Unit 6 · Level 4 · Portfolio & Hedging
Portfolio construction
A portfolio is a DESIGNED machine, not a pile of trades. Core-and-satellite gave you the skeleton: boring compounding core (index + DCA, maybe BTC/ETH DCA), a sized trading satellite, and cash as a position. Construction means choosing the WEIGHTS on purpose and capping correlated risk.
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What you get asked
Why does the CORE deserve most of the capital?
The satellite's job is edge, the core's job is time. The core is the part of your wealth that doesn't depend on your win rate. That independence is priceless. Protect it from your own excitement.
Match the sleeve to its job and sizing logic
Every euro has ONE job. Money without a job wanders into trades it shouldn't be in.
Rebalancing (trimming winners back to target weights) forces you to systematically sell ___ and buy low.
A calendar-based rebalance is discipline mechanized: it harvests bubbles and funds despair without requiring courage in the moment.
Your satellite tripled during a mania and is now 40% of net worth (target: 15%). The construction answer:
Most mania fortunes round-trip to zero because nobody skims. Rebalancing is how paper wealth becomes real wealth.
The portfolio-level version of the 1% rule is…
Concentric circles of survival. Risk management fractal: the same idea at trade, theme, and life scale. Hedging next, the last tool. 🐜
The rest of this unit
Core-satellite construction, rebalancing, insurance, and the League 4 graduation.