Spend enough time studying the greatest investors of all time, and one thing becomes clear very quickly: |
They don't agree on how to manage risk. |
Some of the most successful investors in history never used hard stop losses at all. They managed risk through position sizing, patience, and long-term conviction. |
Others cut exposure aggressively the moment conditions changed. |
Some relied on deep fundamental insight and time. Others leaned on structure and rules. |
And yet, all of those approaches worked. |
What doesn't work is ambiguity. |
Not in markets. Not in systems. And especially not when you're writing to thousands of people who are making real financial decisions. |
Different Roads, Same Destination |
Warren Buffett has famously ignored short-term price volatility in favor of business quality and long-term compounding. Peter Lynch talked openly about enduring drawdowns in great companies while focusing on the story, not the ticker tape. |
Stanley Druckenmiller, by contrast, has described cutting risk quickly when conditions shift, even if the long-term thesis still appears intact. |
Those approaches look wildly different on the surface. |
But they share one critical trait: clarity. |
Each of these investors knows exactly what a price move means inside their own framework. There's no confusion about whether a line was crossed, what that implies, or how risk is being handled. |
That's the standard I aim for here at Moonshot Minute. |
Where the Confusion Came From |
Yesterday, a subscriber wrote in with a fair and thoughtful question: |
"I am confused. In your portfolio update, you were stopped out of several positions. Later, those stop-outs disappeared from the model portfolio. That seems odd. Perhaps I misunderstood how this works." | | | | A.M.F |
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That message struck me because the question pointed to how I define risk within the Moonshot Minute framework, and I realized I was causing the confusion. |
And that's on me for not being clear. |
The Moonshot Minute Portfolio (pictured below, with recommendations blurred) reflects the current state of each position based on price, volatility, and risk thresholds at the prior day's market close. |
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It does not log or preserve every intraday or short-term breach once price has recovered. |
In a few cases, prices dipped below newly adjusted stop levels and then rebounded. I did not issue sell alerts at the time because the broader thesis remained intact, and the moves appeared more like volatility than structural breakdowns. |
When the portfolio updated later, the "stopped" condition no longer applied, so it no longer appeared. |
To someone viewing the system without that context, it can feel like history changed. |
It didn't. But the definition wasn't clear enough. |
So I'm fixing that. |
How Our Stops Actually Work |
We use a volatility-based stop algorithm rather than a static percentage or an arbitrary line. A more volatile stock requires a higher stop-loss percentage, while a less volatile stock requires a lower one. |
As a position rises, the stop automatically adjusts upward, accounting for both price movement and the asset's natural volatility. This is intentional because the goal is to preserve gains without suffocating winners. |
When a position moves higher: |
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This means it's entirely possible for a position to be above its original entry price, yet temporarily below a newly raised stop level during a pullback. |
It might seem contradictory, but it's the trade-off of protecting gains dynamically. |
What "Stopped" Means |
From here on out, the definition of Stopped is explicit and documented. |
Stopped means the position has breached our adjusted risk threshold based on price and volatility. |
It is a risk signal, not an automatic sell. |
When a position is marked Stopped, it tells you that: |
The trade has moved beyond the level we consider acceptable risk at that moment, and The position requires review and attention.
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Any actual exit from a position will always be communicated separately through a clear, explicit sell alert. |
All alerts are delivered via email and, if you're on the text alert list, via text message. The portfolio reflects the current risk state, not a historical log of every short-term price movement. |
To put it simply: |
Stops define risk. Alerts define action. |
This definition will now live permanently in the legend section of the official Moonshot Minute Portfolio, so there's no ambiguity going forward. |
One More Important Point |
These recommendations are general guidance, not individualized advice. |
That means: |
If I do not personally issue a sell alert but a stop level is breached, and you feel it's prudent to exit, you should absolutely do so. |
Different people have different risk tolerances, time horizons, and position sizes. A level that signals "review" for one person may signal "exit" for another. Both can be valid. |
The Moonshot framework is built around one core idea: |
Protect capital. Preserve gains. Let winners breathe. |
Dynamic stops help define where risk changes. They don't replace judgment. And they don't override communication. |
If I believe a position should be exited, you'll hear it directly from my team and me with a clear sell alert. |
And if a stop level is briefly breached but price recovers and/or the thesis remains intact, the portfolio will continue to reflect the current reality. |
The Bottom Line |
There are many valid ways to manage risk. History proves that. |
What isn't acceptable, especially at the scale Moonshot Minute has achieved, is confusion about what a signal means. |
So I've tightened the language, clarified the definitions, and we've aligned the system with how many professional investors actually think about risk in the real world. |
I appreciate the subscribers who ask the hard questions. That feedback makes the system better for everyone, so please keep it coming. Even though I may not respond to everyone, I read every email that comes in. |
And going forward, when you see Stopped in the portfolio, you'll know exactly what it means and what it doesn't. |
Here's to clarity and discipline. |
Double D |
P.S. Here's a screenshot of the current Moonshot Minute Portfolio. I've blurred out the tickers since that information is only for Premium Members, but you can see how we've done so far: |
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