How to Reach the Shore
How to reach the shore
The path from W₁ to W₂ (~300M RMB). Restricted content, not publicly posted.
2. How to Reach the Shore
"Fortune favors the bold; the gambling spirit must be strong"
by Shuzhimi@RynW1988
Color coding for this chapter
Thanks to editor-in-chief C / art director Shuzhimi@Chaney
a. Body text / statements in black
b. Axioms / theorems in red
c. Explanations / supplements in blue italics
d. Inferences / conclusions in orange
e. Facts / data / news in green (due to information locality and the author's limitations, this work does not cite all sources)
f. Conjectures / assertions, as well as emotions / comments / rumors / anecdotes / metaphors / analogies and other colloquial or literary expressions, in purple
g. Theoretical innovations in gray with highlighting
The vast majority of this chapter represents theoretical innovation
2.0 What Is Reaching the Shore
2.0.1 Reaching the shore means living in most civilized regions without needing to pursue unknown cash flow, also known as contemporary financial freedom
2.0.1.1 It is generally believed that RMB 300m in the 2020s achieves contemporary financial freedom
a. RMB 300m/USD 40m is hereinafter WP, p for present, same as Appendix The Track of Chapter 0
b. For brevity, hereinafter no distinction is made between WP and its holder, nor between WP and reaching the shore
2.0.1.2 Hurun estimates approximately 50,000 Chinese households at WP, from low x per mille to low x percent
a. Intuitively: a good ocean-view apartment with four bedrooms and four bathrooms in a prime HK location (April 2025) costs roughly RMB 100m, consuming one-third
b. Generally speaking, RMB 1b is the limit of personally linearly expected usable wealth — beyond that, marginal utility becomes negative
2.0.2 Neither oneself nor one's descendants need pursue unknown cash flow — this is perpetual financial freedom
2.0.2.1 This achievement has academic significance and objectively exists, rather than being accidental
2.0.2.2 It is generally believed that USD 1b in the 2020s can achieve perpetual financial freedom
2.0.2.3 USD 1b is hereinafter WH, h for hurdle. For brevity, hereinafter no distinction is made between WH and its holder
2.0.2.4 By the natural succession implied by WH's definition, hereinafter no distinction is made between WH and its descendants — all are subject to the constraints on WH
2.0.2.5 When necessary, WH and The Elite from Chapter 0 are collectively referred to as M
We first discuss WP; for perpetual financial freedom see Chapter 3.
It should be noted that WP does not require being among The Elite.
2.1 The Method of Reaching the Shore
2.1.1 The shore-reaching method refers to, for the non-elite, how to achieve 10x+ returns with maximum certainty in a single transaction or medium-term period (5–10 years, hereinafter the same), where the 10x figure is not subject to fluctuation
a. If you have already graduated from Chapter 1, applying the shore-reaching method will achieve W1→WP in the medium term
b. The annualized return of the shore-reaching method is hereinafter Xi; empirically, Xi ∈ (35%, 50%)
2.1.1.1 Like weather forecasting, the shore-reaching method is a counter-conventional / beyond-normal-rules technique — it cannot offer 100% certainty
2.1.1.2 Like weather forecasting, the shore-reaching method is a science. When preconditions are precisely met, wins outnumber losses
The author has witnessed many people apply the shore-reaching method to achieve WP
2.1.2 This work defaults to using listed Chinese company stocks as examples
2.1.2.1 Reaching the shore is extraordinary (x per mille); in practice it is difficult to achieve purely through stock investing (the stakes involved are too small)
2.1.2.2 Reaching the shore through other investment vehicles follows similar principles
2.1.3 Why can Xi significantly exceed Rm? Three core constraints breaking through Rm
2.1.3.0 Only WH can enjoy long-term perpetual returns (see Chapter 3 for details). Such returns are constrained by three factors:
2.1.3.1 Constraint One: Market Opportunity
a. "Off-market deals" that can only absorb small amounts of capital are meaningless to WH
- Taking A-shares as an example: a stock with market cap RMB 10b trades roughly RMB 150m daily; active buying of just RMB 15m in a day is enough to trigger the daily limit-up
- Active position-building of USD 150m may double your average entry cost (7 consecutive limit-ups). The same applies when selling
- Investing USD 150m and earning USD 150m back is only possible with large-cap stocks like Moutai or Yangtze Power
b. If the initial capital required to reach the shore is small enough to pursue off-market opportunities, then it may exceed Rm
2.1.3.2 Constraint Two: Long-Term Compounding
a. The best investments in the world, such as Monet's Water Lilies, have GRm as their perpetual growth ceiling
b. Reaching the shore requires only one success: capturing the reversal phase from crash to stabilization or even to major rally, which may exceed GRm
2.1.3.3 Constraint Three: Extremely High Certainty
a. What WH essentially does is near risk-free trading — they neither need nor should chase returns from value system restructuring
b. Reaching the shore demands a strong gambling spirit: participating in the establishment of new value systems may exceed Rm
2.1.4 Three types of shore-reaching methods arise from the above
2.1.4.1 First type breaks Constraint 2.1.3.1, denoted X1: IRR 50%, MOC 5-year 8x
2.1.4.2 Second type breaks Constraint 2.1.3.2, denoted X2: IRR 40%, MOC 7-year 12x
2.1.4.3 Third type breaks Constraint 2.1.3.3, denoted X3: IRR 35%, MOC 10-year 18x
2.1.4.4 Some notes on the median returns of the above Xi
a. IRR stands for internal rate of return, i.e., expected investment return; MOC is the return multiple mentioned earlier
b. IRR and time horizons have standard deviations; MOC values represent single-use medians, independent of principal, non-compoundable, with standard deviations
2.2 The First Shore-Reaching Method
2.2.0 The first principle of X1 is: high-return certainty comes from the scarcity of the trading opportunity (i.e., good price), not from certainty about the asset itself (i.e., good company)
Such high-certainty, high-return transactions accessible only to a minority are hereinafter called X1 deals
2.2.0.1 Common examples include spin-offs of new-track subsidiaries by corporate giants, and the final financing round before industry leaders go public
None of the above are secondary market transactions. Early-stage private equity investment is called VC; mid-to-late stage through pre-IPO is called PE — hereinafter the same
2.2.0.2 The underlying assets of an X1 deal do not possess the certainty of The Portfolio, but their transaction prices are extremely attractive
2.2.0.3 This work defaults to using listed Chinese company stock examples
a. Stock investment naturally does not restrict participation by number of people — rather, it restricts those who understand and dare to participate. That is, X1 deals arise from fundamental positive changes in a listed company that only a minority can deeply comprehend
b. For certain reasons, only a hypothetical example is given
- Assume publicly available information shows a private aerospace company secured an order from Shanghai Yuanxin Satellite Technology
- But not everyone understands what this implies before China's version of Starlink is built in April 2025
2.2.1 The first shore-reaching method refers to the technique of securing a place in an X1 deal by leveraging one's own commercial influence
2.2.1.1 Essentially, investing (paying cash together with a group of people to purchase equity, same shares same rights) is merely the necessary form and optimal vehicle for monetizing personal commercial influence
2.2.1.2 Other methods of monetizing commercial influence are not recommended (examples omitted)
2.2.2 Why do X1 deals exist?
2.2.2.1 Trading is a short-term activity during which market vacuums may exist (only one buyer/seller within a certain period)
2.2.2.2 If the asset is sufficiently good, trading during a market vacuum period is actually zero-risk — the sole buyer/seller enjoys full pricing power
2.2.2.3 Take Buffett as an example. In reality, he possesses no extraordinary mathematical intelligence or risk-pricing ability; Berkshire Hathaway is essentially an acquisition company where he chooses his battlefield and conducts simple, rough, fault-tolerant risk pricing
a. Specifically:
- Only do risk-free trades that only he can execute; exit at satisfactory IRR passively
— Any mega-PE firm could meet this bar
- Only do sufficiently large trades
- During the 2008 financial crisis, Buffett invested in Goldman Sachs: crisis pricing + preferred stock + high dividends + warrants
- This was clearly asymmetric deal terms, but during the financial crisis he was the sole bidder
2.2.3 Core elements and empirical characteristics of X1 deals
2.2.3.1 The asset must be good — at the level of a top-tier industry leader, hereinafter "top-tier"
a. While it lacks long-term certainty, it has short-to-medium term certainty at a specific time and place
b. Below the "top-tier" level, any action taken on such assets yields long-term negative-sum outcomes in terms of interest
- Its own growth is insufficient to pay off everyone
- That is, not everyone who participates will fare well. This is inevitably high-risk — the wise avoid it
2.2.3.2 This trading opportunity is scarce
a. Scarcity generally means not merely the ability to buy at a discount, but that others cannot buy at all
b. Or others can buy but, due to information asymmetry, dare not buy at the same price
2.2.3.3 Empirical characteristics of X1 deals
a. 85%+ probability of achieving a deterministic 5–10x return
One successful capture before retirement suffices; beforehand, slowly accumulate commercial influence / wait for opportunity
b. You must be a necessary link in this transaction — you cannot buy someone else's story/rumor
You wouldn't dare buy much of another person's rumor; net profit insufficient makes it not worth risking
If you're not on the front line of the transaction, once conditions deteriorate, you won't understand the dynamics
c. Commitment should be no less than e-1 of personal net worth, median 100%
d. Bet to the end — "fight until complete victory"
2.2.4 Non-elite individuals may possess commercial influence
2.2.4.1 The Elite are those willing to Serve Original Dishes to the world — and they need help
2.2.4.2 Logically, "you served this dish" and "without you, this dish couldn't have been served" are different propositions
2.2.4.3 The difference between the latter and the former is called commercial influence
a. Taking an M&A transaction as example: typical persons with commercial include target company shareholders and management; headquarters of major commercial banks, M&A lending departments, handling branches; acquirer's boss and core employees; regulatory authorities
b. And key assistants to all of the above
2.2.4. I almost never have influence in any transaction — what then?
Then you're suited for the second or third shore-reaching method
2.2.5 Core elements of the transaction structure / realization method for X1 deals
2.2.5.1 Must be indisputably legal and compliant
a. Laws/regulations/rules are not immutable — it must remain legal and compliant under generous interpretation
b. For example, involving listed companies: if there's no particularly valid reason to buy before a trading halt, buy after resumption
c. For X1 deals, window returns arising from halts/resumptions (return differential between buying before vs. after halt) are entirely irrelevant
2.2.5.2 The more you share the same profit mechanism with commercially influential persons, the safer it is
Safety in numbers
2.2.5.3 If sharing profit mechanisms with many isn't possible, align as closely as possible with a very wealthy individual/institution's profit mechanism — this is the next-safest realization method
a. The standard is: what you take should be negligible to them
2.2.5.4 If all laws of capitalism were summarized in one sentence: always stand on the side of the rich. For the non-elite, aligning profit mechanisms with the rich is self-protection — because the rich have far less motive to default on you
2.2.6 Three examples of X1
2.2.6.1 A formerly worked at a foreign PE firm
a. Resigned during a project spin-off. Personally invested in the new company's formation and became vice-chairman
b. Currently considered the wealthiest among ex-PE practitioners
2.2.6.2 B formerly worked at a domestic PE firm
a. The firm's investment committee rejected a certain project. He mortgaged his house and invested nearly 100% of his personal net worth
b. The project later accumulated low double-digit returns, with net profit in the RMB 1b range
2.2.6.3 C, owner of a foreign PE firm
a. Personally invested in the first large-scale Chinese concept stock privatization transaction. Because the market had no precedent, privatization proceeded smoothly at reasonable cost
b. Secured high single-digit returns smoothly, net profit in the RMB 1b range
2.3 The Second Shore-Reaching Method
2.3.0 The first principle of X2 is: high-return certainty comes from severe prior decline AND reversal certainty — both are indispensable
Such high-return transactions featuring prior crash + deterministic reversal are hereinafter called X2 deals
2.3.1 The second shore-reaching method refers to the technique of reaching the shore through reversal investing / X2 deals
For the main academic viewpoints and practices of reversal investing, see the appendix to this chapter
2.3.1.1 In the turnaround of an X2 deal, there must be a key person/party playing a central rescue role (typically a new CEO / new shareholder)
Hereinafter White Knight / WK
2.3.1.2 The certainty of an X2 deal derives from WK's rescue capability
It should be noted that WK also brings massive positive changes to the target company that only a minority can understand — but differs from X1
a. X1 deal excess returns mainly come from trading scarcity — monetization of commercial influence
b. X2 deal excess returns mainly come from severe prior decline and WK ultimately avoiding its extinction risk
2.3.1.3 Therefore, completing an X2 deal does not require commercial influence — but it requires you to have above-market understanding of and confidence in WK
a. You need to determine only: "Who will rescue? Is the rescuer reliable?" That's enough
b. In any endeavor, even win-win ones, among resource-holding, influential parties, at least one person must be responsible/decent/professional — commonly known as having "someone to backstop." Bad actors cannot accomplish good things. The backstop must be reliable.
2.3.2 Why do X2 deals exist?
2.3.2.0 The investment target must reach top-tier level
2.3.2.1 Severe decline means dropping 90% from the prior peak, then declining further by roughly e-1
a. The first 90% is certain; the subsequent e-1 has a range of ±e-1 (in growth ratio terms)
b. A 90% drop isn't enough. Empirically, if something has dropped 90%, it usually falls further (see appendix on "Reflexivity")
2.3.2.2 Dropping 90% means the market believes this formerly top-tier asset faces extinction risk
2.3.2.3 There are two causes: either the environment underwent fundamental change, or the company committed serious operational misconduct
Colloquially: "shot themselves in the foot" (made a fatal blunder)
2.3.2.4 Only the second cause is salvageable. The first is mostly unsalvageable
a. A 90% drop means the market believes this company no longer serves any purpose under the new environment
b. A company typically cannot change its macro environment. Without self-inflicted damage, every reasonable response would already have been deployed. Continued decline indicates human effort is exhausted
c. What if the environmental cause later improves (e.g., temporary policy changes)?
- Possible, but rational investors cannot bet on this
- Policy changes generally have profound, irreversible reasons (e.g., China's "Double Reduction" policy on tutoring, grounded in deep social fairness and demographic foundations)
- If the cause were reversible/temporary, the market would be smart enough that the drop rarely reaches 90%
d. When the environment hasn't changed but the company shot itself in the foot, recovery is much easier — simply returning to its former self suffices
If WK is capable, this is achievable
2.3.2.5 Misconduct by original shareholders/management on the liability/distribution side generally doesn't directly affect asset/operations in the long run
a. Assets remain quality assets; brands often remain strong brands
b. For top-tier leaders, if you think they've made a recoverable blunder, other capable institutions surely think so too
c. Eventually, a capable WK will emerge who judges the target worth saving, believes they can revive it, and dives in personally
2.3.3 Core elements and empirical characteristics of X2 deals
2.3.3.1 WK's strength, credibility, and experience must exceed those of the rescued company
Typically elite entrepreneurs/acquisition funds become new owners; or with dispersed ownership, capable management becomes new CEO
This must not be WK's first/only project — their rescue capability remains unvalidated, and win rate is insufficient
2.3.3.2 WK must have skin in the game — fully committed
If they don't rescue, they suffer personal loss — not merely opportunistic trial
Once WK is committed and sufficiently capable, there is 70%+ probability of successful revival
2.3.3.3 Empirical characteristics of X2 deals
a. Return distribution is empirically roughly: 70% at 10–20x; 20% at 1–2x; 10% at 0x
As stated, a 90% drop reflects the market's belief that this formerly top-tier asset faces extinction risk
If the final outcome is non-extinction, there's a floor of 6–8x return; empirically, the median exceeds 10x
b. Bet to the end — "fight until complete victory"
A common error: correctly betting the top-tier won't go extinct, yet exiting at 2x or with insufficient position size
2.3.4 Non-elite individuals may also build confidence in WK
2.3.4.1 Philosophically, the success of the non-elite necessarily comes from following the right Elite
Most early ByteDance employees have reached WP or even WH and retired
2.3.4.2 Non-elite individuals may also have the ability to leverage social resources to understand inside information
2.3.4.3 You need only make a 0/1 judgment
This is information you'll only learn after sharing a bottle of Moutai with at least one witness to the power struggles among the company's factions
2.3.4.4 I have no opportunity to learn who the new operator is or whether they're reliable — what then?
a. An X2 deal appears roughly once per year across the entire market (deal of year)
b. Once before retirement is sufficient. If you happen not to know anyone in that field, wait for the next one
c. In fact, this is the most common path to the shore for ordinary people
d. If you have no opportunity to learn about any capable WK, you're suited for the third shore-reaching method
2.3.5 Core elements the transaction structure / realization method must satisfy
2.3.5.1 Use capital you can afford to lose — such capital, after 10x appreciation, must reach WP/your satisfaction threshold
Human calculation cannot match heaven's design; X2 deals have at best ~70% win rate
2.3.5.2 Gambling spirit must be strong
a. You need deep understanding of and absolute confidence in WK — do not reduce positions before achieving expected/needed returns
b. In a single trade, if you eventually earn 10x, it means you did not materially reduce positions at 2x or 5x
c. This means if principal is 10, your utility function U(w) satisfies U(10)=U(0)=U(20)=U(50)<
Colloquially: "have a ruthless streak"
2.3.6 Three examples of X2
2.3.6.1 Steve Jobs' return to Apple
a. Before Jobs returned, Apple's stock had fallen 95% from its peak
b. During Jobs' tenure after returning, Apple's stock rose over 100x
2.3.6.2 RX Coffee
a. After accounting fraud erupted, the stock fell over 95%
b. Yet throughout, RX Coffee's assets remained quality assets. Since new controlling parties took over, the stock has risen over 30x
2.3.6.3 A local government rescuing/buying the dip on a new-energy vehicle manufacturer
a. Over the subsequent 8 months, this NEV company's stock rose 20x
b. Shareholders with inside knowledge benefited accordingly
2.4 The Third Shore-Reaching Method
2.4.0 The first principle of X3 is: high returns come from a new asset category emerging from nothing and growing into significance
2.4.0.1 Such brand-new-from-nothing assets are hereinafter called X3 Assets
a. Predicting a new asset category's growth entails startup-level risk — weakest certainty
b. Identifying X3 Assets requires you to get Chapter 5: How to Predict the Future
2.4.0.2 Despite weak certainty, X3 still holds academic value
a. X3 has the lowest requirements on capital/social resources and highest expected returns (note: not highest return ceiling)
b. Low capital allows failure tolerance; X3 is the only common shore-reaching category permitting multiple attempts
2.4.0.3 The third shore-reaching method refers to the technique of reaching the shore by investing in X3 Assets
2.4.1 Applicability of X3, "non-elite exception," and illustrative examples
2.4.1.1 Ex-post, X3 requires The Elite to originally succeed in performing — but the non-elite may attempt
a. Getting Chapter 5 is, of course, an Elite pursuit. There exists a kind of Elite who produces only original thought. Consequently, they cannot obtain WP by signing their name to endeavors. Their original intellectual contribution has only one direct user: themselves
b. Per 2.4.0.2.a, X3 performed by such Elite is unattributed, thus open to non-elite attempts — many other "Elite games" lack this opportunity
2.4.1.2 Per 2.3.4.1, whenever opportunities open up, non-elites can follow or copy homework — or in the process produce original thought and become Elite ("Eliteness is not innate")
a. The most common practice is becoming an early employee at companies creating X3 Assets; or following Elite X3 performers to invest in X3 Assets; or copying their ideas and applying them to the current-version world
2.4.1.3 Illustrative examples
a. April 2025: BTC rose ~20x over the past decade; Pop Mart also rose ~20x from recent lows
b. April 2025: Cardoo Limited plans IPO; news reports call it "sweeping 4.4 billion from elementary students" (referring to collectible card business revenue)
2.4.2 Core elements and empirical characteristics of X3 Assets
2.4.2.1 The core element of X3 Assets is: entirely new assets requiring new culture/new values/new rule-setting
2.4.2.2 X3 Assets CANNOT be early-stage tech-driven conceptual assets
a. Technological progress possesses considerable reasonableness and feasibility from day one
April 2025: autonomous driving, flying cars, curing cancer, brain-computer interfaces all have very high probabilities of eventual success
b. No matter how early, you cannot obtain pricing good enough for X3-level returns
Bill Gates said: "People overestimate what they can do in one year and underestimate what they can do in ten years" — hence tech concept assets tend to be expensive even in year one
2.4.2.3 After the first wave ends in chaos, such tech concept assets may subsequently present X3-level pricing
April 2025: under AI's impact, metaverse/NFT concept assets are barely discussed anymore
2.4.2.4 Empirical characteristics of X3 Assets
a. On the basis of correctly predicting the future, return distribution is empirically roughly: 50% at 30x; 50% at 0x
Correctly predicting the future doesn't guarantee profits. The first ride-hailing app, the first bike-share — both bankrupt by April 2025
b. X3 Assets entering rapid appreciation undergo a sudden takeoff; before that, no clear pattern emerges — median waiting time spans a decade
c. Therefore you must tolerate total-loss risk tolerance. After enduring long waiting and entering the takeoff harvest phase, (very counter-intuitively) do not exit prematurely
2.4.3 Why do X3 Assets exist?
2.4.3.0 Only by defining new values can new asset holders / newcomers participate in value reshuffling
The most common value reshuffling is a city's new hot district: Beijing won't forever favor locations closest to Tiananmen Square
2.4.3.1 Newcomers' labor and demand create net value. Traditional-value-system M also welcomes this and opportunistically shares the new pie
After new residents pour in, urban new districts genuinely transform from wasteland to modern metropolis, surrounding land appreciating dramatically
2.4.3.2 Their combined forces form a new consensus
a. The only losers in this game are slow-transitioning defenders of old value systems
b. Since this game creates net wealth, the formation of new consensus is irreversible and inevitable
- Pop Mart went viral — its supply chain, promotion platforms, store owners, new and old shareholders all benefited accordingly
- Everyone is pleased to see toy culture go global; Pop Mart indeed makes prettier products than Jellycat, with stronger psychological projection
2.4.4 Identifying X3 Assets requires curiosity, broad interests, and love of learning
2.4.4.1 You must be unable to tolerate fixed cognitive frameworks and unable to accept stagnant understanding of the world
a. Successfully predicting 5→100 necessarily contains deep understanding of the world and powerful prediction ability
b. This understanding certainly lies outside your existing track (otherwise you'd have reached the shore already) — this unknown demands curiosity
Don't mind learning completely unrelated knowledge — bird taxonomy, vocal techniques — embrace the spirit that "no learning is wasted"
2.4.4.2 Possessing broad curiosity prevents confinement by existing cognitive frameworks — your worldview won't be fixed
a. If someone considers their pre-T self very foolish, call T their foolishness cycle. Highly curious people have extremely short foolishness cycles
b. Eventually, these structural understandings / analogies / refutations of the world undergo qualitative change — at some point you discover the world itself is foolish
c. As correction, X3 Assets naturally enter your cognition
2.4.4.3 X is known as China's most curious entrepreneur. He told a story:
a. Mr. CM Po is a renowned financier. X wondered: "Why 'Po' in his name? Must be a good reason."
b. X has a remarkable cognitive trait: "Boss C chose this name not because his mother was confused — it must be because X himself was confused."
c. Reportedly, "Po" carries auspicious meanings. The water radical represents wealth; combined with fa (from facai, prosperity), it becomes Po
d. This quality is politically termed "welcoming criticism" (Li Shimin) and academically termed "never letting any counter-intuition slip" (Yang Chenning). X is top-tier Elite — at least e-1 of his Eliteness stems from such top-tier curiosity. Incidentally, X invested USD 100m in BTC at a very early stage, purely to "pay tribute to this magnificent design"
2.4.4.4 Compared with "judging whether WK is reliable," X3 theoretically requires fewer social resources — quiet reading suffices
a. However, this actually requires investors to possess some degree of insight into the world's operating laws, even the ability to predict the future
b. Colloquially: "having truly mastered learning," possessing great wisdom — harder than X2
2.4.5 Core elements the transaction structure / realization method must satisfy
2.4.5.1 After forming identification and judgment on a new asset class, intervene early enough
2.4.5.2 One important optional path: join a company operating new assets
2.4.6 Three examples of X3
2.4.6.1 A certain angel investor
a. Co-founder of a renowned education institution. Introverted, avid reader. After leaving that company, deep understanding of the world enabled two investments turning RMB 100m → RMB 10b
2.4.6.2 Pop Mart
a. Founder studied MBA at Guanghua School of Management (2014). Several classmates joined pre-Molly-era Pop Mart
b. The most contributing classmate held ~1%; April 2025 market cap around RMB 1b
2.4.6.3 Singapore's Sea Group and Vietnam's potential X3
a. Singapore's Sea Group is "the Tencent of Southeast Asia"; rose 30x+ from 2018–2021
b. Vietnam's potential X3 targets are omitted here, with some notes:
- April 2025: limited by the author's capabilities, virtually no marginal macro change unfavorable to Vietnamese targets can be found
- Its small scale and low base are already priced in. Vietnam's GDP exceeds Yunnan/Guizhou, approaching Hebei. If a Vietnamese target reaches national dominance, it has momentum akin to Great Wall Motor/Yunnan Baiyao; if it leads all Asia outside China (GDP comparable to China's), it has momentum akin to Moutai/Tencent
2.6 When Encountering Xi, You Are Usually Not Ready — Strive to Seize Opportunities
2.6.1 Although Xi is a medium-term investment, in practice you almost NEVER have time to operate leisurely
Ex-post windows may span months or even over a dozen months — but you cannot wait
2.6.2 One relatively realistic reason: normally you have low probability of having maximal-level liquid cash available
Yet Xi investment opportunities are exceedingly rare — maximize capital mobilization
2.6.3 The author's experiences consistently had only around three weeks of operation window
2.6.3.1 Once, the author drove family far to a ski resort. Ski gear just on; while stowing phone, received intel: 2–3 week operation window. Removing heavy gear to head to airport felt deeply counter-intuitive
2.6.3.2 Still went to airport and started fundraising. Just finalized when informed quota increased — still half short. Had to continue fundraising; spent over a month total, one week overtime, barely completed
2.6.3.3 Had to stay in hotel meetings constantly that year; child's birthday had to be celebrated at the hotel
2.6.4 All three types of Xi are rare opportunities — exert maximum effort
2.6.4.1 Maximize commercial influence to get a foot in; maximize social resources to understand WK; maximize curiosity and courage to learn new things
2.6.4.2 Maximize position sizing to spur bravery, push yourself to 137% effort, transcend self-capability
a. Reaching the shore is extraordinary; fortune is not lightly bestowed
2.6.5 Two examples of seizing Xi
2.6.5.1 A senior alumnus
a. Participated in a chip company's backdoor-listing paired private placement; WP→WH took three years: "Those three years exhausted me"
b. After completion, donated a building to alma mater as reward to self
2.6.5.2 Leader of a world-leading new energy group
a. "When you have 70% confidence, act. Overcome 15% of risk during execution; bear the remaining 15%"
b. "'Dare to win through hard work' is insufficient — that's physical labor. 'Strong gambling spirit' — now that's mental labor"
2.7 Don't Reach the Shore Twice
2.7.0 WP→WH cannot be accomplished by the non-elite, nor via Xi
One shouldn't possess wealth exceeding what one can carry
2.7.1 People who complete Xi may be non-elite but are all extraordinary — in Feng Shui terms, they "possess wealth fortune"
Happening to know the methods saved them detours
2.7.2 Xi·Xj ≠ X². After Xi success, it cannot be compounded — usable only once
2.7.2.1 Empirically, after one Xi success, repeated compound use causes severe return degradation
a. With identical external conditions, return distribution degrades to: 10% at 2x–10x, 60% at 1–2x, 30% at 0–1x
2.7.2.2 Some explanations why Xi cannot be compounded:
a. Someone is non-elite; through certain opportunities occasionally executed Xi and obtained WP — they should be content
b. After reaching the shore, mindset shifts: less sharp, less humble
c. Someone didn't change or even grew stronger, but successful Xi itself is enormous luck — a repeat attempt likely reverts to mean
2.7.3 If Xi succeeds: in the following period (at least one year), relax thoroughly
2.7.3.1 Engage in anything legal and relaxing except investing — default choice is global travel
2.7.3.2 Seek yourself during world travel; forcibly refrain from investing
2.7.3.3 Of course one MAY become rich twice — but don't try to
April 2025: Trump went bankrupt twice, became rich twice
2.7.4 Adjust mindset: after reaching the shore, forget Chapter 2
2.7.4.1 Good fish require excellent water adaptability and swimming ability; good frogs require sharp vision and jumping power
a. Their skill sets differ
b. After reaching the shore, they face different food sources, living environments, and predators
2.7.5 After reaching the shore, adjust mindset and switch ASAP to Chapter 3: How to Maintain Position
Non-elite version Appendix to Chapter 2: On Reversal Investing
2.8 What Is Reversal Investing? Doesn't the Anchoring Limit Include Soros's 30-Year 30%?
2.8.0 Reversal investing is an academically recognized investment school exceeding Rm, with effectiveness between Chapter 1 and Chapter 2
2.8.0.1 On one hand, well-applied reversal investing outperforms the Wealth Management Method; on the other hand, pure reversal investing cannot achieve reaching the shore — it needs its enhanced version X2. The content below can be viewed as X2's theoretical foundation
2.8.0.2 Unlike the Wealth Management Method, shore-reaching methods can be infinitely strengthened. For uncertain matters, every bit more stability helps
2.8.1 Reflexivity of Expectations (Soros)
2.8.1.1 Humans are irrational. Once psychological thresholds are breached, reactions follow the trend — fleeing en masse
2.8.1.2 Thus this downward trend overshoots / self-reinforces — this phenomenon is called negative reflexivity of expectations
2015 A-share circuit breaker introduction / forced liquidation / thousands of stocks hitting limit-down
2.8.1.3 Investing that exploits reflexivity is called reversal investing
2.8.2 Practical Reversal Investing Example 1: ZD Group
2.8.2.1 ZD Group is the #1 Chinese commercial family by wealth, prosperous across seven generations
2.8.2.2 Investment style: acts once per decade, frequently at RMB tens-of-billions scale, purchasing only strategically important best-in-class assets
a. Philosophically, unique quality assets are always cheapest long-term — "fear of heights is the lot of the unfortunate"
2.8.2.3 Its Chinese investments include:
a. China X Group / J Company mixed-ownership reform
b. Two Grade-A office towers in Beijing CBD core area
c. ZG Biotech (shareholder of KX vaccine)
2.8.3 Practical Reversal Investing Example 2: Hong Kong Property Stocks
2.8.3.1 HK's priciest property viewings often require proof of assets in tens or hundreds of millions
2.8.3.2 Yet the finest HK property stocks, like Sun Hung Kai, over a 20-year horizon always reach PE 5x at some point
2.8.4 Practical Reversal Investing Example 3: Diversified Reversal-Factor Investing
2.8.4.1 Ordinary people lack access to exclusively buy the highest-certainty assets (as in the two examples above), but the phenomenon that ordinary assets (short-term) refuse to fall further may exist
a. Facing life-threatening danger (e.g., at gunpoint), few immediately flee — most freeze in fear and numbness
b. Similarly, an asset experiencing multiple rounds of sharp decline and prolonged bottom oscillation enters a so-called oversold state
c. Among oversold-state assets, removing portions with fast-extinction risk and investing in a diversified way often achieves ~30% returns
2.8.5 This merits mention because it is arguably the only academic strategy exceeding GRm=20%
2.8.6 Reversal investing is not suitable for everyone
2.8.6.1 Investment style mirrors investor personality
Those who love oversold bargains generally dislike buying quality assets, and vice versa
2.8.6.2 This technique is currently fully armed — nearly only institutional professional operations are viable
2.8.6.3 Poor application leads to value traps and severe losses
a. A company valued below its book free cash is quite ordinary
b. Two examples of "market cap below cash on books":
- An HK-listed company held RMB 500m cash on books, but market cap was only RMB 400m
- Natural thought: buy it, dissolve it, and it's worth RMB 500m?
- But it won't dissolve — management expenses travel and entertainment on the company dime daily
- Management is so terrible no WK is willing to step forward for privatization
- Capital C raised an Ethereum metaverse fund
- Operation: convert raised USD to ETH, then invest ETH into metaverse projects
- Fund ultimately liquidated: earned 2–3x in USD terms but lost 90%+ in ETH terms
- I.e., if they'd simply held ETH post-fundraising without investing in any projects, they'd have earned 10x–20x
c. Oversold ordinary assets merely resist falling short-term; long-term extinction is certain
d. Some top-tier companies appear to have dropped significantly and present opportunity, but they are no longer who they were
For understanding this point, see main text 2.3.2.4
Both Elite and Non-Elite versions