RISK MANAGEMENT
Risk management isn't about avoiding risk — it's about understanding, sizing, and being compensated for it. Here's my framework for staying in the game.
POSITION SIZING
No single position exceeds 5% of my portfolio in high-risk assets. Core ETF positions can be larger (15-25%) because the diversification is built in. I use a modified Kelly criterion for tactical bets.
DRAWDOWN LIMITS
I set mental stop-losses at -20% for individual high-risk positions and -10% for the overall portfolio. If either triggers, I pause, reassess, and only re-enter with a clear thesis.
CORRELATION AWARENESS
Diversification only works if your assets are truly uncorrelated. I track rolling correlations between my holdings and adjust when correlations spike (as they often do in crises).
THE PSYCHOLOGY OF RISK
The biggest risk isn't volatility — it's your behavior during volatility. I maintain an investment journal, follow a checklist before every trade, and never make decisions after large market moves.