mandoo

Whenever my portfolio reaches new (significant) highs I remind myself of the lessons I learned from previous cycles. The portfolio all-time high number isn't real. 1. I am unlikely to sell the top. I am even less likely to sell the top on everything at once. Some amount of drawdown from that peak number is pretty much inevitable. 2. I will likely lose money buying a larger pullback too early. Especially if the market has been rewarding shallow dip buys and conditioning me to do so, it's likely that I eat some drawdown if I've been trend following and take the same setup(s) again. It's the cost of doing business (hammer it until it stops working) but adds to the drawdown from the all-time high number. 3. There are unlikely to be reliable 'hedges' on the long side. When tides turn, correlations generally converge towards 1 and everything tends to nuke at once. News, tokenomics, fundamentals don't meaningfully matter - liquidity is king and I shouldn't play favourites. Some short-term idiosyncratic outperformance may emerge, but it is neither 'sticky' nor reliable. This means if I'm spread thin among many positions, they'll all be hammering my portfolio simultaneously (while also reducing my ability to manage any one position particularly carefully given there are N number of them moving at once, all requiring attention). 4. If I am 'late' to sell or assume I can sell on the way down, I should also assume that my execution will suffer. Specifically, if liquidity becomes sparse, volatility picks up, and flows are one-sided, I should assume my exit prices are going to be suboptimal. This effect is compounded if I'm holding perp positions that get displaced by a bunch of liquidations, and/or I am holding a bunch of some illiquid shitcoins (rare). In both cases, market impact is greater which generally means worse fill prices. Liquidity is always there - until you need it most. Trying to realise paper gains amidst paper thin liquidity can lead to drastically different outcomes compared to whatever number was on the screen previously. 5. I am unlikely to conveniently flip bearish at the right time and 'make back' the unrealised gains via shorting. Generally speaking, the whole 'just flip your positions and trade the other side' is grossly overstated and is a clout-preserving fantasy rather than a description of reality. 6. Taxes matter. Boring, yes. But I saw a lot of friends and peers suffer massively from tax burdens created by those huge unrealized gains. It happens every single cycle, and the consequences can range from mildly annoying roundtrip to bankruptcy and lifetime financial devastation. Do not use the portfolio all-time high number as a goal or an anchor. It is neither of those things. It is a false idol that will cost you dearly for taking it for granted when it's there, and chasing its footprints once it's gone. Too long; didn't read. I ain't reading all that. I'm happy for u tho. Or sorry that happened.