#1
Concentrated Portfolio
"If you truly understand a business, concentrate. A few great investments beat many mediocre ones."
Concentrate holdings in a few great investments rather than diversifying broadly.
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Li Lu🛡 Risk Management
Li Lu's Risk Management Rules
Li Lu (born April 6, 1966) is a Chinese-American investor and founder of Himalaya Capital Management. He is one of the few fund managers to have Charlie Munger as a personal investor, and Munger has called him one of the finest investors he has ever known. Born in China during the Cultural Revolution, Li Lu was a student leader during...
3 principles·Risk Management
3 Key Risk Management Principles
#2
Risk-First Approach
"Before considering how much you can make, consider how much you can lose. Risk management is not about avoiding risk entirely, but about understanding and controlling it."
Consider the downside before the upside.
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Position Sizing Discipline
"The size of your position should reflect your conviction and the risk involved. Never bet so large that a single mistake can wipe out your portfolio."
Size positions based on conviction and risk.
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What are Li Lu's key risk management principles?
Li Lu has 3 key principles on risk management. The most important one is "Concentrated Portfolio" — If you truly understand a business, concentrate.
How does Li Lu apply risk management in practice?
Li Lu applies risk management through several key principles including "Concentrated Portfolio" and "Risk-First Approach". These principles guide practical investment decisions and have been tested across decades of market cycles.
What makes Li Lu's approach to risk management unique?
Li Lu's approach to risk management is distinguished by a focus on long-term thinking and fundamental analysis. With 3 specific principles in this area, Li Lu provides a comprehensive framework that investors at any level can study and apply to improve their decision-making.
