Hardcore! Important concepts that every investment novice must understand

Investment is an art, as well as a science.

For investment novices, understanding some core concepts is crucial.

This chart is specially organized to showcase several key investment ideas:

🔺 Three Swans: Black Swan, Gray Swan, and White Swan represent unpredictable events, predictable but overlooked events, and almost certain events, respectively.

🔺 Margin of Safety: Understanding the concept of margin of safety in investing can help us avoid losses and ensure the stability of investments.

🔺 Pareto Principle: 80% of results often come from 20% of causes, reminding us to focus on areas that yield the greatest returns in investing.

🔺 Circle of Competence: Understanding our own capabilities and focusing on areas where we excel can increase the success rate of investments.

🔺 Anxiety Management: Anxiety is inevitable in investing; learning to manage emotions and stay calm is key to successful investing.

🔺 Dunning-Kruger Effect: Understanding our own cognitive level and avoiding overconfidence can help us make more rational investment decisions.

🔺 Required Returns to Offset Losses: Understanding the return ratio needed to offset losses can help us manage risks better.

Investment is not just about making money; it is also about understanding and managing risks. I hope these concepts can help everyone on their investment journey go further.