After reading Chapter 5 of 'The Most Important Thing in Investment', the content can be summarized in four words: understanding risk. Most of the time, we think we understand risk, but in reality, the concept of what risk really is can be easily misunderstood. Howard Marks compressed him into these few: one ️⃣ Risk is not volatility, but the possibility of 'permanent losses'. In traditional finance, risk is often defined as volatility. But Max doesn't quite agree. He believes that the real important risk is not price fluctuations, but rather: you buy something and then realize it's not worth the price, or even never come back. For example, if BTC drops from 100000 to 70000, and your asset judgment remains unchanged, the cycle logic remains unchanged, and your position can withstand it, it is more like volatility. This volatility cannot be called risk, and you cannot consider volatility as risk. But if you are buying an asset with fundamental collapse, narrative bankruptcy, team running away, and liquidity depletion, such as EOS, then damn it is the real risk. Because there is a possibility of permanent losses here, your money is really gone. two ️⃣ Risk is often underestimated in bull markets. The most dangerous time in the market is usually not when everyone is afraid, but when no one is afraid. Because when everyone is optimistic, prices are pushed up, and safety margins are compressed, people may mistakenly believe that: This asset is really strong There's no problem with this track All callbacks are opportunities But in reality, the more expensive the price, the higher the risk; The more consistent the emotions, the more hidden the risks. I see this and feel that it is particularly suitable for use in crypto: when a project goes from a valuation of 100 million to a valuation of 5 billion, the project itself may indeed improve, but the investment risk may also increase at the same time. Because you are not buying 'good assets', you are buying' prices corresponding to good assets'. three ️⃣ High risk does not equal high returns. Many people misunderstand the saying: high risk, high return. What Max wants to correct is that high risk only means more uncertain results, it doesn't necessarily mean you will receive higher returns. More precisely, those who take on high risks must demand higher potential returns as compensation. But in reality, it is often the case that many people take on high risks without receiving reasonable returns, instead opting for high risks and low returns. That is to say, you think you are taking a risk to make money, but in fact, you are just taking a risk. This is particularly common in altcoins, primary markets, and leveraged trading. four ️⃣ Risk is subjective, implicit, and only becomes apparent after the fact. Risk cannot be accurately calculated afterwards like returns. Profit is the result, risk is the possibility in the process. Just because a person buys high-risk assets and eventually makes money doesn't mean they didn't take any risks at the time. Just like a person crossing the road with their eyes closed and not being hit, it doesn't mean that this behavior is safe. So Max emphasized that evaluating investments should not only focus on the results, but also on: How much uncertainty did you bear at that time? Do you have a safety margin? Did you survive by luck? If history were repeated 100 times, would you be able to win most of the time? This is a bit like what I've been saying: investing is not about winning once, but about the ability to continuously have the next bet in a non traversal world. five ️⃣ The ability of a good investor is not just about pursuing returns, but about understanding and controlling risks. Max's most important reminder is: Ordinary investors like to ask: How much can this increase? Mature investors will ask one more question: How much will I lose if I am wrong? The truly excellent investment is not simply pursuing high returns, but obtaining asymmetric returns while bearing limited risks. That is to say, the upward potential is large enough and the downward risk is tolerable. My summary: Risk is not price fluctuations, but the possibility of permanent losses; The key to investment is not to avoid all risks, but to only bear those risks that are adequately compensated for after fully understanding the risks. Profit is the reward given to you by the market, while risk is the way you expose yourself to death in order to obtain the reward. True investment ability is not about seeing opportunities, but knowing which opportunities will prevent you from realizing compound interest.