Three Types of Investors

There are three types of investors: those who know nothing, those who know some things, and those who know everything.

IQ bell curve with crying wojak at the median

People on the left don’t know much. They know what they see on Fin Tok. They know that Doge is going to the moon. They live and die by the meme. And right now, the meme is pure alpha.

People on the right have read all the white papers. They understand each blockchain, how it is built and secured, and how cryptocurrencies are transferred. They understand the frictions involved and the arbitrage opportunities. They understand it in a way that few others do. They have the informational edge.

The people in the middle overthink everything. They’re bearish when Bitcoin goes down and feel like idiots for missing out when it goes up. They understand that it’s a decentralized, peer-to-peer, permissionless network. They understand the immutable nature of the blockchain. They know all the buzzwords. But they don’t have conviction. Their opinion changes three times a day. They’re completely paralyzed.

How much information do you really need to make an informed investment decision? I really do think this image captures it pretty well. The middle is dangerous. You know enough to know that you don’t know anything everyone else already knows.

And then some investors can see the forest through the trees. They know so much that they are the Jedi at the right, but ultimately come full circle and end up on the left. Bill Miller’s description of why he owns Bitcoin is a perfect example of this. It’s hard to make it look this easy.

You’ve made a killing on Bitcoin. What’s the rationale for owning it?

Bitcoin is a decentralized, permissionless, peer-to-peer network of computers that’s permanent and unhackable. When you buy a Bitcoin, you’re buying a slot on that database, and almost all of those slots have been allocated. There’s only going to be 21 million Bitcoins in the world, and 18.5 million have already been mined and circulated. So we’ve got 2.5 million to go. It’s Economics 101. The supply grew 2.5% last year; it’s growing 2% this year. Is demand growing faster or slower than 2%?

There’s no edge in the middle. Know nothing, or know everything.


Famed Investor Bill Miller Is Roaring Back With Amazon, Bitcoin, and GM

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

The Compound Media, Inc., an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here:

Please see disclosures here.