Ape Like Warren Buffett

Dividends Forever
6 min readOct 18, 2021

Crypto is starting on a new bull-run, which means you’re going to see a lot of FOMO over random alt coins and NFTs. This also means heavy news coverage for a handful of people who pick the next one or two winning tokens, while all the investors who go bust on all the other flopped projects are quietly ignored.

While I like crypto, I also think that the space attracts a lot of unsophisticated gamblers who are simply looking for that one big payday.

This is why there are so many coins that exist solely as get rich quick schemes. And why there are YouTube videos unironically titled So You Lost Money In Dogecoin? Here’s The Next 1000x Opportunity.

At the same time, crypto is one of the few spaces where you can take $500 and turn it into $6,000 within a year.

Because of this, today’s article is all about asymmetrical bets.

For the unfamiliar, asymmetrical bets are situations where you take on very little risk (or sometimes none at all) while exposing yourself to potentially massive rewards.

The grandfather of conservative investing, Warren Buffett is famous for using this strategy whenever he apes into a hot new trend.

Take Buffett’s 2002 investment in Amazon.

The Oracle of Omaha purchased high-yield Amazon bonds, and bought them in then-depreciated Euros. This was a very low-risk strategy, yet it netted an 84% return in five years.

This might not sound super impressive by crypto standards, but keep in mind that the Nasdaq lost 31.53% of its value in 2002. And, for typical investors, the entirety of the 2000’s is often referred to as the “Lost Decade.”

Warren Buffett doesn’t grab headlines for making long-shot plays or buying speculative penny stocks. Instead, he amassed his fortune through limiting risk while maximizing potential upside. This is how he still enjoys 10x returns when he’s “late to the party” with companies like Apple, or how he doubles his money in one year by buying Amazon stock after “it’s too late to see any real gains.”

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