Rule du Jour: Rule #79 - Six Laws of Wealth {Probably My Most Important Post Ever} (Patreon)

The Six Rules of Concentrated Investing

I’ve shared elements of this before, but it’s worth putting the framework together. This was inspired by those who criticized me for selling ETH, but what they missed is:

• I bought ETH at $90 in March 2020.... all in one day.

• I rotated those gains into SOL. This Bull Run ETH has done a 3x while SOL has done a 21x.

• SOL has since dramatically outperformed ETH. FAR OUTPERFORMED ETH. Few can wrap their heads around this...... this is a classic rotation to a faster horse.

The Portfolio

That decision wasn’t luck—it was valuation discipline. And it’s a reminder that investing is brutally difficult. Picking even one winner is hard; picking four across different asset classes is nearly impossible.

HERE ARE MY RULES (why I follow a strict set of rules):

Rule #1: Buy Below Intrinsic Value, Sell Above It

Valuation is the anchor. I buy when an asset trades below intrinsic value and trim when it exceeds the upper bounds. That’s why I rotated ETH into SOL—because relative undervaluation created asymmetric upside.

Rule #2: Activity is the Enemy of Returns

The more an investor trades, the worse the long-term outcomes. I prefer to build positions early, keep adding up to a valuation threshold, and hold unless the thesis fundamentally changes. You have heard this from me for years... when I stack and when I stop stacking....

Rule #3: Avoid “Diworsification”

Over-diversification dilutes returns. Nearly 90% of my capital is in four core positions. If I held 60, the few home runs would be averaged away by mediocre holdings.

Rule #4: Home Runs Drive Wealth

Outperformance isn’t luck—it’s the product of my deep research, my relentless modeling, and constant comparison across assets. A handful of life-changing winners drive the bulk of returns. Yes there will always be a faster horse qtr to qtr but few will beat the multi year CAGR of the winners

Rule #5: Recycle Gains into the Next Home Run

Use winners to fund future winners. My early TSLA gains financed leveraged exposure to MSTR. Now, I’m recycling MSTR gains back into TSLA options, where I see the potential for another 10x.

Rule #6: Let Winners Compound

The most powerful edge is time. Great asymmetric bets need years, not weeks, to deliver transformative outcomes.

NOW MY RETURNS ON MY TOP ASSETS

My investments in Bitcoin (BTC), Solana (SOL), Tesla (TSLA), and MicroStrategy (MSTR) have all grown strongly, but in very different ways. The biggest standout is MSTR, which delivered monstrous growth in 5 years—largely due to options leverage. Solana also surged, multiplying more than 10x in just 4 years, and it did so without leverage, making it one of the most powerful growth stories in my portfolio. Bitcoin has provided steady, long-term growth, averaging about 28% per year compounded over 8 years, which is impressive given its maturity. Tesla, while also a strong performer, came in lower at around 20% per year, partly because its options exposure didn’t amplify gains as dramatically as MSTR. But remember it was my Tesla Bag which was the fuel that created my MSTR Bag. Never forget that.

NOTE ALSO I HAVE BLOWN UP MY LOW TESLA COST BASIS as I am rotating hard into it since $106, $150, $220 and now in the $300s. So from the above it looks like it sucks but it is because it is the only thing I have been buying in earnest the last 2 yrs.

The compounded annual growth rate (CAGR) shows the true yearly pace: ~80% for SOL and MSTR, ~28% for BTC, and ~20% for TSLA. This paints a clearer picture of sustained performance. Remember I use positions for safety, I park my money in what I call low downside assets during different periods eg 2017-2020 was BTC, 2020-2023 was MSTR 2024-today is MSTR.... and these are MONSTER ROTATIONS.

Bottom Line

This is not about chasing every trade—it’s about selective concentration, valuation discipline, and giving asymmetric bets time to compound. That’s how insane wealth is built.

I hope this is clear.... it is very important you can all wrap your heads around this and of course.. it is a process that requires insane discipline and patience.