{"id":40535,"date":"2026-01-01T23:56:00","date_gmt":"2026-01-01T15:56:00","guid":{"rendered":"https:\/\/www.granitefirm.com\/blog\/us\/?p=40535"},"modified":"2026-02-07T09:29:04","modified_gmt":"2026-02-07T01:29:04","slug":"bet-boldly","status":"publish","type":"post","link":"https:\/\/www.granitefirm.com\/blog\/us\/2026\/01\/01\/bet-boldly\/","title":{"rendered":"Bet boldly when opportunity is clear or probability is high"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #ffffff;color:#ffffff\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #ffffff;color:#ffffff\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2026\/01\/01\/bet-boldly\/#Buffetts_Bet_boldly_Practical_Approach\" >Buffett&#8217;s Bet boldly Practical Approach<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2026\/01\/01\/bet-boldly\/#Munger_holds_similar_investment_views\" >Munger holds similar investment views<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2026\/01\/01\/bet-boldly\/#Using_the_Kelly_Criterion\" >Using the Kelly Criterion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2026\/01\/01\/bet-boldly\/#Related_articles\" >Related articles<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Buffetts_Bet_boldly_Practical_Approach\"><\/span>Buffett&#8217;s Bet boldly Practical Approach<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In his <a href=\"https:\/\/berkshirehathaway.com\/letters\/1992.html\" target=\"_blank\" rel=\"noopener\">1992 letter to shareholders, Buffett wrote<\/a>:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>&#8220;In baseball lingo, our performance yardstick is slugging percentage, not batting average.&#8221;<\/p>\n<\/blockquote>\n\n\n\n<p>He used baseball as a metaphor to distinguish between &#8220;seemingly diligent and efficient behavior&#8221; and &#8220;actions that truly create long-term value.&#8221;<\/p>\n\n\n\n<p>A high batting average represents frequent but low-impact hits; conversely, a high slugging percentage means fewer swings, but each hit is more impactful. Buffett applies this concept to his capital allocation decisions.<\/p>\n\n\n\n<p>Buffett&#8217;s statement stems from his decades-long investment discipline. What drives Berkshire Hathaway&#8217;s growth is often not a large number of small profits, but a few major successes.<\/p>\n\n\n\n<p>Berkshire Hathaway&#8217;s holdings in companies like Coca-Cola, American Express, and GEICO have generated returns far exceeding many smaller or shorter-term investments.<\/p>\n\n\n\n<p>At its core, this baseball analogy stems from a belief of Buffett&#8217;s: rather than constantly chasing small incremental gains, it&#8217;s more effective to identify a few truly exceptional opportunities and invest boldly, leading to superior long-term performance.<\/p>\n\n\n\n<p>However, Buffett has repeatedly emphasized that short-term earnings fluctuations do not represent a company&#8217;s true economic strength. His method of measuring performance is the compounding growth of long-term internal value, what he calls &#8220;slugging percentage.&#8221;<\/p>\n\n\n\n<p>This analogy showcases Buffett&#8217;s consistent investment philosophy: bet boldly when opportunities are clear, and remain patient when uncertain.<\/p>\n\n\n\n<p>Unlike those who favor highly speculative, short-term trading strategies, Buffett believes that &#8220;when to swing is more important than the number of swings.&#8221;<\/p>\n\n\n\n<p>Regardless of market volatility or excessive optimism, this thinking serves as a reminder: in uncertain times, investors are prone to adopting strategies to reduce volatility, but Buffett believes this may sacrifice significant long-term returns.<\/p>\n\n\n\n<p>In overheated markets, his analogy serves as a reminder to investors not to be misled by the superficial results of short-term trading.<\/p>\n\n\n\n<p>Warren Buffett&#8217;s core message, conveyed through baseball, is very clear: investment performance should be measured by the &#8220;magnitude of success&#8221; and the &#8220;sustainability of results,&#8221; not the number of positive returns.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Munger_holds_similar_investment_views\"><\/span>Munger holds similar investment views<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><a href=\"https:\/\/speakola.com\/corp\/charli-munger-widom-business-usc-1994\" target=\"_blank\" rel=\"noopener\">In a 1995 speech at the USC Graduate School of Business, Munger stated<\/a>:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p> &#8220;The wise ones bet heavily when the world offers them that opportunity. They bet big when they have the odds. And the rest of the time, they don&#8217;t. It&#8217;s just that simple.&#8221; <\/p>\n<\/blockquote>\n\n\n\n<p>He also stated at the Daily Journal shareholder meeting, &#8220;Everyone has two or three good investment opportunities in their lifetime; the key is whether you can seize them when they come.&#8221; He further estimated that &#8220;Berkshire has made about 100 important decisions to date, averaging about two per year.&#8221;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Using_the_Kelly_Criterion\"><\/span>Using the Kelly Criterion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><a href=\"https:\/\/www.princeton.edu\/~wbialek\/rome\/refs\/kelly_56.pdf\" target=\"_blank\" rel=\"noopener\">The Kelly Criterion, derived from American mathematician John Kelly, was proposed in 1956 and applied to the stock market<\/a>. The Kelly Criterion is a well-known simple money management strategy; the formula is straightforward, logical, and easy to implement.<\/p>\n\n\n\n<p>This formula was initially used primarily for betting in casino games. Later, it was widely adopted by investors for managing their money in investments, and many well-known investors, including Buffett and Munger, recommend this simple formula.<\/p>\n\n\n\n<p>The formula is as follows:<\/p>\n\n\n\n<p>Percentage of bet = Probability of winning &#8211; (1 &#8211; Probability of winning) \/ Probability of winning<\/p>\n\n\n\n<p>Suppose we are bullish on a certain stock, expecting its return (i.e., the probability of winning) to be 40%, but the risk (i.e., the probability of losing, i.e., 1 &#8211; probability of winning) to be 10%. According to the Kelly Criterion, how much money should we invest?<\/p>\n\n\n\n<p>Substituting the data from the example into the Kelly Criterion:<\/p>\n\n\n\n<p>Percentage of bet = (0.4 &#8211; 0.1) \/ 0.4 = 0.75<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"90\" height=\"100\" src=\"https:\/\/www.granitefirm.com\/blog\/us\/wp-content\/uploads\/sites\/2\/2026\/01\/bet_boldly-Custom.jpg\" alt=\"\" class=\"wp-image-40537\"\/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Related_articles\"><\/span>Related articles<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2026\/01\/01\/bet-boldly\/\">Bet boldly when opportunity is clear or probability is high<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/04\/27\/buffett-portfolio\/\" target=\"_blank\" rel=\"noreferrer noopener\">The commonalities of Buffett portfolio \u2013 cheap, fixed income, repurchase<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/04\/07\/buffett-deserves-study\/\" target=\"_blank\" rel=\"noreferrer noopener\">Why Buffett deserves further study?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/12\/07\/buffett-investment-idea\/\">What helps Buffett to get his investment idea?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/08\/10\/reading-is-irreplaceable\/\" target=\"_blank\" rel=\"noreferrer noopener\">Reading is irreplaceable and necessity of for investors<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/01\/12\/are-analyst-reports-useless\/\" target=\"_blank\" rel=\"noreferrer noopener\">Are analyst reports useless?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/06\/21\/why-long-term-investment\/\" target=\"_blank\" rel=\"noreferrer noopener\">Why long-term investment is better?<\/a>&#8220;<\/li>\n\n\n\n<li><a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/11\/07\/cigar-butt-investment\/\" target=\"_blank\" rel=\"noreferrer noopener\">&#8220;Problems with Cigar Butt Investment<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/12\/14\/buffett-hold-for-long-haul\/\" target=\"_blank\" rel=\"noreferrer noopener\">Is Buffett no longer hold for long haul? TSMC, HP, and US Bancorp cases study<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/11\/22\/bet-on-dominant-player\/\">Bet on dominant player, don&#8217;t predict<\/a>&#8220;<\/li>\n<\/ul>\n\n\n\n<p><em><strong>Disclaimer<\/strong><\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>The content of this site is the author\u2019s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.<\/em><\/li>\n\n\n\n<li><em>I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers&#8217; direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.<\/em><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Warren Buffett&#8217;s consistent investment philosophy is: bet boldly when opportunities are clear, and be patient when uncertain. Munger holds similar investment views.<\/p>\n","protected":false},"author":1,"featured_media":40537,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[18,15,11],"tags":[],"class_list":["post-40535","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing-strategy","category-charlie-munger","category-buffett"],"_links":{"self":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/40535","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/comments?post=40535"}],"version-history":[{"count":10,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/40535\/revisions"}],"predecessor-version":[{"id":40805,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/40535\/revisions\/40805"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media\/40537"}],"wp:attachment":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media?parent=40535"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/categories?post=40535"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/tags?post=40535"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}