Core Viewpoint - The article discusses two prominent investment philosophies: Warren Buffett's focus on understanding one's own capability circle and Ray Dalio's all-weather diversified allocation strategy, questioning which approach is more beneficial for investors [1][2][3]. Group 1: Investment Philosophy - Buffett's principle of "do not invest in what you do not understand" is widely recognized, yet many investors confuse familiarity with true understanding [3][5]. - Dalio's strategy emphasizes diversification, but investors often fall into the trap of diversifying without understanding the underlying correlations, leading to ineffective risk management [5][11]. Group 2: Understanding Risk - True understanding in investing does not equate to predicting price movements; it involves comprehending potential losses and their probabilities [6][9]. - The article highlights that overconfidence stemming from cognitive biases can be more detrimental than a lack of knowledge [8][17]. Group 3: Data Insights - Historical data from 2005 to 2025 indicates that a stock-bond allocation reduces maximum drawdown by 15% compared to a pure A-share investment [16]. - Further diversification into global assets, including U.S. stocks and gold, minimizes drawdown while maintaining returns, validating both Buffett's and Dalio's investment principles [16][17]. Group 4: Bridging Understanding and Diversification - The article suggests that a balanced approach can be achieved by integrating Buffett's focus on understanding with Dalio's diversification, allowing for a more robust risk-return profile [17].

Core Viewpoint - The article discusses the concept of "don't invest in what you don't understand," challenging its validity and suggesting that many investors may overestimate their understanding of investments [2][4]. Group 1: Understanding Investment - The author argues that the phrase "don't invest in what you don't understand" can hinder individuals from entering the investment world, as everyone starts from a place of ignorance [4]. - It is noted that even successful investors like Warren Buffett do not apply this principle rigidly, as they focus on areas where they have sufficient knowledge and profitability [4]. - The article emphasizes that many individuals mistakenly believe they understand investments, leading to poor decision-making and financial losses [6][12]. Group 2: Survivor Bias - The author highlights the issue of survivor bias, where successful investors' stories are celebrated while failures are often ignored, leading to a skewed perception of investment success [14][16]. - The article points out that those who have failed in investments, such as cryptocurrency or business ventures, often remain silent about their losses, contributing to a misleading narrative [17]. Group 3: Risk Diversification - The author advocates for risk diversification as a valid investment strategy, suggesting that understanding the principles of asset allocation can mitigate risks even if one does not fully comprehend every asset class [19][23]. - It is mentioned that diversification can be a response to the lack of deep understanding of individual investments, allowing for a more balanced approach to risk management [23]. Group 4: Self-Assessment in Investment - The article raises the question of self-awareness among investors, suggesting that many may overestimate their abilities and should consider whether they are truly equipped to compete in crowded markets [25]. - The author reflects on the importance of recognizing one's limitations and opting for diversified strategies to achieve stable, long-term returns rather than chasing high-risk opportunities [26].

Group 1 - The principle of "do not invest if you do not understand" serves as a protective measure for novice investors, emphasizing risk control, knowledge accumulation, long-term perspective, and psychological resilience [1][2][7] - New investors often fall into traps due to information asymmetry or blind following, leading to significant losses, as seen in the 2021 cryptocurrency market [2][6] - The principle encourages investors to ask critical questions about asset attributes and risk characteristics before making investment decisions [2][8] Group 2 - Knowledge accumulation is essential for building a cognitive framework, enabling investors to understand industry dynamics and identify companies with core technologies [3][5] - Understanding market signals, such as the inverted yield curve, allows investors to adjust their asset allocations proactively rather than reactively [5][6] - The principle fosters a long-term investment mindset, where understanding the correlation between stock market returns and corporate earnings growth helps investors remain committed during market downturns [6][7] Group 3 - Psychological resilience is crucial in investment, as behavioral biases like overconfidence and loss aversion can lead to poor decision-making [7][8] - The principle helps investors establish decision-making discipline by setting cognitive thresholds, allowing them to filter out market noise [7][8] - By understanding valuation logic, investors can make rational decisions based on fundamentals rather than historical price points [8] Group 4 - The principle of "do not invest if you do not understand" is not conservative but reflects respect for the market and honesty with oneself, promoting a learning-practice-reflection cycle [9] - Investors should be able to answer key questions about a company's revenue generation, industry potential, and risk factors to internalize this principle [9] - Maintaining capital is prioritized over seeking returns, with the principle serving as the first line of defense in wealth preservation [9]