Optionality

After a liquidity event, the market offers a thousand ways to put capital to work. Few of them mention the cost of being unable to change your mind.

Optionality is not caution. It is the preservation of future choice. A house, a fund, a jurisdiction, a philanthropic pledge — each one spends some of that choice.

Maximum return assumes a life that will not interrupt the model. Lives interrupt models. Health, children, a second move, a change of country, a desire to do less. The portfolio that cannot absorb those events is not sophisticated. It is brittle.

Keeping a meaningful share of capital liquid is often described as a failure of imagination. It can also be the most expensive decision you choose not to make.

The question is not how much the capital could earn. It is what the capital is for, and how much room you still need around it.

Written for general reflection. It is not advice, and it is not an invitation to invest.