Why is the crowd not good at picking investments? The main portfolio construction rule is to diversify: invest in all of USA, Europe, Asia (geographic and currency diversification), and in stocks, bonds, real estate, commodities (asset classes diversification). VCs invest in a bit of everything too: consumer startups, business to business startups, various themes and technologies. It's simply safer statistically. Unfortunately, most people don't do diversification: they invest in what they "like" or "know", and often all their money in one project only, rather than split it into several picks. So most CF funded projects in Kickstarter and Indiegogo, but also in equity CF platforms, are video games or consumer gadgets, what most people like or know, and picked as the first and only choice. Often, simply who got the cutest marketing video. Further, there's no location diversification: a lot of the funding comes from people who already know the founder or living in the same area. Too many CF funded projects fail to end up profitable, because competing in the same few crowded fields that most people like or know. Instead, other projects liked or known by fewer people and so not funded, would enjoy less competition and higher probabilities to end up profitable. The crowd doesn't think at this, so statistically picks worst than a VC.
Google Games confirmed, less greed than Facebook and Apple
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