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Is Diversification a Trap for Investors? Autism Capital: Investing Involves Risk, Diversification Doesn't Guarantee Profit

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Is Diversification a Trap for Investors? Autism Capital: Investing Involves Risk, Diversification Doesn

Youtuber and blogger Alex Voigt's argument against diversification, posted on January 7th, sparked a heated discussion. He believes that by following Warren Buffett's advice to diversify, Bill Gates gave up a majority of his Microsoft shares, leading to a significant decrease in Gates' assets in the future.

Most of the comments below his post criticized his viewpoint, and Ethereum founder Vitalik also retweeted the article, stating that it was terrible advice.

Amid the debate on Buffett's diversification strategy, what financial advice did Vitalik offer?

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However, some in the crypto community believe that this blogger's investment philosophy is entirely applicable to the cryptocurrency space.

Autism Capital: Must Take Risks, Diversification Won't Make Money

Autism Capital tweeted that so-called risk management and diversification cannot make big money, especially when the amount of funds is relatively low, even if you earn 2 times or 5 times, it will not change your life.

Therefore, investors tend to take higher risks in their operations, such as holding Bitcoin early on, participating in Ethereum ICOs, and so on. He said:

It is wrong to diversify investments when you go bankrupt. You must take risks, whether it's participating in new public chains, using leverage, until you have substantial funds. Those who give advice on diversified investments have all been through this. Although scammers always exploit this speculative psychology, we must be more vigilant when engaging in high-risk investments. If you really want to enter this game, you cannot diversify your investments.

Nick Drakon: Gambling Without Risk Management

Defi Sparks Podcast host Nick Drakon retweeted Autism Capital's tweet and disagreed with the above view.

He said that during his professional poker career, people around him were always looking for ways to get rich quick, but this small-to-big idea is completely wrong. He believes this is a path to a lifetime of misery, a marketing myth created by brokers, exchanges, and gambling companies.

If you engage in high-risk trading and use high leverage, the most likely outcome is that you will repeatedly deplete your small amount of capital. Diversification and risk management are key means to ensure your survival in high-volatility markets. Without an investment process that can withstand the test of time, you are just gambling.