📖Li Lu
Know Your Limits
Stay within your circle of competence.
The most successful investors stay within their circle of competence. Know what you understand well and resist the temptation to venture outside it.
🏠 Everyday Analogy
📖 Core Interpretation
Li Lu advocates a repeatable process: define criteria, execute consistently, and review decisions against evidence. Process quality drives outcome consistency.
💎 Key Insight：Self-awareness about knowledge limits prevents costly mistakes.
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❓ Why It Matters
Without process, there is no reliable feedback loop. Structured execution and review improve decision quality over time.
🎯 How to Practice
Run a decision loop of research, thesis, execution, and post-mortem; document assumptions and update playbooks with evidence, not hindsight bias.
⚠️ Common Pitfalls
Having opinions without execution criteria
Reviewing outcomes but not decisions
Abandoning rules during volatility spikes
📚 Case Studies
1
BYD Early Investment (2003)
Li Lu, through Himalaya Capital, invested in Chinese battery and EV maker BYD before mainstream recognition, analyzing its engineering strength and founder quality.
✨ Outcome：BYD grew into a global EV leader; the multibagger return validated concentrated, owner‑like investing.
2
Post‑Crisis BYD Volatility (2011)
After initial success, BYD’s stock price fell sharply amid concerns over growth, competition, and China’s EV policy shifts.
✨ Outcome：Li Lu maintained a concentrated stake, emphasizing intrinsic value; the company later recovered and reached new highs as EV adoption accelerated.
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