Awareness of capability boundaries and adherence to investment principles

One of our readers wrote the following in a comment:

Buffett makes value investments within his capability, and he is risk-averse; he never takes risks. Therefore, he doesn't have to worry about buying some altcoins or what to do if there isn't an altcoin bull market.

This statement reminds me of a significant shift in my understanding of Buffett's investment style and philosophy over this period.

A long time ago, I candidly stated in an article that Buffett's attitude towards Bitcoin indicated that the old gentleman had completely disconnected from modern technology and the virtual age.

At that time, when I wrote such an evaluation, I was more expressing my disdain for the old gentleman.

Looking back today, while I still believe that the old gentleman's understanding of modern technology may not be as quick as ours, I no longer dare to hold the same disdainful attitude.

As I have gained more experience, I increasingly realize that for an investor, being able to understand one's own capability boundaries and to steadfastly adhere to one's investment principles despite strong external distractions is truly remarkable.

In addition to Bitcoin, the old gentleman has also openly expressed his ignorance regarding high-tech stocks and Silicon Valley venture capital multiple times.

During the Q&A at the Berkshire Hathaway shareholder meeting, he and Munger highly praised the success of American venture capital in the high-tech field, but candidly admitted that they really do not understand why these venture capitalists can perform so well, nor do they understand why they invest in companies in that way.

He frankly stated that the two old men are still accustomed to their own investment methods and can only understand those old-fashioned traditional enterprises.

Not only Buffett, but I also greatly admire Duan Yongping among Chinese investors for his straightforward attitude towards Bitcoin.

In an early conversation, when he talked about Bitcoin, he candidly said that he did not understand Bitcoin at all and could not see why it would have value, so he did not buy it.

When I first saw his statement, I also thought he was outdated, but later, upon rereading his conversation, I felt that he, like Buffett, recognized his capability boundaries and adhered to his investment principles.

Recognizing one's capability boundaries and adhering to investment principles sounds simple, but it is actually very difficult to do.

We might as well ask ourselves:

Including ourselves, how many people have truly read the Bitcoin white paper, studied the history of Bitcoin, and understood the hard work of the pioneers in Bitcoin's development, thus believing in Bitcoin's value and being confident in its future value before buying in?

I believe that the vast majority of people did not buy Bitcoin for those reasons, but rather because they heard that Bitcoin could make people "rich overnight."

In fact, Buffett and Duan Yongping probably knew about Bitcoin earlier than many of us, and they certainly knew the stories of people getting "rich overnight" with Bitcoin, and they also knew that Bitcoin's price increase was more dramatic than the stocks they held.

However, they acknowledge their capability boundaries and adhere to their investment principles, completely shielding themselves from the distractions and temptations of such price increases, remaining steadfast in cultivating their own territory.

How many people can achieve this?

In our ecosystem, more investors do not talk about capability boundaries and lack investment principles.

Especially when a hot trend arises, the vast majority of investors would rather rush in at high prices than miss out on the so-called "opportunity." The result of this behavior for most is ending in losses or even losing everything.

Perhaps this is a significant difference between masters who have been tempered through countless trials and ordinary investors.

To this day, I still confidently believe that in the niche field of the crypto ecosystem, my understanding is slightly deeper than that of Buffett and Duan Yongping, which is why I firmly believe in the value and future of Bitcoin, and even more so in the value and future of the crypto ecosystem.

However, compared to these remarkable predecessors, what we need to learn more is to always have a clear understanding of our capability boundaries and to steadfastly adhere to our investment principles like they do.

Only then can we achieve results and gains in our cultivated fields that others find hard to reach.