To The Moon

The Buffet of Opportunities: Why You Can’t Eat It All

One of the key lessons I’ve learned over time is this:

During market downturns, opportunities multiply—but your capital doesn’t.

For example, in a recent market dip, we saw several high-quality companies trading at deeply attractive valuations. April alone gave us what looked like a buffet of blue-chip bargains. But here’s the challenge that every investor—retail or institutional—must face: capital constraints.

When you see multiple great opportunities at once, the natural instinct is to want to buy everything. But that’s exactly where most mistakes happen.

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The Capital Allocation Trap

Just like a buffet, the market may serve 20 amazing dishes. But if you try to sample all of them, you end up bloated, exhausted, and likely regretting the experience.

Similarly, in investing, you have to choose what suits your risk capacity and financial health. And just because you didn’t choose one dish doesn’t mean it was “bad”—it just wasn’t your allocation at that time.

Even institutions face allocation thresholds. Risk exposure to a sector, stock, or theme can only be scaled up so much before portfolio imbalance or liquidity risk sets in. The same is true for individuals.

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The Stress Test Mindset

Another critical question I constantly ask myself is:

If my stock drops by 40–60%, will I still be in the game? Will I still want to own it?

That’s what conviction really means.

But conviction is meaningless if it isn’t backed by preparedness. If you believe in a company and you’re leveraging or borrowing—even modestly—then you need to know:

• How much fresh capital can you bring in if the stock drops 50%?

• Will you have the discipline to buy when others are fearful?

• Will you cut spending on luxuries like gadgets, but not touch the stock at a discount?

Unfortunately, most investors hesitate when the market is down. They have cash, but they freeze. They’d rather buy a new phone than shares in Apple at a 40% discount. That’s the psychological trap we all face.

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Averaging with Logic, Not Emotion

Let’s take an example. Suppose you invest in Google at $200. The very next day, it falls to $190. Should you immediately add another 10%?

No.

There’s no formula to predict the “right” bottom for averaging. You’re not meant to chase price levels like a mathematical puzzle. Instead, you should follow a capital pacing strategy—allocating in stages based on deeper market stress indicators, not just minor dips.

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Borrowed Capital Has a Hidden Cost

Now, let’s add borrowing into the mix.

Suppose you borrow $100 at 6% annual interest to invest. If your investment returns nothing, you’ve already lost 6%. But more importantly, you’ve incurred an opportunity cost: what else could you have done with that $100?

To just break even, you’d need to earn at least 12–14% annually (to cover both the interest and your opportunity cost). That’s a high hurdle—and it means leveraged investing is only suitable when:

• You’ve done the math

• You’ve accounted for drawdowns

• You have backup capital to average in—strategically

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Final Takeaway:

Market downturns are like buffets.

You don’t eat everything just because it’s served.

You eat what nourishes you, suits your capacity, and won’t make you sick.

Likewise, don’t chase every opportunity. Allocate capital where conviction, strategy, and staying power align.

“It’s not how many good ideas you have — it’s how well you scale the few that truly matter.”