Risk Acknowledgment Aids Perspective

Shaan Puri shares his experience and perspective on losing over $2M in the Terra/LUNA crypto crash, emphasizing the importance of risk awareness and emotional management during significant financial losses.

Key Points:

• Initial Investment & Growth:

  • Started with $25K investment
  • Added $200K through VC opportunity at 40% discount
  • Value grew to approximately $750K at peak ($116/LUNA)

• Risk Management Philosophy:

  • Documented investment thesis and potential risks beforehand
  • Limited exposure to 15% per project due to "black swan" risks
  • Maintained clear understanding that algorithmic stablecoins had never succeeded

• Emotional Response to Loss:

  • Not traumatized despite losing $2.25M
  • Attributes calm reaction to prior risk acknowledgment
  • Wife remained surprisingly relaxed about the loss
  • Focuses on earning rather than dwelling on losses

• Personal Financial Strategy:

  • Keeps crypto at less than half of liquid net worth
  • Doesn't actively check portfolio during major downturns
  • Uses losses as motivation to work harder
  • "When you start losing a year salary per day... that starts to add up"

• Lessons Learned:

  • Market success can be demotivating to work
  • Major losses create stronger motivation to earn
  • Important to maintain perspective when investments are performing well
  • Don't calculate net worth during significant downturns for mental health