Asymmetric Bet Evaluation Worksheet

Asymmetric Bet Evaluation Worksheet

Use this 5-question framework to evaluate any high-risk, high-reward opportunity before investing. If you can’t answer YES to all 5 questions, don’t invest.

📋 Download: Print this worksheet or save it digitally. Use it every time you evaluate a potential asymmetric bet.

Question 1: Do I understand the fundamental value proposition?

Can you explain in simple terms WHY this should increase in value? If you can’t explain it simply, you don’t understand it well enough to invest.

My explanation:

Write your explanation here in simple terms. Can you explain this to a 12-year-old?

✓ PASS if: You can clearly explain the value proposition in 2-3 sentences

✗ FAIL if: You’re relying on hype, can’t explain it, or are just “hoping it goes up”

Question 2: Is it early enough that most people haven’t noticed?

Where is this in the adoption cycle?

☐ Almost nobody has heard of it (EARLY – Good sign)

☐ Tech/niche communities know about it (EARLY – Good sign)

☐ Mainstream media is covering it (GETTING LATE – Caution)

☐ Everyone is talking about it (TOO LATE – Red flag)

☐ Your relatives are asking how to invest (WAY TOO LATE – Run)

✓ PASS if: You’re in the first two categories

✗ FAIL if: Mainstream adoption has already happened or FOMO is driving your decision

Question 3: Can I afford to lose this investment completely?

Calculate your risk tolerance:

My current net worth: $__________

Investment amount: $__________

Percentage of net worth: _______%

⚠️ RULE: Investment should be 2-5% of net worth MAXIMUM

Required safeguards (must have ALL):

  • □ Emergency fund (6+ months expenses)
  • □ Zero high-interest debt
  • □ Regular investing in index funds already happening
  • □ Housing cost below 15% of income

✓ PASS if: Investment is ≤5% of net worth AND you have all 4 safeguards

✗ FAIL if: Investment is >5% OR you’re missing any safeguard

Question 4: Is the potential upside 10x or more?

Asymmetric bets need massive upside to justify the risk.

Current price/value: $__________

Realistic best-case price in 5-10 years: $__________

Potential multiple: ______x

What would need to happen for this to 10x?

Write your realistic scenario here.

✓ PASS if: Realistic path to 10x or more exists

✗ FAIL if: Upside is capped at 2-3x or requires everything to go perfectly

Question 5: Can I hold for 5-10 years without needing the money?

Asymmetric bets require patience and the ability to hold through volatility.

Ask yourself honestly:

  • ☐ Do I need this money in the next 5 years for anything?
  • ☐ Can I emotionally handle a 50-80% drop without panic selling?
  • ☐ Am I investing with “extra” money, not money I need?
  • ☐ Can I ignore this investment for years without checking it constantly?

✓ PASS if: You answered YES to all 4 questions

✗ FAIL if: You need the money soon or can’t handle volatility

FINAL DECISION

Did you answer YES to ALL 5 questions?

✓ ALL 5 YES: This passes the framework. Consider investing your predetermined percentage (2-5% of net worth).

✗ ANY NO: Do not invest. Wait for a better opportunity that passes all 5 questions.

Remember: Real asymmetric opportunities are rare. You might only see 2-3 per decade. That’s normal. Be patient.

Real Examples: How This Framework Works

✓ PASS: Sam’s Bitcoin Decision (May 2011)

  • Q1: YES – Understood digital scarcity, limited supply, peer-to-peer transactions
  • Q2: YES – Almost nobody had heard of it, media called it a scam
  • Q3: YES – $500 was 0.54% of $93K net worth, had emergency fund, zero debt
  • Q4: YES – Could go from $1.50 to $150+ if technology worked (100x potential)
  • Q5: YES – Didn’t need the money, could hold indefinitely

Result: $500 → $8 million

✗ FAIL: Rich’s Horse Investment (May 2011)

  • Q1: NO – Couldn’t explain why horses should appreciate beyond “people pay a lot”
  • Q2: NO – Gypsy Vanners were already popular and expensive
  • Q3: NO – $14K was 28% of net worth, had debt, no emergency fund
  • Q4: NO – Best case was 2x return, not 10x+
  • Q5: NO – Needed income within 2-3 years to cover ongoing costs

Result: Lost $23,500

Golden Rules for Asymmetric Bets

  • 1. Never invest more than 5% of your net worth in a single asymmetric bet
  • 2. Never invest money you’ll need in the next 5 years
  • 3. Never invest based on FOMO (fear of missing out)
  • 4. Always take profits on the way up (sell 10-20% at major milestones)
  • 5. Keep total asymmetric bets under 20% of your net worth combined

Want the PDF version?

Download Printable Worksheet (PDF)
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