I think that rich people pay attention to absolute numbers as well, as to the percentage. And sometimes they are more interested in getting the percentage because it is attractive and quite large. But sometimes they really agree to a low percentage, about 1-3, but with their initial investment the return is quite high. It all depends on their risk management strategy.
I agree, they are great at measuring the risk that they're taking and whether the numbers are high or low as long as they get decent returns. That's what all matters to them. There are conservative investors that even the return would definitely be too low for them, it won't matter as long as they're safe and low risk. We won't go and say about guaranteed profits but it's safer to say that there's lesser and low risk that they'll choose and that's how many of them assess risks that they're taking.
It is not even just about measuring risk, it's about calculating risk/reward ratio correctly.
Yeah, that's called risk management and mitigation.
If you have 50% chance of making 1 million dollars when you bet 10 dollars on something, you would bet on it won't you? Everyone would, worst case you lose ten bucks, best case you win a million dollars. But reverse it, and if you could make 10 dollars with a 50% chance if you bet 1 million dollars, would you then do it? Of course not, that would not make sense at all. Now what is the middleground and reasonable place? What is the % in any situation?
We're good at taking a risk with small amounts and the potential of having larger rewards. It's the same with investing in Bitcoin several years ago, the risk is quite high and you're not obliged to invest with a large amount. But the others defied that fear and took the risk with bigger sums of capital and now, those who have held and are patient are raking in the results of that risk because of their bravery.
We do not know that and we can't possibly know it, but at the same time we are talking about something that will take a while, and we should be considering the fact that it is not going to be what we know, yet whales do know it.
Whales have got an idea because they can afford to invest with larger capital. Whilst for most commoners like me and probably you, we're actually taking the risk as it seems going to be a gamble if we have little knowledge about it and that's why in general as an investor, we need to know what we're dealing with.