Emotions Wreck Portfolios
Most investors obsess over daily market noise—but what if the real key to wealth is patience? Discover the power of asymmetric investing. Will you ride the wave?
“The stock market is filled with individuals who know the price of everything, but the value of nothing.” – Philip Fisher
Most investors treat their portfolios like a garden—they hover, they prune, they panic at the sight of weeds.
The secret, as Lucas explains in our asymmetric investing course, is to stop fussing over individual plants and start thinking about the soil.
Portfolio management isn’t about reacting to daily market noise; it’s about positioning yourself to capitalize on deeply undervalued, high-upside bets.
A hundred positions? No problem.
If you’re sweating every tick, you’re doing it wrong.
This article breaks down the Capitalist Exploits philosophy to portfolio management, packed with historical examples, data, and the kind of common sense that Wall Street conveniently ignores.
Riding the Right Tide
The golden rule? Get the macro thesis right.
If you correctly identify a sector poised for asymmetric returns, the boats within that tide will take care of themselves.
Take Bitcoin.
In 2014, when the Capitalist Exploits team flagged it at $400, it was a tiny, misunderstood corner of the financial world.
By 2021, when they exited above $50,000, the asymmetry had played out—turning a speculative bet into a 12,000% gain.
Most retail investors, however, do the opposite.
According to Dalbar’s 2023 study, the average investor underperforms the S&P 500 by 4.1% annually. The culprit?
Emotional decision-making.
Panic selling at lows, buying euphoria at highs, and treating portfolio management like a high-stakes game of whack-a-mole.
The key insight? A well-managed portfolio isn’t a collection of stocks—it’s a basket of theses.
Find the right wave and ride it.
The Red Flags That Matter
Portfolio management isn’t about staring at your screen all day. But it’s not a blindfolded rollercoaster ride either.
Here are two triggers for action:
Thesis Drift – When a company pivots away from your original investment rationale, it’s time to reassess.
Example: BP. If you bought it for oil exposure but they shift to green energy, does it still fit?
Reality check: BP announced plans to cut oil production by 40% by 2030. If you were in it for hydrocarbons, that’s a thesis breaker. Exxon, meanwhile, doubled down on oil and handily outperformed BP in the years following.
Price Anomalies – If one company in a sector is moving wildly while its peers remain stable, dig in.
Example: Freeport-McMoRan vs. Southern Copper in 2020. When copper prices surged 26%, Freeport jumped 87%, but Southern Copper only gained 50%. If you held the latter, it warranted a closer look.
Knowing When to Sell
Selling is where investors fumble the ball.
A stock doubles—should you lock in profits? What if it triples?
A simple framework: don’t confuse price action with a change in fundamentals.
Look at copper.
After a brutal decade-long bear market (2011-2020), it bottomed at $2.50/lb.
By 2021, it had surged to $4.90/lb.
Miners like Teck Resources rode this wave from $15 in 2020 to $45 by 2022. Selling at $30? That’s leaving cash on the table.
The Amazon example is even more extreme.
In 2009, it was an $80 stock. By 2010, it hit $160. By 2016, $800. And by 2021? A staggering $3,500. If you sold after a mere double, you missed a 4,275% return.
The lesson? Let the cycle play out. Selling early kills asymmetry.
Emotions Wreck Portfolios
We do not pull capital out at arbitrary milestones (e.g., “playing with house money” at 100% gains) because it caps upside. Instead, we ask two questions:
Is there a better opportunity? If another asset offers superior risk-reward, rotate capital.
Is the position still cheap? If the fundamentals have improved but the market hasn’t caught up, hold.
Retail investors anchor to their purchase price—one of the worst biases in investing.
The market doesn’t care what you paid. The Capitalist Exploits trick? If you didn’t already own it, would you buy it today? If not, why are you still holding?
Valuations Over Prices
Forget technical charts, stop-losses, and momentum trading.
Our team moves capital based on valuations.
When entire sectors become overvalued—like tech’s P/E hitting 38 in 2021 (vs. a 20-year average of 19)—it’s time to pivot.
When markets panic, like in 2009 when P/Es hit 13, that’s when you strike.
History repeats: the dot-com bust, the 2008 crash, the 2021 tech bubble. The money is made in the waiting.
The Power of Asymmetry
Portfolio management isn’t an art of precision—it’s an exercise in patience.
Nail the macro thesis. Monitor only for fundamental shifts. Ride the full wave.
It’s simple. But not easy. That’s why the asymmetric gains go to those willing to do what most won’t: nothing.
Now the only question is—will you?
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Disclaimer: Not investing advice! This article is for educational purposes only. Seriously, we really do hope you become a better investor after reading our work. But always do your own due diligence and/or consult with a financial professional before making any investment. Capitalist Exploits reserves all rights to the content of this publication and related materials.