📖Li Lu
Wait for the Right Opportunity
Wait for exceptional risk-reward opportunities.
The stock market is a no-called-strike game. You don't have to swing at every pitch. Wait for the fat pitch — the opportunity that offers exceptional risk-reward.
🏠 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：Selectivity dramatically improves investment outcomes.
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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
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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