Most people would say that the goal of investing is money, such as a net worth of $100 million or an annualized return of XX%. But money is ultimately just a tool, not a goal for people. Thinking seriously about the following two questions can help to clarify your positioning:
What are your personal desires? How much money do you need to achieve them? (It's even better to think deeper and ask why you need to think about the above questions)
Everyone has different interests and hobbies, and the amount of money they need also varies greatly, which also leads to different risk preferences. My personal answer is a life that allows me to freely allocate my time and satisfy my curiosity. Pursuing top 0.001% social status, luxury consumption, etc., should have higher return and risk preferences.
Everyone is talking about financial freedom. Is it a reasonable goal to pursue a net worth of $100 million and an XX% return? First of all, net worth and return are standards for measuring currency. Why do we need to use currency to measure? The answer to this question is purchasing power. The underlying need of human beings is the intake (protein) and consumption (energy) of hydrocarbons, and purchasing power for hydrocarbons is a reasonable standard for judging whether an individual has achieved financial freedom. The essence of investment goals is to improve the purchasing power of hydrocarbons.
Currently, the answer is the US dollar. As the currency with the largest trading volume in the world, a larger trading volume represents more accurate value discovery (pricing purchasing power). It also means that the inflation index (CPI) measured in US dollars has better reference value. It should be noted that the US CPI cannot represent the CPI of overseas markets. The currency used to measure purchasing power is not constant. Assuming that in the future, more transactions are conducted using ETH as the medium of exchange, ETH may become a new standard for measuring purchasing power.
Profit and risk are two sides of the same coin. Only with a correct understanding of the return on the market can reasonable expectations be made for the goal.
First, let's take a look at Buffett's long-term investment returns. Buffett's Return & CAGR The table shows the rate of return of Berkshire Hathaway's investment records. Prior to this, Buffett's estimated return was superior to the data in the table.
It can be seen that Warren Buffett, achieved a return of over 2300 times during his 56-year career in public investment, with a compound annual growth rate (CAGR) of only 14.84%. If we narrow the time frame to before 2000, Buffett achieved a higher CAGR of 20.01%. It can be said that the large scale of investment has affected Buffett's level of return. Let's take a look at the situation of top VC/PE.