I was on a business trip in the Yangtze River Delta recently, and I met a private equity fund manager whom I hadn't seen for a long time. Over tea and meals, we talked about some new insights into investing in the past 1-2 years. Since 2018, I have done a lot of operations on investment targets, from tiered fund A, closed funds, convertible bonds, new listings (Hong Kong stocks, convertible bonds), private equity (quantitative neutral, arbitrage, CTA, quantitative index increase), ETF funds, etc. There are many investment products involved. Since the beginning of 2022, I have been thinking about whether I should do some subtraction, really achieve the extreme and deep enough in a certain field. How to choose between "one horizontal" and "one vertical" in investment? Do I need to do some subtraction? The current idea is to keep the horizontal unchanged and find a deep vertical to cultivate. The thinking process is roughly as follows:

1-【Tao-What is the right thing to keep】

From the perspective of investment philosophy, although I have tried various martial arts, after trading experience, I still feel that David Swensen's asset allocation logic is suitable for my original intention of investment (keeping the right path) and my personality traits. In addition, Taleb's series of books have deeply influenced my investment and trading philosophy. It is based on this investment philosophy and investment logic that it means that we must have an overall judgment on cross-market and cross-product investment targets, but there will be a lack of depth, after all, human energy is limited. However, the low-hanging fruits and average returns of those cross-market targets are indeed highly certain.

For example:

Two things to do after private equity investment:

① Only one major buying or selling decision is made in Q4 or Q1 each year;

② Rebalance once in Q3 each year;

Three aspects to consider when choosing private equity:

①Company culture;

② Investment logic;

③Scale and capacity.

2-【Skill-Live Long and Live Happy】

Recently, I have interacted with some friends. Everyone generally feels that the financial industry has relatively high returns and risks. There are occasional cases of people getting rich by surviving this deviation. There are also some investment circle bigwigs who have suffered huge drawdowns or even liquidated their positions. Recently, I have also had some thoughts on this risk and drawdown. The high volatility of the financial industry itself is an amplification of the volatility of the real industry. However, the underlying logic of various industries is often similar. There are many cognitive and game-level competitions behind the real industry's move to the middle and senior levels, and the volatility of positions, salaries, etc. will also be stronger (executive salary cuts and corporate layoffs are not uncommon). The biggest advantage of this seemingly wide-ranging approach to finding low-hanging fruits is that you don't go all in. If a market or a type of target really dies, there is still a possibility of turning around according to the logic of allocating 10-25% (investing for a long time is the kingly way, and there are so many shooting stars, how many are really long-lived?); according to the logic of portfolio allocation, it is better to invest in Sharpe and Karma for a long time, which will give you a very comfortable investment experience and you won't lose sleep.

3-【Side effects】

Low-hanging fruit certainly has advantages, but we must be aware that it has limitations. Over-reliance on low-hanging fruit may leave no "fruit" to be picked when one or several markets "roll up". If you want to build your own scarce core competitiveness, make yourself irreplaceable, become famous, or even establish a school of thought, then picking low-hanging fruit is at most just the beginning. You need to pick all the fruits from the whole tree. A cross-border expert shared his experience. He mentioned that cross-border ability can greatly improve a person's comprehensive competitiveness, but one thing needs to be noted. You can cross borders in multiple fields, but you'd better be able to drill deep enough in one field. Let's "translate" his words according to the context of this article, that is, pick most of the fruits from a tree, and then pick more low-hanging fruits from other trees, so as to build your own compound competitiveness.

4-【Conclusion】

Recently, I have indeed thought about some long-term things and done some short-term things; I have also been thinking about the topic of "low-hanging fruit". It can be regarded as a perspective to observe problems, a basis for selection and judgment, and a routine of thinking. As I said before, the financial world is constantly fighting back and forth, trying to gain comfort, self-consistency, and a sense of value; and self-denial, and evolving non-stop day by day.