Rule #84 – The E² Principle (Patreon)

Rule #84 – The E² Principle aka “E-Quadrat”

Growing up i hammered it into myself calling it “E-Quadrat” literally means E² (“E hoch zwei” = E to the power of 2).

“Be both effective and efficient. Good is fine, effective is better, efficient is smart — but when you’re both, you’re unstoppable. If you slip on one, don’t stop until you’re back on track.” IA 2021

Application in Investing

Effective (the what): Allocate capital where it truly matters — assets with strong fundamentals, real utility, and long-term growth potential. Think Bitcoin. Think Tesla.

Efficient (the how): Optimize execution — manage entries, manage costs, taxes, and risk with precision while maximizing exposure. Think LEAPS, disciplined scaling, and smart position sizing. Efficient also applies to rotating out of tired horses.

Combined (E²): When your capital is in the right place and managed with precision, compounding becomes unstoppable.

E² in Action – A Real Example

Effective: Spot the right narrative early — e.g., Artificial Intelligence — and identify the true winners with durable moats and adoption tailwinds. Names TSLA and NVDA

Efficient: Maximize upside with disciplined tactics — buy the dips, scale in methodically, and use LEAPS to amplify exposure without spreading capital thin.

Result: You’re not just in the right story — you’re positioned in the smartest way possible. That’s how conviction compounds into outsized returns.

The Mindset

Since 1990, everything I do must be both effective and efficient. Anything less drives me insane. E² isn’t optional — it’s survival.