Introduction
Moonshot stocks represent tantalizing opportunities—biotech breakthroughs, AI innovators, early-stage disruptors—with the potential to reshape portfolios. But beyond the dream of outsized returns, the Moonshot Portfolio serves a deeper purpose: it is a learning laboratory for investors. The real goal is not simply outperformance, but the ongoing process of understanding how stocks behave, managing emotions during volatile swings, and refining personal rules for trading. Through structured practice, staged buying, and disciplined selling, the portfolio fosters flexibility, humility, and a keen appreciation of risk. These lessons—navigating uncertainty, making and breaking rules, and developing resilience—are as valuable as any financial gains. By embracing this journey, investors transform speculation into an opportunity for lifelong growth and meaningful improvement.
Having laid out the deeper intentions behind the Moonshot Portfolio, it’s helpful to clarify exactly what kind of opportunities we are seeking.
Moonshot stocks are breakthrough innovators in fields like biotech, AI, and other emerging sectors. They’re the companies with potential to multiply several times over — the “10-baggers.” Yet, chasing these high-upside opportunities means accepting elevated risks. The guiding principle remains: protect principal first, and capture upside second. Even small allocations to such stocks can meaningfully impact your total portfolio when carefully managed.
Moonshot Portfolio Strategy
The Moonshot Portfolio is built intentionally small—typically 0.2% to 1% of total net worth—to provide a hands-on learning environment without risking significant capital. Its goal is incremental returns (1–5% extra annual return), achieved through disciplined rules and staged investing. Starting with small initial allocations and gradually scaling allows you to manage risk, practice active trade management, and improve emotional resilience. Over time, successful positions can grow to around 5% of the portfolio, letting winners meaningfully impact overall returns while maintaining control and flexibility.
Staged Buying: Managing Dry Powder for Cost Averaging
Staged buying helps manage risk by avoiding committing your entire allocation upfront. Instead, deploy capital gradually in tranches:
- Start with a small initial position (e.g., 40%–60% of intended allocation).
- Keep remaining “dry powder” reserved for buying more shares if the price drops to target levels.
- Add incrementally on dips to lower your average cost and improve risk/reward.
- Avoid averaging down indefinitely—use predefined price targets and conviction levels.
- This approach preserves flexibility, limits initial overexposure, and capitalizes on market pullbacks.
Allocation Rules
| Rule | Description | Purpose |
|---|---|---|
| Initial allocation | ≤5% of portfolio cost | Limit risk at entry |
| Individual position | ≤1% of total portfolio | Avoid overexposure |
| Growth limit | Market value allowed to grow to 10% | Capture upside while maintaining discipline |
| Scaling | Gradual new contributions | Increase flexibility without exceeding risk limits |
| Dynamic bands | Trim above 35%, add below 25% | Control exposure while allowing upside |
Profit Rules: Staged Selling
- Recover initial cost first: Sell enough shares once a stock reaches a profit threshold.
- First tranche: Partial profits at ~30% gain.
- Second tranche: Another portion at 80–100% gain.
- Final tranche: Let remaining “free-money” shares ride, using trailing stops (~20% below recent high).
- Spike capture: Optional trims if a stock jumps 20%+ intraday.
Dynamic Band-Trimming: The Art
- Trim at ~35% of allocation: Lock profits and reduce concentration.
- Add at ~25% of allocation: Consider adding to improve average cost, if conviction remains.
- These bands are guidelines; market behavior is unpredictable. Use judgment and intuition.
- Avoid aggressively re-entering a position immediately after trimming; be selective with further purchases to prevent overexposure.
Loss & Risk Management
- Individual positions ≤30% of Moonshot allocation.
- Diversify across multiple moonshots (3+ recommended).
- Principal protection is always first priority.
- Staged selling and band rules help manage exposure even during volatile swings.
Probability-Based Thinking & Philosophy
Inspired by Howard Marks: Think in probabilities, not certainties.
Rules tilt the odds in your favor while protecting principal.
John Bogle reminds us: “The enemy of a good plan is the dream of a perfect plan.”
Accept that outcomes are never guaranteed. Flexibility, humility, and structured rules coexist to manage risk while pursuing upside.
Practical Example: CRNX Case Study
CRNX is a main holding of my Moonshot Portfolio. I initially purchased shares at ~$31.87. Before FDA approval last week, I added 20% more shares in anticipation of positive results.
After FDA approval:
- Estimated revenue ~$500M/year; net profit ~$150M.
- Market cap ~$3.5B; P/E ~23. If re-rated to P/E 27–30, upside potential ~15–20%, pointing to a target market cap near $4.25B.
Staged Selling Execution:
| Price | Shares Sold | Remaining Shares | Moonshot % |
|---|---|---|---|
| $43.88 | ~11% | 89% | 36% |
| $46.00 | ~11% | 78% | 34% |
Why I Sold:
- Portfolio discipline: CRNX capped at 30% max weight.
- Risk management: FDA approval removed binary risk; gains locked in.
- Reallocation: Partial profits deployed into Costco, balancing growth and stability.
This was not a lack of confidence in CRNX — it was about managing exposure, securing gains, and keeping the Moonshot Portfolio balanced.
Long-Term Impact
Even small allocations can meaningfully impact a portfolio over time:
| Moonshot % of Total | Portfolio Impact |
|---|---|
| 0.2% | ~2% boost |
| 1% | ~10% boost |
| 5% | ~50% boost |
Extra 1% annual return from moonshots → significant portfolio growth over time.
Over 10 years, incremental returns can compound substantially.
Key Lessons & Takeaways
- Conviction matters: sizing up before catalysts allows outsized gains.
- Plan ahead: pre-set sell targets prevent emotional decisions.
- Staged selling and dynamic bands capture upside while holding meaningful positions.
- Discipline > prediction: rules + flexibility + humility beat chasing perfection.
- Moonshot investing is an art: rules guide, but judgment and experience fill in the gaps.
This approach transforms speculative investing into a structured, probability-driven, and educational process. It is rewarding, manageable as a part-time pursuit, and teaches both risk management and opportunity capture.
Moonshot Rules Cheat Sheet
| Category | Rule / Principle | Purpose / Notes |
|---|---|---|
| Allocation | Total moonshot allocation ≤ 5% portfolio value | Limit overall portfolio risk |
| Individual position ≤ 1% total portfolio | Avoid overexposure to a single stock | |
| Dynamic Bands: Add below 25%, Trim above 35% | Control exposure while allowing for upside | |
| Growth limit: Position can grow to 10% market value | Capture gains while maintaining discipline | |
| Profit Taking | Recover initial cost at first opportunity | Secure capital before taking profits |
| First tranche at ~30% gain | Partial profit-taking | |
| Second tranche at 80–100% gain | Further profit realization | |
| Let remaining shares ride with trailing stop (~20% below recent high) | Protect gains and let “free money” run | |
| Optional: Trim shares on 20%+ one-day spike | Capture sharp, sudden gains | |
| Risk Management | Diversify across 3+ moonshots | Spread risk |
| Individual position ≤ 30% of moonshot allocation | Avoid concentration risk | |
| Use stop-loss and trimming rules | Manage downside risk | |
| Mindset & Philosophy | Think in probabilities, not certainties | Inspired by Howard Marks |
| Emphasize humility and flexibility | Avoid overconfidence and rigid rules | |
| Focus on disciplined execution over perfect timing | John Bogle’s advice: “Enemy of a good plan is a perfect plan” |
Inspired Gear
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Wearing the journey forward, one launch at a time.