Warren Buffett emphasizes that while it’s crucial to remain within your circle of competence, you should still aim to expand it thoughtfully. Engaging with new industries or consulting experts can yield valuable insights and facilitate future diversification of your portfolio.
Invest intelligently by calculating the downside risk. Effective investors focus on opportunities where the potential gains significantly outweigh the risks, identifying investments with lopsided risk-reward ratios.
To further limit risk, consider taking small positions in high-risk assets. For instance, Blackrock suggests that a mere 2% allocation to Bitcoin can offer considerable upside while minimizing overall portfolio risk.
Small positions in emerging technologies, startups, or volatile markets allow investors to cautiously explore opportunities without heavily impacting their portfolio, balancing potential rewards against inherent risks.
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