🧐 Why say: Low risk = high return! | (Low risk High return) Content analysis —
Are you buying returns, or are you buying risks?
Some books have interesting points in that they can help us integrate our cognitive system!
It is like you have this vague understanding in your heart, and you are doing this, then when you see this book, it feels like you've found a kindred spirit, very happy!
I recommend a book (Low Risk, High Return) whose author's thoughts contradict everyone's cognition!
Many people say that high risk, high return! In reality, this is a wrong mindset; from an overall and long-term perspective, high risk cannot bring us high returns;
On the contrary, 'low risk, high return' better reflects the reality we find ourselves in.
In reality, many people are unaware of or do not understand this 'low risk, high return' phenomenon because they overlook the two immensely powerful forces of 'compound interest' and 'losing less'.
These two invisible things, once persisted and acted upon, are incredibly powerful!
If you add another point: it is about choosing direction, that is, the choice of trends and tracks!
For example, if your trend track is in Bitcoin, rather than junk stocks, and if your choice is in Nvidia rather than the Chinese economy!
Trends can accelerate your wealth and make your compound interest even more terrifying!
Therefore, this logic actually applies to any investment and can be summarized as —
The investment philosophy of 'low risk + returns + trends',
Also known as 'conservative investment strategy'.
Buffett has long emphasized the importance of capital; he once said: 'Few can endure becoming rich slowly.' This is human nature, but it is also an unavoidable cognitive change!
Every investment god I know is one who can endure patience, because those who are eager to make money have all perished!
Long-term investment returns and the effects of compound interest will help us establish a long-term, cumulative, and combinatorial thinking framework, so that we can cycle through it, remain evergreen, and as long as the turtle can stay steady and live long, it can actually defeat the rabbit without any effort!
I think this is clearly different from trying to 'get rich overnight'; it advocates for 'long-termism'.
It has nothing to do with how much assets you have, nor with your investment style! It only relates to your investment cognition —
Investment is an extremely cautious operation, waiting for returns is the same; there is no universal formula for investment, seeking victory in stability is a type of success. Sometimes whether low risk or conservative investment thinking can help us profit fundamentally depends on whether you are willing to profit from it and whether you are willing to wait for the opportunity to profit.
Successful investment is not just about looking at the returns, but also needs to consider how your investment returns compare with peers and the market as a whole. Low risk, high return may seem contrary to our common sense, but in fact, this is the true strategy for steadily seeking progress and outperforming the market.
Correct investment is about being able to control risks at the lowest while seizing relatively large opportunities. Within a stable system, we humans tend to revert to the mean. As the unprofessional majority, we sometimes believe we haven't seen good opportunities, which may be because we don't have enough confidence or patience in the choices we've made to be friends with time.
The author finally says: I hope these facts do not lead you to become extremely risk-averse investors, that is not my intention. But remember, what is the golden ratio? The real advantage often lies between two extremes. Risk is not necessarily bad in all cases, but please note that in the vast majority of cases, taking risks does not yield returns.
Please remember this rule of thumb: avoid anything that looks like a lottery or promises you high returns. Whether in horse racing or managing your investment portfolio, do not bet your money on extreme situations.
Risk is not always an enemy, but do not treat risk as our friend or even confidant:
