Why Confidence Can Wreck Your Portfolio

A client I worked with had just come off a big win.

He caught a token early and rode it 8x in a few weeks.

Confidence was high. Maybe too high.

The next month, a new project launched.

He’d only skimmed the whitepaper, hadn’t checked tokenomics.

But he was sure:

He put in 10% of his portfolio.

The project flopped.

He panic sold days later, already down 70% on that position.

🧠 The Mistake: Overconfidence in Position Sizing

Wins feel good. Too good.

And when we win, we tend to:

• Trust our gut over the data

• Skip due diligence (“I already know how this plays out”)

• Go too big on the next thing

It’s not about being reckless. It’s about being overconfident.

🔍 The Shift: Size Based on Risk, Not Conviction

Great investors don’t size positions based on how right they feel.

They size based on how wrong they could be.

That’s risk-aware thinking.

If the project fails tomorrow, how much damage would it do?

If you can’t live with the downside, the position’s too big.

✅ “Max Risk Cap” Rule

Before entering any new position:

1. I set a max % of my portfolio I’m willing to risk.

2. Default to 1–2%, depending on the risk profile.

3. If it’s a “bet,” I size it like one. Not like a sure thing.

Another simple rule that can avoid huge losses in the portfolio.

The upside is always there, but so is the risk of going to zero.

Tell me what’s your rule for allocating to new projects - just hit reply to this email.

And if you’re serious about allocating into crypto strategically, I offer a few free calls each month. Book here.

(Limited spots. Priority to engaged subscribers)

Until then,

– Matt