The Barbell Investment Strategy
Load both ends of the risk spectrum and own nothing in the middle
- Difficulty
- Moderate
- Time to result
- ~ongoing to results
- Steps
- 5
- Confidence
- 85%
The barbell as a model says that on a risk spectrum — most risky at one end, least risky at the other — you want to be weighted at both ends and hold nothing in the ambiguous middle. Bloom's implementation adds the variable that makes it work for operators: control. His risky end is investments in himself and his own businesses, and the fun thing about that risk is that you actually control it to an extent. Contrast crypto: it might be a great investment, but he doesn't control the price of Bitcoin or Ethereum and can't influence the outcome. So he'd rather invest time and energy where he has real influence — and where he has none, he wants it super safe, basic and boring. His safe end is Vanguard S&P 500 index funds. The rule underneath both ends: only invest in things you can really touch, feel and understand.
Origin
Extracted from Young and Profiting. Bloom spent the first seven years of his career investing professionally — mostly later-stage private equity — before applying the barbell to his own personal portfolio.
Core principles
- 01Weight both ends of the risk spectrum; avoid the middle you don't understand.
- 02The riskiest allocation should be the one you can actually influence.
- 03Control is the variable that makes risk intelligent rather than reckless.
- 04If you can't influence the outcome, demand that it be boring and safe.
- 05Only invest in things you can touch, feel, and understand.
- 06Your own businesses are the highest-risk, highest-control asset available to you.
How to run it
- 1
Draw the risk spectrum
Lay out the risky end and the safe end, and place your existing holdings honestly along it.
- 2
Name the control variable for each risky holding
For everything on the risky end, ask whether you can actually influence the outcome. Bloom can influence his own businesses; nobody influences the price of Bitcoin.
Pro tip Risk you control is a different asset class from risk you merely bear.
Watch out 'It might be a great investment' isn't the test. The test is whether you can move the outcome.
- 3
Concentrate the risky end where you have control
Load the high-risk end with investments in yourself and your own businesses — things you're actually driving.
- 4
Make the safe end genuinely boring
For anything you can't influence, demand super safe, basic and boring. Bloom's is a Vanguard S&P 500 index fund.
Pro tip Boring is the specification, not a compromise.
- 5
Cut the middle
Don't hold things in between that you don't really understand. Bloom's rule: only invest in things you can really touch and feel and understand.
Watch out The middle is where you take real risk without either the control of the risky end or the safety of the safe end.
In the wild
Bloom's risky end is investments in himself and his own businesses. His safe end is super boring basic stuff — the stock market, Vanguard S&P 500 index funds. He wants nothing in between that he doesn't really understand. The reasoning turns on control: creating your own businesses is the riskiest thing there is, but you actually control it to an extent. He contrasts crypto — he doesn't control the price of Bitcoin or Ethereum, so however good the investment might be, he has no ability to influence the outcome.
→ A portfolio where every risky dollar is attached to something he can drive, and every uninfluenceable dollar is parked somewhere deliberately boring.
Bloom cites Peter Lynch, the Wall Street legend behind One Up on Wall Street, one of the best investing books of all time. One of Lynch's best career investments was Hanes, the underwear company. He bought it because his wife came home from CVS raving about a pair of Hanes pantyhose from a tiny little company. He went and picked up shares. The principle Bloom draws: invest in things you love — if you uniquely love an experience or a product, it's probably going to end up being profitable.
→ Roughly a 100x return on a public market investment, and the general lesson that first-hand understanding is a genuine investing edge.
Common mistakes
Taking risk where you have no influence
Bloom's distinction is control, not volatility. An asset you can't move belongs on the boring end or nowhere — not on your risky end.
Accumulating middle-of-the-spectrum positions
The barbell is defined by the empty middle. Holdings you don't really understand carry real risk with none of the offsetting control or safety.
Running the barbell without a risky end you control
Without your own business or a genuine bet on yourself, the model degenerates into an index portfolio wearing a framework's name.
Is it for you?
Best for
Founders and operators with a business or skill they can genuinely compound through their own effort.
Not ideal for
Someone with no operating venture, for whom the barbell collapses into an under-diversified index position with no risky end.
From the transcript
“on a risk spectrum, if you think about the most risky things on one end and the least risky things on the other end, that…”
“I don't want things in between that I don't really understand. Uh, my my whole goal is like I really only want to invest in…”
“if I don't have a degree of control over them, I want them to be super safe and basic and boring”
From the episode
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Sahil Bloom