I agree with you that investing in the base-layer protocol has better odds at upside because of the multiple factors driving its adoption and price (new investors coming in, new apps being launched and adopted, interconnectivity between these apps).
Perhaps he’s trying to argue that investing directly into the applications could lead to higher ROI from an entry-price standpoint. Newer applications are often traded at less of a premium than the base protocols because of their small trading volumes, frequencies and market caps. However the cause of this premium is exactly what reduces the volatility of such an asset and I’d prefer than over a higher risk / return scenario.
It would be interesting to see portfolio simulations that plot the performance of a base-layer only portfolio vs. one that’s strictly composed of dApps. Anyone have any suggestions on how to do this? Jake Brukhman perhaps?