-truth.
Nobody can have a single source of income (One basket Investment).
If you look into their portfolio deeply. You will surprise. (Who claim they have only one investment)

The world is very uncertain. Nobody can predict what will happen in the future?
Better to diversify your portfolio.

 

[Mercury]

Golden Fleece said:
No one can legitimately say that they are absolutely certain that they are correct in regard to any crypto speculation. Moreover, by its very nature, crypto is a speculation, not an investment, so you would never place all your eggs in one basket in regard to a mere speculation.
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What you wrote doesn't apply only with crypto (which is obviously a risky investment for way higher potential returns), it is valid with any kind of markets and anything in life. Even with the best probability/stats rates nobody can predict that an event will happen with 100% certainty.

Recent example is Covid: because of an improbable but possible event, a lot of people worldwide are losing their business/life savings.

Golden Fleece said:
No, I said "you can become filthy rich by placing most of your wealth into a single investment when you are absolutely certain that you are correct." That is a reasoned decision based on superior knowledge of the market.
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How/When can you be absolutely certain that you are 100% correct? Do you have a workable crystal ball? If so, please share!

 

[JohnLocke]

It is the exact opposite of what everyone else say, and also the old saying, never put all your eggs in the same basket 🙂

I don't know, would never do it regardless if it is this guy, Warren Buffett or any other so called Guru. I trust my own feelings.

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[Golden Fleece]

Mercury said:
What you wrote doesn't apply only with crypto (which is obviously a risky investment for way higher potential returns), it is valid with any kind of markets and anything in life. Even with the best probability/stats rates nobody can predict that an event will happen with 100% certainty.

Recent example is Covid: because of an improbable but possible event, a lot of people worldwide are losing their business/life savings.



How/When can you be absolutely certain that you are 100% correct? Do you have a workable crystal ball? If so, please share!
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Like I said, watch "The Big Short." Some financial events are a near certainty and they can make you filthy rich.

But such a strategy is not for the faint of heart -- and the exact timing is usually the main problem, which can create problems with psychology, willpower, and solvency.

The one thing that you can count on in life is mass stupidity. Be sure to be on the other side of that trade. 😉

Last edited: May 10, 2021

 

[12345]

Better to decide on your own than listen to business guru even if it is Bill Gates, usually they don't tell what they really think but try to create good image of themselves. Personally I prefer conservative approach and not put all eggs in 1 basket

 

[JohnLocke]

Golden Fleece said:
But such a strategy is not for the faint of heart -- and the exact timing is usually the main problem, which can create problems with psychology, willpower, and solvency.
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That is the general issue with all speculation.

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[Golden Fleece]

The Sovereign Individual said:
Sure ! But on this quote, you think Andrew Carnegie just tried to create a good image of himself ? How it could be ?
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I would like to see the context of that quote by Andrew Carnegie. It likely applied to owning your own business over which you have total control. That is how most people get very wealthy, i.e., their own business or real estate.

He certainly did not mean a speculation and likely did not mean your average investment.

 

[luckycriminal]

Golden Fleece said:
I would like to see the context of that quote by Andrew Carnegie. It likely applied to owning your own business over which you have total control. That is how most people get very wealthy, i.e., their own business or real estate.

He certainly did not mean a speculation and likely did not mean your average investment.
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That's it.

I believe it varies depending industry, context, etc.:
You can diversify with stocks or crypto, if you have enough money, or you can buy only BTC since it is the ''safest''.
But with business or other goals trying to achive many things will burn mental capital and conecntration, therefore achieving less, simplicty is key: ''The man who chases two rabbits, catches neither''.

As everything, there's no black or white, you just have to try out different things and see how it turns out for you, before trying out get enough info and past experiences to make better decisions too.

 

[Golden Fleece]

The Sovereign Individual said:
Investment is for long-term, speculation is for short-term.
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That is not correct. A speculation can be short-term, medium-term, or long-term. So can investments. The defining characteristic between the two is risk, not the hold period.

In the world of finance, speculation, or speculative trading, refers to the act of conducting a financial transaction that has substantial risk of losing value but also holds the expectation of a significant gain or other major value. With speculation, the risk of loss is more than offset by the possibility of a substantial gain or other recompense.
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https://www.investopedia.com/terms/...e world of finance,gain or other major value.
For example, plenty of people are holding crypto long-term and yet it is most definitely a speculation. They could lose all their crypto wealth tomorrow, or at any point in the future, under a wide variety of different circumstances.

 

[khinkali]

I don't think it has to be either one or the other.

Put all your eggs in one basket and then watch that basket. Do not scatter your shot. The man who is director in half a dozen banks, half a dozen railroads and three or four manufacturing companies rarely amounts to much. He may be director of many, but these should all be of the one kind which he understands. The great successes in life are made by concentration.
- Andrew Carnegie
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Let's look at some Factor Analysis on “Women Track Records”. It's very difficult to be good at both the 100m sprint and the marathon. This should not be surprising.

On the other hand if you don't have some big Alpha discovery and you want to protect your assets, then listen to Ray Dalio:

Personally I say if you're 20 years old and you have a lot of energy, concentrate your efforts to maximise your chance of success. If you're nearing retirement and you do not want to risk losing your capital, go with Ray Dalio.

 

[Golden Fleece]

Some of the best financial (and life) advice you will ever get, from the film "The Gambler" --

 

[fortunespeculator]

I think speculating with the pareto principle is the right idea .You speculate with 20% of your net wealth.That should give you 80% of your returns.