The most fatal thing in investing is not ignorance, but thinking you understand!

The market will not reward you for how much you know; it will only punish you for how much you think you know.

I am reminded again of that dark humor: if you are playing the market, no matter how smart you are, you may still fall into structural traps!

I just saw @Svwang1's article "Lessons on Risk Management from the Bankruptcy of a $9 Billion Hedge Fund."

Amaranth was once a star hedge fund on Wall Street, managing up to $9.6 billion. In 2005, a trader in his early 30s, Brian Hunter, made nearly $1 billion in one go by betting on the surge in natural gas prices caused by Hurricane Katrina. His personal bonus was $130 million, making headlines in major financial media.

Behind the huge profits were enormous leverage and positions. By 2006, Amaranth held 150,000 NYMEX natural gas contracts, accounting for over 40%, nearly 40% of the entire U.S. natural gas consumption. Every $0.1 price fluctuation meant a profit or loss of $150 million.

At this scale, Hunter could even distort market prices, temporarily detaching them from fundamentals.

The massive paper profits could also turn against you in an instant.

In August 2006, a loss of $600 million in one hour → forced liquidation → margin pressure → further losses → ultimately leading to a complete blowout.

The peak $9.6 billion fund evaporated 60% in a month.

That year, almost everyone was praising Hunter's genius, except for Larry Fink (founder of BlackRock), who asked the critical question in advance:

"Is there excessive risk behind this?"

So he chose to pay a penalty and redeem his funds early, avoiding disaster.

Those who did not realize this ended up with a mess!

Thus, the destructive risks in investing often stem from an illusion of self-awareness.

Short-term success can easily lead one to mistakenly believe "they have mastered the rules," thinking they know the patterns, know their fate, and even believe they are fate itself, doubling down until they lose everything.

So you see—

Novices outside of investing think that institutional teams and big screens equal professional capability, but the reality is that 95% of institutions fail to outperform the index in the long run.

The reason is structural: short-sighted investors + short-term pressure + blind trust in star traders → forces the entire system towards excessive risk-taking.

The same applies at the institutional level, only the stakes are higher and the consequences more severe.

So, the same old saying—

True wisdom: acknowledge boundaries, maintain rhythm!

The wisdom of investing is not prediction, but survival;

I can earn a little less each time, but I must not lose too much in areas I do not understand. The cruelty of the market lies in "the more confident you are in your mistakes, the greater the harm!"

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。