Stock & Bond Correlations

With these concepts in mind, let’s review the data in the chart above. As you can see, venture capitalists rarely pick the huge winners you hear about non-stop. Under 4% of dollars invested go to businesses that multiply by at least 10X. Venture capital investing is riskier than investing in public companies since many startups don’t have sales. There are also bigger rewards with CV investing. Therefore, you can argue your odds of getting a 10x stock are even lower than 4%. There is a possibility that all these risky stocks retail investors love go to zero.

Furthermore, it’s possible that there will be fewer big winners in the tech sector the next decade that there were in the prior decade. Everything is cyclical. If you are looking for amazing returns in the exact same fashion as the masses, then it’s not going to work out. You need to look in new places. Furthermore, the very act of looking for a huge winner is too popular. Now might be the time to play it conservative. If you can find a safe consumer staples stock that can return 10% per year with low volatility, take that. You won’t regret such a decision. There is always time to find huge winners. Don’t be impatient. If you take a big hit, the game is essentially over. Staying in the game is extremely valuable. Don’t take in for granted.


Lately, stocks and bonds have been correlated. If you are worried bonds won’t save you from volatility, then change up your allocation. Don’t be like a deer in headlights. Some investors are looking for the next Apple and Amazon. It’s unlikely that the next group of winners will look like the last one. It might not even make sense to look for such winners. There might be fewer in the future. It was already very tough to find them in the prior decade.  

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