📖Li Lu
Master Your Emotions
Master your emotions to master the market.
The greatest enemy of the investor is himself. Fear, greed, regret, and pride cause more losses than any economic event. Master your emotions to master the market.
🏠 Everyday Analogy
📖 Core Interpretation
Li Lu highlights that many investment mistakes are psychological, not analytical. Managing behavior under stress is as important as finding ideas.
💎 Key Insight：Emotional control is the foundation of investment success.
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❓ Why It Matters
In volatile markets, fear and greed push investors to buy high and sell low. A behavioral framework reduces avoidable, self-inflicted errors.
🎯 How to Practice
Pre-write decision rules, slow down trades during stress, and separate market emotion from business facts before adjusting positions.
⚠️ Common Pitfalls
Following crowd emotion at extremes
Mistaking confidence for certainty
Forcing trades to quickly recover losses
📚 Case Studies
1
BYD Initial Investment (2002)
Li Lu studied Chinese battery maker BYD, leveraging his deep understanding of China and technology to judge its moat, management, and growth prospects within his circle of competence.
✨ Outcome：Invested early; BYD compounded massively over decades, becoming one of Berkshire-related circle-of-competence success stories.
2
Himalaya Capital and Chinese Banks (2003)
Li Lu analyzed major Chinese financial institutions, focusing on simple, comprehensible retail banking models, state backing, and durable deposit franchises he understood well from years studying China’s reforms.
✨ Outcome：Invested selectively; positions appreciated significantly as China’s banking system strengthened and valuations normalized.
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