My point is, the $ sum doesn't matter, all that matters is the CAGR and the percentage of your total capital that the portfolio constitutes. I think that the logic there is so obvious so as to not need further explanation. (And while it might be psychologically harder to lose, say, 1 million USD out of a total of 2 mn – especially as that sum would in all likelihood be the result of many years of hard work and savings – 1k out of a total 2k is the exact same thing, just at an earlier part of the snowball accumulation process – and massive ("permanent") losses here are just as harmful as at any other stage.)
Why would one need to accumulate X amount of dollars before starting one's compounding?
Isn't the whole point of investing to compound one's money?
All massive things start from some initial grain.
The only point in not diversifying early on, as I see it, is to get just that learning experience of how horrible it feel to lose everything or nearly everything. (And this result – the worst of results – is of course better to experience when the capital hasn't yet grown large; this may be an argument to take on larger risks when sums are small. But again, why not do that experience with 1 % of the initial 3k, instead of all of it? Money is still money, regardless of denomination – many small rivers make a big stream, etc. etc...)
But I'm with you, I think both sides of this argument get where the other is coming from. Let's leave it here.
Interesting to hear that both you and Spekulatius have different points of view on this than I myself do, though! Thanks for the perspectives. |
