PORTFOLIO MATHEMATICS · ALLOCATION PROTECTION
Portfolio Sizing & Protection
Inspired by the thesis: CryptoBredo Investment Principles ↗
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Strategy book: AI Investing Handbook ↗
▸ Key Investor Takeaways (from the strategy handbook)
- On-chain RWA (Real World Assets) Investing: The handbook suggests entirely bypassing traditional brokers in favor of tokenized shares held in self-custodial wallets. Ondo Global Markets is the primary choice (tokens with the suffix on, e.g.,
NVDAon), and Backed Finance is the secondary choice (tokens with the suffix x). Dividends are automatically reinvested into the token price, accelerating the de-risking ladder triggers. - The Demand Lens ("Pickaxes" vs "Prospectors"): When selecting assets, the authors recommend prioritizing "Pickaxes" — those controlling narrow infrastructure bottlenecks (ASML, TSMC, Visa, CME, custodians), as they capture profits regardless of the outcome of competitive battles in the industry.
- Mathematical Exit Staircase (10 levels): Selling decisions are executed mechanically based on mathematical growth targets from the entry price (+25%, +45%, +77%... up to +3139%), rather than on emotion. At each trigger, exactly 10% of the current remaining position is sold. Reaching Level 6 (+376%) recovers 100% of the initial capital, while about 35% of the original position remains in play forever past Level 10 for exponential upside.
- Self-Healing Portfolio: Each asset is assigned a conviction score from 1 to 10. The allocation is calculated dynamically as the ratio of the asset's score to the sum of the scores of active assets. During rotations or conviction updates, the portfolio automatically rebalances based on the formula.
- No-Strings-Attached Insurance (Volume VI): Gold (PAXG and XAUT in a 45/45 ratio) is allocated into an isolated safety layer. The exit staircase is completely disabled for this layer — insurance is never sold to lock in profits; it is held in self-custody for black swan market shocks.
Portfolio Calculator
Enter assets and conviction scores (1-10) to calculate weights. Capital is iteratively reallocated if assets exceed the Cap ceiling.
Calculated Allocation
| Ticker | Score | Allocation % & Weight |
|---|
Profit-Taking Ladder
Calculates target escalation levels. Highlights executed targets, the next active target, and the cost-basis recovery L6 milestone.
Total Cost
$1,000.00
Cash Realized
$0.00
Current Value
$0.00
Net Return
0.0%
Escalation Levels (L1 - L10)
| Level | Trigger | Sell (Qty) | Realized | Remaining | Status |
|---|
Visual Price Pathway
Methodology & Sizing Protection Guide
Click the tabs below to explore the mathematical rules governing platform portfolio management, allocation protection, and systematic de-risking.
Timefinder & The Regime Gate: Knowing When to Trade
The first rule of risk management is gating market exposure. Outperformance is not achieved by constant trading, but by sitting in cash during unfavorable market regimes.
- Timing Trigger: The long book is only activated when overall market breadth ("heat") is above 74, and BTC trades above its 200-day simple moving average.
- Preserving Capital: If either condition fails, the strategy sits entirely in cash. This timing rule is responsible for bypassing major market unwinds.
Roots & Conviction-Based Weighting
Naive equal-weighting over-allocates capital to high-risk, low-conviction assets, while cap-weighting introduces structural momentum lag.
- Conviction Scores: Each asset is scored from 1 to 10 based on fundamental strength and whale accumulation bases ("roots").
- Normalizing Weights: Capital is allocated proportionally to conviction scores. The higher the conviction, the larger the capital slice, ensuring portfolio direction aligns with high-probability bets.
Velocity, Cap Limits & Sizing Protection
Risk ceiling protection and dust filtering keep the portfolio concentrated and clean, avoiding structural decay.
- Cap Limit (Ceiling): A hard constraint (e.g., 20%) ensures that even the highest-rated asset cannot dominate the portfolio. Any surplus weight is reallocated iteratively to remaining assets.
- Floor Limit (Dust Filter): If an asset's normalized weight falls below a minimal threshold (e.g., 0.3%), it is eliminated. The capital is automatically redistributed among the rest, avoiding execution drag.
Profit-Taking Escalation & The Cost Recovery Milestone
Disciplined execution requires a systematic exit model. The escalation ladder splits take-profit targets into 10 milestone-based levels.
- Ladder Sell-Offs: At each trigger milestone (L1 to L10), the strategy sells exactly 10% of the remaining position, locking in cash and reducing exposure as the trend climbs.
- The L6 Cost Recovery (Break Even): Reaching Level 6 (+376% growth) realizes cumulative cash that exceeds 100% of the initial capital. The entire cost basis is recovered, leaving the remainder of the position running completely free of risk.