Another factor which helps is also position sizing. An investor can have a mix of Buffett, growth and VC in the same portfolio potentially, following the different range of rules for each (category 1 Don't lose money, VC Can it 100x). Then having different sizing rules for each (Cat 1 could be say 5-20% cost basis, growth 2-8%, (defined as "some risk" of losing money, but a chance to 10x in 10 years say) and VC could be 0.2%-0.6% say). At least, this is the approach I take current.
In this way l, the overall risk/reward and correlated risk profile of the portfolio can be managed, whilst still allowing an investor to take positions in opportunities in each category
You could also imagine each as an individual portfolio potentially (especially say the VC part, for example allocating a max of 5% of your portfolio to 10-25 VC bets)
Yup that is another approach. Probably easier for an indivudual investor than fund manager to sell that but you could BYD for Buffett was basically a VC bet. (Although even then he wouldn't directly invest in it and instead directed Berkshire Energy to make the investment).
Yes, definitely easier for private investments especially for an individual investor. I think a fund manager could run the spectrum for public market steady monopoly/oligopoly types to early stage growth (although nowadays with private companies staying private for longer that is harder to do)
Great write up, thank you.
Another factor which helps is also position sizing. An investor can have a mix of Buffett, growth and VC in the same portfolio potentially, following the different range of rules for each (category 1 Don't lose money, VC Can it 100x). Then having different sizing rules for each (Cat 1 could be say 5-20% cost basis, growth 2-8%, (defined as "some risk" of losing money, but a chance to 10x in 10 years say) and VC could be 0.2%-0.6% say). At least, this is the approach I take current.
In this way l, the overall risk/reward and correlated risk profile of the portfolio can be managed, whilst still allowing an investor to take positions in opportunities in each category
You could also imagine each as an individual portfolio potentially (especially say the VC part, for example allocating a max of 5% of your portfolio to 10-25 VC bets)
Thank you!
Yup that is another approach. Probably easier for an indivudual investor than fund manager to sell that but you could BYD for Buffett was basically a VC bet. (Although even then he wouldn't directly invest in it and instead directed Berkshire Energy to make the investment).
Yes, definitely easier for private investments especially for an individual investor. I think a fund manager could run the spectrum for public market steady monopoly/oligopoly types to early stage growth (although nowadays with private companies staying private for longer that is harder to do)