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Examples of Barbell Strategies - By Dwarkesh Patel
Investing 101: Risk management is poorly understood and even more poorly applied.
Here’s a simple framework I use to manage risk.
Imagine a barbell - weights at either end with a thin bar in the middle. In my opinion, risk is best managed in this way.
Chamath Palihapitiyax.comWhen dealing with uncertainty, build a portfolio of small bets and work on themConvex bets have more upside than downside. You lose small and stand to win big.
Daniel Vassallo • Daniel Vassallo on Applied Antifragility – Visión Periférica Podcast • Podcast Notes
Funds taking a more concentrated approach and investing in fewer companies most likely are assuming that one of their investments has an extremely large outcome while the rest either go to zero or whose exits are much more modest. This is called the power law dynamic and historically, this can be seen happening often in venture capital. Funds... See more