Learned Lately: Deadlifting And Bitcoin

Recently I was asked what's something important I've learned recently or that I have changed my mind about.

There's a few big ones, first and foremost is the idea of asymmetric risk which I have written about in the context of Bitcoin. I've chronicled my position in Grayscale Bitcoin Trust (GBTC). Bitcoin is backed by nothing other than a few touts telling us it will be a big deal. They could be right, it could be everything they say, sending the price up to $1 million per Bitcoin. If there is nothing underlying it (yet?) then there is nothing to prevent it from going to zero. A little bit invested that goes to zero is no big deal but if that little bit goes to $1 million then it would be a big deal. I've come to have a greater appreciation for this potential.

The stock market is a place to get rich slowly, which means there is no asymmetric attribute. The average return is 7-10% annually depending on what timeframe you look at. Outlier returns in a year might be 30% to the upside and 40% to the downside. The day Bitcoin hit $14,000 last week, a 52 week high, it also entered a "bear market" being down 20% briefly. It has since clawed some back.

You can invest in the stock market, but for now Bitcoin seems to be pure speculation and I don't think I have any real pushback to someone who says it's a Ponzi Scheme. Any outcome is possible, and that is the asymmetry.

I do want to include an example of what is not asymmetric risk. Someone from self-improvement Twitter whose Tweet volume far exceeds his wisdom said that lifting weights has asymmetric risk because you can get so much out of it without having to put a ton of time into it. That description is true, I lift twice a week for about 45 minutes per and I believe the benefit to me far outweighs the time spent. That's not asymmetric risk though. It's probably better thought of as asymmetric benefit. This example may not resonate with you but to the extent we confront various asymmetric opportunities in our lives, it helps to know which ones actually involve risk and which ones don't.

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