Risk and sizing · 3 articles

Risk is managed by how much you own, not by how confident you are

Most investing writing is about what to buy. This lane is about how much, and about what would make me sell. A sound thesis held at the wrong size can still ruin a portfolio, and a weak one held small does little harm. The difference between the two outcomes is decided before the first purchase, when the downside can be estimated without a price moving against you.

I treat sizing as arithmetic rather than temperament. Each position gets a written estimate of what it loses if the reason for owning it proves false, and a written list of the events that would prove it false. Those two notes set how large it can be, when it may grow, and when it has to be cut, whatever the screen says. The essays here apply that habit across credit and markets generally, including the uncomfortable cases where leaning against a crowded price looks brave and is really a question of bookkeeping.