Val Sklarov’s Capital Dependency Irreversibility Model (CDIM) explains why investments don’t fail when returns disappoint—but when capital becomes structurally dependent on conditions it cannot exit. Profitability masks captivity. Losses arrive when independence was already gone.
This model reveals why capital feels liquid—until it isn’t.
1. Capital Becomes Dependent Before It Becomes Illiquid
CDIM starts with a structural illusion:
Liquidity at entry hides dependency at scale.
Early capital enjoys:
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Market depth
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Narrative optionality
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Regulatory tolerance
Later, exits depend on permission, timing, and optics.
2. The Three Capital Dependency Locks
CDIM maps where capital is trapped.
| Lock | Dependency Source | Consequence |
|---|---|---|
| Market Lock | Thin liquidity | Price collapse |
| Regulatory Lock | Controls, approvals | Exit denial |
| Structural Lock | Leverage, covenants | Forced holding |
Capital is free until two locks engage.
With three, it is captured.
3. Why “We Can Hold Longer” Is Not Strategy
Holding often substitutes for exit.
CDIM shows irreversibility when:
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Selling signals failure
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Regulation punishes withdrawal
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Structure disallows unwind
Time becomes constraint, not ally.
4. Yield vs Independence
High yield often compensates for dependency.
| Yield-Seeking | Dependency-Aware |
|---|---|
| Accept lockups | Preserve liquidity |
| Optimize structure | Stress-test exits |
| Ignore optics | Model intervention |
| Defend positions | Maintain flexibility |
Val Sklarov emphasizes that the most dangerous capital is the kind that must stay invested.
5. Strategic Implications
For investors:
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Map dependency vectors explicitly
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Price exit optionality aggressively
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Avoid synchronized lock-ins
For allocators:
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Diversify by exit path
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Keep liquid ballast
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Treat leverage as dependency amplifier
CDIM reframes investing as dependency risk management, not return maximization.
6. The Val Sklarov Principle
“Capital stops being yours when leaving becomes a problem.”
— Val Sklarov
CDIM explains why disciplined investors obsess over exits—and why exits define power.