Gyroscopic Investing

Cash is an inefficient drag during bull markets and as valuable as oxygen during bear markets, either because you need it to survive a recession or because it’s the raw material of opportunity. Leverage is the most efficient way to maximize your balance sheet, and the easiest way to lose everything. Concentration is the best way to maximize returns, but diversification is the best way to increase the odds of owning a company capable of delivering returns. On and on, if you’re honest with yourself you’ll see that a little inefficiency is the ideal spot to be in. link

vincent_c wrote: ↑Fri Jul 02, 2021 8:45 pm

Kriegsspiel wrote: ↑Fri Jul 02, 2021 5:57 pm

Cash is an inefficient drag during bull markets and as valuable as oxygen during bear markets, either because you need it to survive a recession or because it’s the raw material of opportunity. Leverage is the most efficient way to maximize your balance sheet, and the easiest way to lose everything. Concentration is the best way to maximize returns, but diversification is the best way to increase the odds of owning a company capable of delivering returns. On and on, if you’re honest with yourself you’ll see that a little inefficiency is the ideal spot to be in. link

You'll have to read the article for more context.

I remember working for a major manufacturing company when I got out of the military, and (apparently) like all other manufacturers, they were fully into the lean JIT logistics. Coming from the military, that was almost the antithesis of everything I had known, so adjustments had to be made (by me). They also didn't like hearing young Kriegsspiel say "fuck" so much.

I feel like this way of thinking is just a poorly defined form of efficiency. More like efficiency is probably not the right metric for determining what is the best investment approach.

Although I do not think that there is a universal allocation right for everyone, I do believe there is a universal philosophy and rules that anyone can just apply to come up with their ideal investment approach. But even on here I think an ideal approach may not be practical to most.

The best example that comes to my mind is how people can divide their money into various buckets or different portfolios. In my mind since money is fungible it is the overall exposure that matters. There must be some on here that think they run a PP but the PP is only one of their portfolios and I’m not talking about VP philosophy.