process
Via Negativa
The rule
You often improve more by removing the harmful thing than by adding a clever new one. A weak bridge gets safer when you take off the extra load, not when you paint it.
Where it flips
This can turn into doing nothing and holding only cash, which quietly loses to rising prices over the years. The fix is to remove the fragile parts while still owning enough good assets to actually grow.
The surest gains often come from taking things away. Cutting the things that can wipe you out - heavy borrowing, businesses you do not understand, bets that could go to zero - protects you better than adding one more smart idea. We know what harms us far more surely than what helps us. A portfolio grows steadier by taking risk out, not by piling more in.
A worked example
Instead of hunting a new multibagger, Arjun simply clears his ₹3 lakh loan and sells two lottery-ticket penny stocks. His portfolio becomes far harder to wreck, without adding a single new holding. [illustrative]
How to spot it
- ·Cut borrowing before chasing returns
- ·Remove what can go to zero first
- ·Fewer, stronger holdings over more clever ones
Nassim Nicholas Taleb · Skin in the Game