What’s interesting about this battle is we could update it for the 21st century. It’s now cryptos that are regarded as risky, untoward, and disreputable. And yet, that is where the big alpha in today’s market clearly lies if you can get the timing right. I’d suggest if you want to replicate Keynes’s performance — I know I do — then you better start allocating your thinking and money toward the crypto market…then prepare yourself to hold on for dear life. Because that was the second secret of Keynes’s success. In the 1920s he gave away on the idea that he should try and surf the market volatility with short-term trades. He turned to making big, bold, high-conviction bets that he was prepared to back for years. That’s how I approach the crypto market. [PS: Make sure you jump on board with my colleague Ryan Dinse for all crypto-related insight.] But Keynes took it a step further and also decried another false god of finance: diversification. Keynes argued it made no sense to invest in 50 enterprises about which you knew little when you could invest in five where you knew a lot and could outwit the market on insight. That was a radical thought at the time. It’s still a radical thought for some now. But not for Stanley Druckenmiller, hedge guru and billionaire. Here are some recent thoughts of his on the topic… ‘When I've looked at all the investors [that] have very large reputations — Warren Buffett, Carl Icahn, George Soros — they all only have one thing in common. ‘And it's the exact opposite of what they teach in a business school. It is to make large, concentrated bets where they have a lot of conviction. ‘They're not buying 35 or 40 names and diversifying. ‘I don't know whether you remember that Icahn a few years ago put $5 billion into Apple. I don't think he was worth more than $10 billion when he did that. ‘[In 1992] when I went in to tell Soros that I was going to short 100% of the fund in the British pound against the Deutschmark, he looked at me with great disdain. ‘He thought the story was good enough that I should be doing 200%, because it was sort of a once-in-a-generation opportunity. ‘So, [these investors] concentrate their holdings. This is very counterintuitive. In my thinking, [concentrating your bets] decreases your overall risk because where you tend to be in trouble is if you have 35 or 40 names. If you start paying attention to one. If you have a big, massive position, it has your attention. ‘My favorite quote of all time is maybe Mark Twain: "Put all your eggs in one basket and watch the basket carefully." ‘I tend to think that's what great investors do.’
2) I do have one bone of contention with the above book. Keynes’s reputation as an economist does need some revision with the advantage of hindsight. No doubt he was an original thinker, but he missed the key factor underpinning the modern economy: that’s the land market. That’s why, toward the end of his life, he wrote an essay wondering what people in the future would do with all their free time. He had the vision to see the astonishing rise in technology prowess and productivity that the modern world would bring. But he never imagined that the benefits would be swallowed not by workers but by landholders. That’s why the modern house in Melbourne now costs a million dollars, but the average wage has not risen anywhere near the same rate. That’s why you must sign up to Cycles, Trends & Forecasts. Those that invest and work without this correct worldview get left to grow their wealth at 2% a year — if they’re lucky. Make sure you’re on the right side of this dynamic by going here. Regards, Callum Newman,
Editor, The Daily Reckoning Australia | 
