The truth about investments is always cruel and realistic. The majority of intelligent and exceptional investors spend their whole lives pursuing “excess returns,” only to find that they cannot outperform the S&P 500 index. This article, derived from the writings of “Trap-Locked Xiao Li,” has been organized, compiled, and written by Deep Tide.
(Background information:
Buffett’s Annual Speech: 800-word Highlights + Full Text, 2024 Berkshire Hathaway Shareholders Meeting
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(Additional context:
Bitcoin’s market value surpasses Berkshire Hathaway and Tesla, reclaiming its position as the tenth largest in the world! Analysts issue warnings: No significant pullback in over 100 days..
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Recently, with the annual Berkshire Hathaway shareholders meeting led by the stock market guru Warren Buffett, a picture has flooded social media moments: Over the past 20 years, Warren Buffett’s investment performance yielded 554%, which falls short of the S&P 500’s 568%.
Is it better to buy the S&P 500 or Bitcoin?
The S&P 500 represents the top 500 listed companies in the United States, accounting for approximately 80% of the total market value of the U.S. stock market, also known as the “beta.”
The truth about investments is always brutally cruel. The majority of intelligent and exceptional investment managers spend their entire lives pursuing alpha (excess returns) but ultimately find that they cannot outperform the benchmark index (beta). For most investors, it is better to start by passively investing in index funds and passively accumulate wealth.
Turning to the cryptocurrency market, how many assets have outperformed Bitcoin? How many diligent traders and top fund managers have ultimately achieved better performance than Bitcoin? From what I know, there are very few.
The reason is simple. Like many others, they believed that Bitcoin’s market value was too high and not an opportunity for ordinary people. Even if it were to double in value, it wouldn’t change much. They needed to take risks for greater returns. Consequently, they went all-in on various other cryptocurrencies, only to naturally lose Bitcoin and end up with a handful of other cryptocurrencies, becoming the liquidity for others to exit.
A similar story has unfolded with Solana. SOL has been a high-beta asset with predictability in this cycle, but like Bitcoin, its market value is too high and lacks the allure of a tenfold increase. It is far less attractive than various meme coins, leading investors to lose patience and exchange their cherished SOL for various meme coins. Eventually, they find that they can no longer exchange them back for an equivalent amount of SOL.
Behind the tremendous achievements lies the lament of a group of small retail investors.
During a bull market surge, most people are excessively optimistic, believing that they are investment geniuses capable of capturing super alpha within this cycle, achieving social advancement. However, when the tide recedes, they realize that they are just ordinary individuals oscillating between arrogance and inferiority. For ordinary people, it is better not to easily give up the beta in hand.
Investing is no different from love.
Many women/men are dissatisfied with their current boyfriends/girlfriends, always thinking they can find someone better, only to realize that what they once had might have been the best.
Just like in “Charlotte’s Web,” Charlotte initially despised Wilbur and believed that Templeton was the perfect goddess. Did Charlotte really love Templeton? Not necessarily. It may have just been an obsession with something she couldn’t have. When Charlotte finally got together with Templeton, she discovered that Templeton wasn’t as great as she had imagined. She only loved an idealized image.
In the end, the time-traveling Charlotte saw the truth and chose to cherish the person in front of her. However, outside of the movie, most people do not have the opportunity to make a new choice. It is just like a pile of worthless coins in hand that can never be exchanged back for the Bitcoin they once had.
Therefore, from the beginning, do not lose the person who treats you well, and do not lose your Bitcoin.
Understand yourself and learn to be content.
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