I have been emphasizing that we live in a non-reversible multiplicative world, whether in investment or other aspects of life:

Many friends will message me, what exactly is a non-reversible multiplicative world?

It can actually be broken down into three layers of understanding.

1️⃣What is a "multiplicative world"?

It means that your results are not a simple addition, but a continuous multiplication.

For example, in investment:

In the first year, a loss of 50%, in the second year, a gain of 50%.

Many people instinctively feel:

-50% + 50% = 0

It seems to balance out.

But the actual result is:

1 million loses 50% → becomes 500,000

500,000 gains 50% → becomes 750,000

You do not return to 1 million, but only have 750,000 left.

So investment is not an addition game, but a multiplication game.

The biggest characteristic of a multiplicative world is that the damage from losses is heavier than the gains from upswings.

A loss of 50% requires a gain of 100% to break even.

A loss of 80% requires a gain of 400% to break even.

Once it hits zero, it does not matter how much it goes up afterward.

Thus, in a multiplicative world, the first principle is not "earn quickly," but "don't die."

2️⃣What is "non-reversible"?

"Reversible" can be simply understood as: does the overall average result represent your long-term personal experience?

For example, your daily commute sometimes encounters traffic jams, sometimes smooth.

The city's average commuting time can basically represent your personal experience.

This is close to "reversible."

But investment is not like that.

Suppose 10,000 people buy high-risk assets together, and in the end, 10 people become rich, while 9,990 people suffer heavy losses.

From an overall average perspective, this game may have good returns because those 10 rich individuals raise the average.

But for you, the specific person, you are unlikely to be one of those 10; you are more likely to be one of the 9,990.

So:

Overall average ≠ personal destiny.

This is called non-reversible.

Others becoming rich does not prove you will also become rich.

The market rising over the long term does not prove you won't face a margin call along the way.

A strategy having high historical returns does not prove you can survive to the end.

3️⃣What does it mean together?

A non-reversible multiplicative world means: you live in a world of continuous compound interest, continuous betting, and continuous volatility; the overall average return cannot represent your personal destiny; a significant loss, a margin call, or hitting zero can make you permanently exit.

The market may rise in the long term, BTC may rise in the long term, US stocks may rise in the long term, high-quality assets may rise in the long term, but you personally may not be able to benefit from that long-term return.

Because you are an individual, and individuals have human nature, which includes fear and greed, attachments, anger, delusion, which may lead to: selling at a loss, leveraging into a margin call, losing everything in short-term trading, cash flow interruptions, being forced to sell at the bottom of a bear market, giving up on strategies due to emotional breakdowns, and losing principal due to a wrong judgment.

And these are the specific reflections of Ye Xiaoming, Liu Bing, and others in "The Way of Heaven," who do not respect the rules, whose mindset of waiting and relying is deeply ingrained, and who cannot understand what their opportunity risks are.

These are the real performances that ordinary people present every day in the market. Unfortunately, most of us are ordinary people, not Ding Yuanying.

So we can only adhere to long-termism; long-termism is not just a slogan.

The premise of long-termism is: you must have the ability to survive to the long term.

In terms of my investment logic, this sentence can be translated as: investment is not about who wins the most in a particular round, but about who can continue to survive in an uncertain world and allow the principal to remain compounding in high-quality assets over the long term.

A simpler way to say it is something I often say:

Stay alive, then compound.

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