Editor’s note: Our founder, Doug Casey, believes in the power of asymmetric bets. That’s when your potential upside in a position is so massive it dwarfs your potential downside.
That’s why today, we’re sharing this piece from our friend Tom Dyson. Like Doug, Tom’s a contrarian who believes gold is the surest bet right now… it’s why he put all his money into the precious metal two years ago.
But it’s not the only asymmetric asset out there. Below, Tom reveals how just a small amount in bitcoin made him a small fortune.
Tom’s got a knack for finding these opportunities. And tonight, at 8 p.m. ET, he’s hosting an urgent briefing on a new trade he’s going “all in” on that involves gold… and could multiply your money tenfold. Go here to register for free – and be sure to tune in tonight.
By Tom Dyson, editor, Postcards From the Fringe
Have you ever played slot machines in a casino? Or video poker on a cruise ship?
They design these games so that you win frequently. And you can get addicted to them… because at every opportunity, you have a good chance to win. (Of course, you lose all your money eventually because these games are rigged against you.)
This way of “winning,” where you have more wins more frequently, is more compelling to the way our minds work. It holds our attention… which is exactly why the casinos use the strategy in the first place.
But if you really want to get rich, you have to do the opposite. And that’s what we call making an asymmetric bet.
Asymmetric betting is when you win infrequently. Most of the time, you lose a little bit of money… or nothing happens at all. It’s very boring, predictable, and dull.
And then occasionally, you score a massive outsized gain.
This gain changes everything.
All your losses are erased 100 times over.
Many of the ideas I put my own money into operate this way. I expect to lose a little bit of money here and there… and I do. But occasionally, I’ll make an enormous winner.
One example is an investment I made in 2011 in bitcoin. It’s the now-famous digital “cryptocurrency” released in 2009.
At the time, no one in my network knew about this oddball investment. It was far too obscure at the time… and far too small and speculative.
But this was a true asymmetric trade.
It took me an entire weekend fiddling around with computer equipment and software, and trading bitcoins around to friends, before I made that bet.
I invested $25,000. And at one point, I held 3,330 bitcoins.
I walked away with $500,000 from that investment in just over a year.
And if I still held them today, my bitcoins would be worth around $32 million.
So there you have an example of what can happen when you score an asymmetric gain. Any losses I had incurred paled in comparison with the win.
How to Structure Your Asymmetric Bets
The way to do this in practice is to set up 10 trades altogether… realizing that nine of them are probably going to lose money.
So if you have $10,000 to speculate on asymmetric bets, take 10 positions of $1,000. Most will lose a few hundred dollars. But that 10th trade can make you $10,000 or $100,000 or more.
So you see, placing smart, asymmetric bets over the long run can boost your average win rate.
It’s certainly not as comforting as “winning” at slots with every other press of the button. But it will make you a lot more money in the end.
Editor, Postcards From the Fringe
P.S. Don’t miss my special presentation tonight at 8 p.m. ET. I’ll share all the details on how to get in on a rare investment that I believe could be the greatest money-making opportunity for the next 20 years. Go here to register for free, before it’s too late.