Optimize risk, not return
Feb 6, 2026
Most investors look at potential return. “How much can I make?” is the first question. I’d say that’s the wrong focus.
Over a long horizon, risk/reward in the markets is leveled out. There’s no fundamental difference between investing in real estate or bitcoin. The market evens everything out. The real question is different: how well do you understand particular risks, and what edge do you have in dealing with them.
The right approach is to invest where you have an edge in understanding the risks. Where you see and know more than the other market participants.
A simple example: investing in Russian companies carries less risk for a Russian than for an American. You understand the context, read the news in the original language, feel the mood. Plus you have no infrastructure risks: sanctions, frozen assets, problems withdrawing funds. For an American investor those are real risks; for you they simply don’t exist. That’s an edge you should use.
The same works in any field:
- If you’ve been in an industry for 10 years, you see risks a newcomer doesn’t
- If you understand a technology deeply, you can assess the real probability of failure
- If you have insider knowledge of a market, you know what others don’t
The formula is simple: look for asymmetry in the perception of risk, not in expected return. Invest where your assessment of risk is more accurate than the market’s.
Originally posted in Russian on my telegram. This is a translation.