Rule du Jour: Rule #75 Starting Over (Patreon)

This rule was inspired by Naval, shared with me by Sanjay a few days ago.

It stuck in my mind over the weekend.

I always say great people find their humility... well this is yet another twist on that but applied to investing. Let me explain!

TLDR

"When pride rules your portfolio, learning stops. Stay humble, start over, climb again." IA 2025

Principle:

Success in investing demands intellectual humility and the courage to reset when necessary. Pride locks you into past decisions, preventing adaptation. Always be ready to abandon old positions, trading strategies, or narratives — even if they once brought success. Remember the world is now changing every 6 months... when I started investing in 1991 the world changed about every 10 years!

Rationale:

Great investors discard failing or outdated theses, even at personal or reputational cost. Starting over is not failure — it’s evolution. I see this now with folks clinging to Uber when they know they are potentially at death's door!

For me I fear I am in a position where I now have too many positions... this is why at the end of every year I clean house... and most of the time I never regret it. I follow these rules

• Reset Your Portfolio: Periodically re-evaluate from first principles. If you had no positions today, would you still buy what you hold? eg Miners, Proxies, Alts etc I hope to kill most positions over the next 20 weeks.

• Avoid Sunk Cost Bias: Don’t let pride prevent you from cutting losses eg ENPH. Staying “right” is more expensive than admitting you were wrong.

• Embrace Discomfort: Be willing to look like a fool if it means growing your edge. Changing your mind is a sign of strength, not weakness. Eg ETH looks like a hero now, but would that make me chase? No. Reason is Data.

• Don’t cling to past success. We always need to reset and pivot.