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I cannot understand why anyone, at this point in history, would spend more than ~10% of their investment money on any assets that they would expect to take more than 3 years to double in value.
Ah, that position makes a lot of sense. Here's why I'm still in boring market-cap-indices rather than high-growth tech companies:
* I think public equity markets are weakly inexploitable - i.e. I expect tech stocks to outperform but not that the expected value is much larger than a diversified index
* Incumbents often fail to capture the value of new trends, especially in tech. The sector can strongly outperform without current companies doing particularly well.
* Boring considerations about investment size, transaction fees, value of my time to stay on top of active trading, etc.
* Diversification. Mostly that as a CS PhD my future income is already pretty closely related to tech performance; with a dash of the standard arguments for passive indices.
And then I take my asymetric bets elsewhere, e.g. starting HypoFuzz (business plan).
Incumbents often fail to capture the value of new trends, especially in tech. The sector can strongly outperform without current companies doing particularly well.
Strong agree on this. But while they may capture only a fraction of the growth, I do expect that they will capture enough to grow substantially (this is, in part, helped by the overall growth I expect to be massive). But there is always a chance that even that doesn't happen. I do wish I had a better sense of what current upstarts are well-poised to make an even larger profit in the near futur... (read more)
Of course, it's easy for someone to claim that something will double in value quickly, and sometimes things even double in value quickly, despite being built on hot air (textbook example, the dutch tulip rush). The important trick is to use first-principles, real-world reasoning to identify the few opportunities that actually can generate real value that quickly. The world would be very different if such companies didn't exist. I invested in Tesla, Microsoft, and Google using such real-world, first-principles reasoning, and these companies has grown at such a clip during the time I have been invested in them (which has been for ~1-3 years depending on the specific asset)