📖Li Lu
Review Your Investment Thesis
Regularly challenge your original investment thesis.
Regularly review whether your original reasons for owning a stock still hold. If the facts change, change your mind. Holding a broken thesis is the costliest mistake.
🏠 Everyday Analogy
📖 Core Interpretation
Li Lu frames investing as a compounding game. Time amplifies quality and discipline, while unnecessary activity often destroys long-horizon returns.
💎 Key Insight：Adapting to new facts prevents holding broken investments.
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❓ Why It Matters
Short-term noise often forces investors out before value is realized. Long-term discipline increases the odds that fundamentals, not emotions, drive outcomes.
🎯 How to Practice
Extend research and review horizon, reduce unnecessary turnover, and adjust only when intrinsic value, risk, or opportunity cost materially changes.
⚠️ Common Pitfalls
Calling it long term while never reviewing thesis
Overtrading and damaging compounding
Ignoring opportunity cost and alternatives
📚 Case Studies
1
Bank of America Legacy Issues (2015)
Ongoing legal settlements and past misconduct at Bank of America highlighted culture and management integrity risks despite improving balance sheet.
✨ Outcome：Li Lu emphasized assessing current leadership’s character and incentives; concluded management had shifted toward prudence, making the bank an investable turnaround with substantial upside.
2
Dot-Com Bubble Discipline (1999)
Li Lu avoided most internet stocks despite market euphoria, focusing on businesses with proven cash flows and understandable models.
✨ Outcome：Preserved capital through the 2000–2002 crash, reinforcing his principle that intellectual honesty means resisting narratives unsupported by economics.
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