📖Duan Yongping
The Power of Compounding
Compounding is the most powerful force in investing.
Compound interest is the eighth wonder of the world. Those who understand it earn it; those who don't, pay it. Time is the most valuable asset in investing.
🏠 Everyday Analogy
📖 Core Interpretation
Duan Yongping sees markets as cyclical rather than linear. Understanding cycle position improves risk-taking decisions more than trying to call exact tops and bottoms.
💎 Key Insight：Time amplifies returns exponentially.
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❓ Why It Matters
Ignoring cycles repeats the same mistakes: excessive optimism at peaks and excessive pessimism near troughs. Context matters for position sizing.
🎯 How to Practice
Monitor credit, valuation, earnings, and sentiment signals; reduce aggressiveness in euphoric phases and preserve flexibility in fearful phases.
⚠️ Common Pitfalls
Treating short rebounds as full cycle turns
Extrapolating peak conditions indefinitely
Becoming maximally defensive near valuation troughs
📚 Case Studies
1
Berkshire Hathaway Purchase (2006)
Duan applied his ‘simple is better’ approach by buying Berkshire Hathaway, focusing on Buffett’s track record, business quality, and capital allocation, without overanalyzing macro forecasts or short-term earnings.
✨ Outcome：Long-term holding appreciated significantly, reinforcing his conviction in concentrated, high-quality, understandable investments.
2
NetEase Leadership Transition (2006)
Duan Yongping invested in NetEase, emphasizing Ding Lei’s integrity and long-term focus despite gaming regulatory uncertainty and past accounting concerns.
✨ Outcome：Management’s prudent capital allocation and product focus drove strong earnings growth and multibagger returns over the following decade.
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