Success – whether it be in trading or life – comes from focusing on your “one thing”.
- Look at the most successful investors in this world. Warren Buffett focuses on stocks, and mostly U.S. stocks. He doesn’t go around trading commodities and bonds and currencies and crypto and stocks.
- Look at the most successful companies in this world. Apple didn’t get to where it is today by being a conglomerate and doing 30 different things. Conglomerates are dying because their business model doesn’t work. In a world that is INCREASINGLY COMPETITIVE, you can only succeed and compete by focusing and being the best at one thing.
- Look at the best athletes in the world. The best athletes in the world aren’t jack-of-all-trades athletes. Usain Bolts focused on running. Michael Phelps focused on swimming. Michael Jordann focused on basketball.
You cannot succeed and compete by trying to focus on 10 different things. Because in each of those 10 things, someone will focus solely on that 1 thing, which means that you will be at a disadvantage in each of those 10 things.
Focusing on “one thing” means that you should avoid Shiny Object Syndrome. Don’t chase after the hottest-market-of-the-month.
By avoiding Shiny Object Syndrome in the markets, you will miss out on some opportunities. But that’s life. You will always miss out on a lot of opportunities. However, you will avoid even more fads that turn out to be coal. For example, Warren Buffett admits that by not chasing high-growth stocks and fancy things, he missed out on Amazon and Google. But at the same time, he avoided the disaster that was cryptocurrencies.
By focusing on 1 or 2 markets that you’re the best at, ON BALANCE the coal that you avoid will exceed the missed opportunities.
Good investors don’t diversify too much, the same way good entrepreneurs don’t diversify too much. Diversification is a strategy employed by people who don’t know what they’re doing. Think about it this way. If you have something that works incredibly well – your number one thing – why would you dilute your investment into this thing? Why would you dilute your #1 so that you can re-allocate those resources into your #30?
Everyone has a market that they’re best at. Every market has its most suitable trading strategy. You need to focus your energy on finding the best strategy for the 1-2 markets that you are trading. Why would you take away from your best thing and put it into the worst thing? The only time people diversify (trade multiple markets at the same time) is when they don’t know what they’re doing. FOCUS is the key skill to have in the modern world. In the modern world, it’s not about how many different things you do or pay attention to. In a world that’s flooded with noise, it’s more a game of how many things you can ignore and not do.