Investing Simplified: Do you have an Edge?
Build a portfolio that (a) doesn’t force you to sell when you’re right but early, (b) doesn’t implode when you’re wrong, and (c) can sit through temporary illiquidity without margin calls.
Investing Simplified: Do you have an Edge?
A. First Principles (what actually pays)
World = incentives (who gets paid to do what).
Market = constraints (plumbing, mandates, collateral, policy).
Survival = sizing & funding (so your path can’t kill you).
Edge = World × Market × Survival. Miss any one, you donate.
B. If you don’t have an Edge
Hold QQQ (beta) + gold (repression hedge) + self-custody Bitcoin (sovereign tail).
Automate contributions. Do nothing else.
C. Why “knowing” ≠ compounding
Leverage & path: You can be right on destination and still get killed on the path. Size so the path can’t bankrupt you.
Liquidity: Great theses die in forced selling.
Horizon mismatch: A 5-year edge deployed with a 5-week stop is just a donation.
Constraints price assets, not slogans: mandates/collateral/policy > naïve Efficient Market Hypothesis.
Behavior: Most “losses” are behavior taxes (chasing, puking, over-trading), not idea deficits.
Taxes/fees: Edges drown under friction. Keep turnover low unless your edge is truly persistent.
TL;DR
If you understand how the world works, you can make money.
If you also understand how markets clear (plumbing, incentives, constraints), you can make outsized money.
If you understand both and still lose, you either used too much leverage, the wrong horizon, or you blew up on liquidity/position sizing — not on thesis.
If you don’t understand either, buy broad tech (QQQ), an inflation/repression hedge (gold), and a sovereign tail hedge (self-custody Bitcoin), then automate contributions and do nothing.
If you think you understand and trade a lot, the market will invoice you via fees, taxes, and variance.
If you truly understand, you design a portfolio that survives being early, wrong, and illiquid — and still compounds.
“Survives early, wrong, and illiquid — and still compounds”
Translation: build a portfolio that (a) doesn’t force you to sell when you’re right but early, (b) doesn’t implode when you’re wrong, and (c) can sit through temporary illiquidity without margin calls or career pressure.
“Behavior taxes” (how investors lose to themselves)
Most underperformance comes from behavior, not idea quality. Here are the biggest taxes and the antidotes:
Chasing. Buying highs after “clarity” PR.
Fix: Write entry preconditions (signals) that must appear before you can buy (e.g., Net Liquidity +$100B 4-week, Policy Synchronization Coefficient/Legibility Pressure Index uptick). No signal, no trade.
Puking bottoms. Selling because of screen pain, not thesis breaks.
Fix: Exhaustion day rule: if down big → closes flat/up on huge volume, add a clip, don’t sell. Use hard thesis triggers (not price) to exit.
Over-trading. Confusing activity with edge.
Fix: Limit yourself to two decisions per position per month unless a pre-defined trigger hits.
Size creep. Winners balloon; you let risk concentrate by accident.
Fix: Band rebalancing: trim to target when +25% over weight; add when −25% under. Mechanical.
Narrative drift. You slowly change the reason you own something.
Fix: One-page Owner’s Manual per position: “What it is, why it wins, what breaks it, what proves it”. Review quarterly.
Information grazing. Constant feed scrolling raises cortisol → bad timing.
Fix: Structured intake: once daily dashboards (liquidity, vol, Policy Synchronization Coefficient/Legibility Pressure Index, issuance), no intra-day doomscrolling.
Time horizon mismatch. 5-year thesis with 5-minute patience.
Fix: Lock a sleeve (e.g., 50% of your core) as “non-saleable” for 24 months unless a kill-switch triggers.
Leverage temptation. Small edge × leverage = blown up at the first Value at Risk shock.
Fix: Use options overlays or cash-secured strategies; never borrow against convictions you plan to hold through air pockets.
Constraints > Narratives (what moves prices)
The five constraints to watch weekly if actively investing
Net Liquidity (US): Fed BS − TGA − ON/RRP (4-week Δ)
+ $100B tailwind / − $100B headwind.
Issuance mix: Bills (friendly) vs coupons (duration indigestion).
Rates & USD: real 10y + term premium ↑ = multiple ↓; DXY ↑ = tighter globals.
Vol & Value at Risk: MOVE/VIX spikes force mechanical deleveraging.
Policy Synchronization Coefficient / Legibility Pressure Index (policy tells): standards & RFP verbs: attest, lineage, revoke, rollback → compliance/identity/lineage spend incoming.
Use: Align with constraints (own the defaults), trade the forced flows, ignore speeches.
Add-On: Inflation & Liquidity Regime (what to expect)
Low Gross Consent Product world prefers financial repression (sticky ~3–4% CPI in US/UK/EU core) over long recessions.
Liquidity: choppy, but supportive — bill-heavy issuance, tactical facility usage, QT taper before full pivot if stress hits.
Positioning: quality growth & policy-embedded platforms (PLTR > MSFT > PANW) outperform; buy fear, sell clarity.
Bottom line
Build a portfolio that (a) doesn’t force you to sell when you’re right but early, (b) doesn’t implode when you’re wrong, and (c) can sit through temporary illiquidity without margin calls or career pressure.
None of this should be considered investment advice.