I had posted a few days ago regarding the vital components of an Investment Policy Statement. One of the components that I find most valuable is not your entrance plan, strategy, or even philosophy......but your drawdown plan.
So what’s your drawdown plan? Is it gradual or is it a ripcord?
Is your plan mapped out and hidden behind breakable glass in case of emergency? If so......break it open. Let’s have a peek.
What vehicles might you utilize? Strictly fiat exits or precious metals or other?
What’s your timeline to be out of crypto? Or is this question ridiculous to you, and you’re in to the bitter end?
What are your red flags or signals to begin your drawdown?
I could go on and on and on. The more detail the better. For you, your conscious, and your money.
Personally, I’ve devised a two part drawdown.
The first is a systematic drawdown of my investment basis. Everyone, IMHO, should have this one planned. It’s the best cure for insomnia, and much better then Ativan.
The second is a staged emergency drawdown signaled by certain geopolitical events/disasters that I have deemed market ‘killers.’ Below is a chart I borrowed that shows the effects of specific geopolitical landmarks that have effected the S&P since 1890. What are more market killers specific to crypto, other then the impending bubble, you can think of?
The finite details of my drawdown plan is mine and mine alone. So excuse me for keeping that to myself. But my main point of this post is to underscore the importance of this component within your IPS. Of all the components, this should be the one with the most specific detail.
I’m verklempt. Talk amongst your selves. Here’s a classic, “I never said most of the things I said.” - Yogi Berra
(If my advice eventually proves folly, let it be known right now, I’m deferring to Yogi)
Forever Crypto! Ho out