📖Li Lu
Behavioral Bias Awareness
Know your behavioral biases to avoid them.
Know the common behavioral biases that trap investors: anchoring, confirmation bias, loss aversion, and herding. Awareness is the first step to prevention.
🏠 Everyday Analogy
📖 Core Interpretation
Li Lu treats survival as the first objective. Limiting permanent capital loss, controlling leverage, and avoiding single-point failure are prerequisites for long-term compounding.
💎 Key Insight：Awareness of biases is the first defense against them.
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❓ Why It Matters
A single large drawdown can erase years of progress. Risk control is not timidity; it is the operating system that keeps compounding alive.
🎯 How to Practice
Define downside scenarios before entry, cap position size, avoid fragile leverage, and maintain liquidity so mistakes remain survivable.
⚠️ Common Pitfalls
Equating volatility with all forms of risk
Oversized positions without an exit plan
Using leverage to compensate for uncertainty
📚 Case Studies
1
Post‑Crisis Bank Holdings (2009)
After the 2008–09 financial crisis, Li Lu bought U.S. bank stocks trading at deep discounts amid fears of prolonged turmoil.
✨ Outcome：Patient holding through regulatory reforms and recovery produced strong multi‑bagger returns over the following decade.
2
BYD Early Investment (2002)
Li Lu invested in Chinese battery maker BYD when it was small, cheap, and misunderstood, with a strong technological edge and capable management.
✨ Outcome：Huge multi‑bagger over the next decade, validating a deep margin-of-safety approach based on intrinsic value and business quality.
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