While discussing two popular investment terms on Twitter, Social Capital CEO Chamath Palihapitiya said that his early Bitcoin investment is his best bet. The former senior executive at Facebook also hinted that he has been “sizing up” more bitcoins since his initial purchase years ago.
Batting Average Vs. Slugging Percentage
The Canadian-American venture capitalist took it to Twitter to compare and share his opinion on two investment terms that actually originated from baseball – slugging percentage and batting average.
The idea behind the batting average is simple – it divides the number of times a person has made a successful investment by the total number of investments. If the end-number is more than 50%, the batting average is in green.
However, that doesn’t necessarily mean that the investor has made a profit because he could lose more on the losing investments than he can make on the winning ones. According to Palihapitiya, getting a positive batting average is like “going to the prom with your mom. Everyone talks about it, but not kindly.”
This is where the slugging percentage comes in. Not every hit in baseball earns the same number of points, and not every investment earns the same profit. It divides the average amount of money made on winners with the average amount of money lost in losing investments. Palihapitiya categorized it as “being the cool kid in high school – you’re a rare thing, and everyone wants to know your secret.”
Virgin Galactic’s Chairman explained that if an investor focuses on batting average, he could skip buying an asset when its price increases. Thus, he could miss out on higher returns once the asset further rises in value. This is something that “great” investors understand and apply correctly as they focus on slugging percentage.
Investing is all about dollars in —> dollars out or the multiple of invested capital (MOIC).
How many good companies you’ve invested in interests no one who knows anything.
How much did you make? What was your entry point? Did you size up or did you shit your pants?
— Chamath Palihapitiya (@chamath) September 23, 2020
Palihapitiya: Nothing Compares To My Bitcoin Bet
Social Capital’s Founder and CEO added that once the investor understands the fundamental differences between the two terms from above, he could even be “all in” if necessary
Only when he’s fully convinced of the potential of a particular asset, he could size up his portion and let the “slugging percentage do all the talking.”
Interestingly, Palihapitiya outlined the primary cryptocurrency as its best bet and asserted that he’s buying more:
“I’ve made some great bets before, but nothing compares to my Bitcoin bet in 2012 and sizing up.
As CryptoPotato reported a few months back, Palihapitiya said that he was introduced to Bitcoin about a decade ago. He found it “really interesting” and purchased a million bitcoins for about $80.
During a recent investment conference call, he also revealed that his firm Social Capital started accumulating BTC in 2013.
Featured Image Courtesy of Yahoo