Optionality: Luck As Your Roommate

Optionality = Lots of options

2021 has been a year for optionality. Bull-markets, Bitcoin, Spacs, Clubhouse, NFTs, and DeFi. Each a passing fad, a paradigm shift, or neutral...(your choice).

Seek options with limited downside and large upside (relative to your reasoning). Investing comes with high optionality.

You can store money in bonds, stocks, start-ups, cash, crypto, spacs, or (deep breath)...credit default swaps on triple A-rated subprime mortgage bonds:

How do we go about making the "right" choices? Well...

What doors are available:

Optionality is a large room with many doors (options) to open.

Behind every door, lies a room with even more doors to unlock.

How to enter rooms:

Though it's a double-edged sword, taking risks is the requirement to open doors.

It takes trial-by-error to open the doors you want. That’s what investing is.

What door to look for:

Find the room where luck is your roommate.

If you don't like the room you're in, unlock a new one. Eventually, you'll find what you're looking for (trial and error).

I've gone from:

  • Investing in JP Morgan and American Express in March 2020
  • Thinking I'd hold onto both businesses for 5+ years
  • Selling those shares around December 2020
  • Reinvesting into bitcoin immediately after

That's what having optionality means. Seeking rooms with limited downside and large upside (relative to your reasoning). Benefitting from trial-by-error.

At the end of the day, the room you choose to enter is entirely up to you. If you don't like the room, avoid it. It's that simple.