15% Investment Cap

A breakdown of the Luna/Terra crash and the importance of portfolio allocation limits, as explained by Shaan Puri who lost $2.25M in the collapse.

The 15% Investment Rule Context

• Shaan lost $2.25M in the Luna/Terra crash
• Despite significant loss, maintained perspective due to proper position sizing
• Key lesson: Never put more than 15% in any single project due to black swan risks
• Even promising projects can go to zero quickly (Luna went from $116 to less than a penny)

Why the 15% Rule Matters

• Protects against catastrophic losses
• Acknowledges that all projects have "black swan" risks
• Prevents over-exposure to single point of failure
• Maintains portfolio resilience even when individual investments fail

Shaan's Personal Implementation

• Had written investment thesis including potential risks
• Acknowledged possibility of bank run/death spiral beforehand
• Treated it as calculated risk-reward bet
• Compared it to poker: "like having a flush draw that got beat"
• Loss was significant but not devastating due to position sizing

Psychological Benefits

• Helps maintain emotional stability during crashes
• Prevents traumatic financial experiences
• Allows for rational decision-making
• Keeps losses manageable relative to total portfolio

Recovery Strategy

• Focus on earning more rather than trading during downturns
• Use losses as motivation to work harder
• Don't obsess over calculating net worth during major drawdowns
• Stay productive rather than dwelling on losses