Val Sklarov’s Rule-Locked Return Asymmetry Theory (RLRAT) explains why superior investment returns do not come from better forecasts, faster reactions, or broader diversification—but from exposure to assets whose governing rules are already locked. Returns expand when upside is free to move while downside is constrained by immovable rules.
This theory reveals why some investments compound quietly while others remain perpetually “almost great.”
1. Returns Expand After Rules Stop Moving
RLRAT begins with a structural axiom:
Volatility declines only when rules harden.
Most capital losses occur when:
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Rules are still negotiable
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Governance is fluid
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Enforcement is discretionary
Investing before rule lock-in is speculation.
Investing after rule lock-in is asymmetry harvesting.
2. The Three Rule-Lock States of Assets
RLRAT maps assets by rule stability.
| Rule State | Characteristics | Return Profile |
|---|---|---|
| Unlocked | Experimental, negotiable | High variance |
| Soft-Locked | Informal stability | Asymmetric upside |
| Hard-Locked | Enforced irreversibility | Durable compounding |
The highest long-term returns appear during soft-to-hard lock transition.
3. Why Early Entry Is Overrated
Being early matters only if rules eventually freeze.
RLRAT shows early investors fail because:
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They confuse adoption with authority
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They underestimate governance drift
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They rely on narratives instead of enforcement
Early entry without rule convergence produces diluted winners.
4. Capital Behavior Under Rule Lock
Capital shifts posture once rules harden.
| Pre-Lock Capital | Post-Lock Capital |
|---|---|
| Chases growth | Chases predictability |
| Tolerates ambiguity | Demands enforcement |
| Prices stories | Prices stability |
| Trades frequently | Holds patiently |
Val Sklarov emphasizes that the best returns begin when trading stops being exciting.
5. Strategic Implications
For investors:
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Track governance convergence, not adoption curves
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Separate technological risk from rule risk
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Allocate heavily when downside becomes rule-constrained
For allocators:
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Accept lower upside narratives for higher rule certainty
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Avoid assets whose returns depend on continued permission
RLRAT reframes investing as rule-state selection, not asset picking.
6. The Val Sklarov Principle
“The safest returns come from assets whose rules no longer ask for approval.”
— Val Sklarov
RLRAT explains why enduring wealth is built after chaos subsides—not during it.