My Investing Rules After Losing 52%

A survival-first version of value investing

Three years ago, after my portfolio was down 52%, I returned to value investing.

My framework was simple:

  • Buy great companies at great prices
  • Hold forever
  • Let time do the work

I understood these ideas.

But over time, I realized:

holding forever is not simple in real life.

That’s why I started to rethink my approach and write down a clearer set of investing rules.

This is not advice.
It’s a guideline for my future self.

Rule 1: Survival Comes First

“What could permanently take me out of the game?”

This echoes Warren Buffett’s rule:

Rule No.1: Don’t lose money.
Rule No.2: Don’t forget Rule No.1.

This is no longer about maximizing returns.
It is no longer about being right.
It is about survival.

I understood this intellectually — but not emotionally.

Until the end of 2022, when my portfolio was down 52%.

Nothing I owned was irrational on its own.
The mistake was structural:

  • Too many positions
  • Heavy exposure to high-growth, high-valuation stocks
  • Businesses I believed in, but did not truly understand
  • Conviction built on narratives, not durability
  • No explicit survival rules

So I subtracted the structure that failed.

Today, I use two survival strategies, because survival is the foundation of everything.

1 Business survival filter

I focus on top-20 (occasionally top-50) companies:

  • Mature
  • Dominant
  • Cash-generating
  • Low probability of permanent failure

This protects me from business death.

If I choose to invest in growth stocks, I treat them as non-core and cap their total allocation at 12%.

This keeps curiosity and learning alive — without compromising survival.

2 Turnover control

I target 40–50% turnover (meaning ~50–60% of the portfolio stays unchanged):

  • Fewer decisions
  • Fewer chances to stack mistakes

This protects me from behavioral death.

Rule 2: Buy and Hold — With Position Size Discipline

Investing is buying a piece of a business and sharing its future cash flows.

But in reality, it’s hard to value future cash flow.
Uncertainty makes emotions louder. Price movement creates temptation.

So when I buy a company, my intention is to hold it forever.

But reality changes.

After price moves up or down a lot, the psychological situation changes too.
If a position becomes large enough to affect my emotions, I don’t fight it with willpower.

I manage position size.

I trim it to:

  • 10%
  • 5%
  • even 1%

That’s what I did with NVDA: I trimmed to 5%, and I may trim further in the future.

This doesn’t break “buy and hold.”
It’s a way to hold without losing myself.

My orientation remains:

  • Hold long term
  • Ignore short-term price
  • Let time do the work

But I refuse to let a single position drain my energy.

For next year, my goal is simple:

  • ~40% turnover
  • ~60% unchanged
  • Fewer trades
  • Fewer temptations
  • More peace

This is easy to say and hard to do.
I’m still practicing.

Rule 3: Only Allocate When the Gap Is Huge

I raise the bar for switching.

I don’t switch because an idea is “better.”
I switch only when it is clearly superior.

I ask one question:

Is the alternative clearly superior after adjusting for quality, risk, durability, and time?

It’s not only about valuation ratios.
It’s about the whole package.

Most of the time, the answer is no.

So I do nothing.

Rule 4: The Allocator Matters More Than the Portfolio

There is a hidden cost in investing: attention.

Investment decisions consume time and mental energy.
For sensitive people like me, it can easily spill into emotion and disrupt daily life.

Some businesses are simply hard to understand and predict.
Even if they are great businesses, they may still demand too much attention from me.

NVDA is one example:

  • Amazing company
  • Difficult to forecast
  • Consumed too much energy

So I reduced it.

Not because NVDA is bad.
But because protecting my life is more important than any stock.

I’ve worked hard to subtract noise and live peacefully.
I don’t want constant investing decisions to disturb my system.

Rule 5: Lower the Expectation

Aswath Damodaran said:

If you can beat the S&P 500 by 2% over the long term, that’s amazing.

I did very well in the last three years.

But I believe a lot of it was:

  • Luck
  • Market opportunities
  • Favorable conditions

Three years is too short to prove real ability.
Maybe I need another 10 years to see what is skill and what is luck.

So I no longer set target numbers.

I lower expectations:

  • No rush
  • No need to prove
  • No pressure to repeat good years

Take it easy. Don’t rush.

Summary

If I adhere to these rules, I can survive.

Not by being smarter.
Not by predicting the future.
But by removing the main ways I could destroy myself.

My survival system is built on four pillars:

Business survival filter

I invest only in mature, dominant businesses.
This reduces the risk of permanent business failure.

Turnover control

I limit how often I make decisions.
Fewer decisions mean fewer chances to stack irreversible mistakes.

Position size as an emotional valve

I manage size, not conviction.
When a position consumes too much energy, I reduce it.

Expectation control

I lower expectations after success.
I treat good results as partly luck and refuse to extrapolate them.

Underlying all of this is one guiding idea: less is more.

  • Fewer positions
  • Less activity
  • Lower expectations
  • Less pressure

By subtracting complexity, noise, and ego, I make survival — and long-term compounding — possible.

This system is not about winning fast.
It is about staying alive long enough for judgment to matter.