23 December 2025

Just over a month ago, C reached $100, up from an average cost of $59. Tangible Book Value crossed 1, up from 0.6. The thesis of the turnaround took hold, but was also buoyed by a rally in forgotten Financials across the board. BAC, Barclays also followed similar trajectories. I reduced our position by two-thirds, rotating the capital into BTC, which slumped to a 52-week low, down from 120K to 80K. In the last month, C continued to rally, up ~ 18%. There’s a feeling of FOMO. So I’m writing this to make sense of my decision-making matrix (or indulging myself in serious cognitive dissonance). 

I rotated out of the position for the following reasons:

1. I saw more risk than reward. The position had grown (~80% return) to be over 25% of my portfolio. A scandal, an FEC investigation, etc are all risks to the existing gains. 

2. It was no longer a value or a turnaround narrative. Multiple expansion would carry this stock forward
3. Fed Easing would be a variable for revenue growth, and I wanted to maintain an appropriately sized position, ~ 5%, to participate in some future upside. 
4. Risk is individual and personal to one’s viewpoint. To many others, rotating into a volatile asset like BTC, of which I’m down a couple of points on paper, perhaps seems more risky than holding on to one of the largest banks, where the turnaround story is perhaps just beginning to unfold, and with tailwinds like Fed easing to come. But I sleep easy knowing that ~ 10% of my portfolio is in BTC. I want to be correctly positioned before the rally begins. 
5. I have a structured thesis about why BTC has the potential to double in value from its current price over the next 2 years – primarily around institutional acceptance and adoption. 
6. In contrast, I had no clear thesis on C doubling in value from its current price. Why should the market reward C with a doubling in its Tangible book value multiple? Someone else with that thesis would take a position in C and be comfortable with that risk. 
7. However, that does not mean stubbornness. As more data and information emerges, my thesis on BTC might change and should change, and likewise, my assessment of the risk-reward ratio. 
8. My strategy remains focused on high-conviction positions that are sized at around 10% of the portfolio. The risk-reward ratio focuses on a 20 to 25% downside risk, with a 100% upside potential. Buying BTC at 88K implies a floor of 70K and a price target of 160K. My time horizon is 18 to 24 months. 
9. I also recognize that momentum can carry a stock far beyond its fair value. Holding a 5% weighting while taking profits is something I’ve done more recently. It’s my version of schmuck insurance. But I’m wondering if that is rational. Time will tell.