One, about returns

Assuming you have 1 million, when the return reaches 100%, the asset will reach 2 million. If you then lose 50%, it means your assets will return to 1 million. Clearly, losing 50% is much easier than earning 100%.

Two, about price fluctuations

If you have 1 million, after a 10% increase on the first day, the assets will reach 1.1 million, then after a 10% drop on the second day, the assets will remain at 990,000. Conversely, if you drop 10% on the first day and then rise 10% on the second day, the assets will still be

990,000.

Three, about volatility

If you have 1 million, earn 40% in the first year, lose 20% in the second year, earn 40% in the third year, lose 20% in the fourth year, earn 40% in the fifth year, and lose 20% in the sixth year, your remaining assets will be 1.405 million, and the annualized return over six years will only be 5.83%, even lower than the coupon rate of a five-year government bond.

Four, about 1% daily

If you have 1 million, and you can earn 1% daily and exit, after 250 days, your assets could reach 12.032 million, and after 500 days, your assets will reach 145 million.

Five, about 200% annually

If you have 1 million, and achieve a 200% return for five consecutive years, your assets will reach 243 million after five years, but such high returns are difficult to sustain.

Six, about ten times in ten years

If you have 1 million and hope to reach 10 million in ten years, 100 million in twenty years, and 1 billion in thirty years, you need to achieve an annualized return of 25.89.

Seven, about averaging down

Assuming you bought a cryptocurrency at 10 yuan with 10,000 yuan, and now it has dropped to 5 yuan, if you buy another 10,000 yuan at this point, your average cost will be reduced to 6.67 yuan, not the 7.5 yuan you might think.

Eight, about holding costs

If you have 1 million and invest in a cryptocurrency with a profit of 10%, when you decide to sell, you can leave 100,000 yuan worth of chips, then your holding cost will be zero, and you can hold it long-term without pressure. If you are extremely optimistic about this cryptocurrency and leave 200,000 yuan worth of chips, you will find that your profit will rise from 10% to 100%, but don’t be complacent, because if this currency drops by 50% later, you could still incur losses.

Nine, about asset allocation

With a risk-free asset A (annual return 5%) and a risk asset B (return -20% to 40%), if you have 1 million, you can invest 800,000.

With a risk-free asset A and a risk asset B worth 200,000, your worst earnings for the year would be zero, while the best return could be 12%. This is the prototype of the CPPI technique applied to capital-protected funds.