One, about returns
Assuming you have 1 million, when the return reaches 100%, your assets will reach 2 million. If you then lose 50%, it means your assets will return to 1 million. Obviously, losing 50% is much easier than making a 100% profit.
Two, about price fluctuations
If you have 1 million, after a 10% increase on the first day your assets reach 1.1 million, then after a 10% drop on the second day your assets remain 990,000. Conversely, if you drop 10% on the first day and then rise 10% on the second day, your assets are still 990,000.
Three, about volatility
If you have 1 million, in the first year you earn 40%, in the second year you lose 20%, in the third year you earn 40%, in the fourth year you lose 20%, in the fifth year you earn 40%, and in the sixth year you lose 20%, your assets will remain at 1.405 million, with a six-year annualized return rate of only 5.83%, even lower than the coupon rate of a five-year treasury bond.
Four, about 1% daily
If you have 1 million, if you can earn 1% every day and exit, after 250 days your assets can reach 12.032 million, and after 500 days your assets will reach 145 million.
Five, about 200% annually
If you have 1 million, if you achieve a 200% return for five consecutive years, then after five years your assets will reach 243 million, but such high returns are difficult to sustain.
Six, about a tenfold increase in ten years
If you have 1 million, and hope to reach 10 million in ten years, 100 million in twenty years, and 1 billion in thirty years, then you need to achieve an annualized return of 25.89.
Seven, about averaging down
Assuming you buy into a certain cryptocurrency at 10 yuan with 10,000 yuan, and now it has dropped to 5 yuan, if you then buy another 10,000 yuan, at this point your holding cost can be reduced to 6.67 yuan, not the 7.5 yuan you imagined.
Eight, about holding costs
If you have 1 million and invest in a certain cryptocurrency with a 10% profit, when you decide to sell, you can leave behind 100,000 yuan in market value as chips, then your holding cost will be zero, and you can hold for the long term without pressure. If you are extremely optimistic about this cryptocurrency and leave behind 200,000 yuan in market value as chips, you will find that your profit will rise from 10% to 100%, but don't be complacent, because if this cryptocurrency drops by 50% later, you may still incur losses.
Nine, about asset allocation
With a risk-free asset A (annual return 5%) and a risky asset B (return -20% to 40%), if you have 1 million, you can invest 800,000 in risk-free asset A and 200,000 in risky asset B, then your worst annual return is zero, and the best return could be 12%, this is the prototype of the CPPI technique applied to capital preservation funds.