Core Viewpoint - The article discusses the misconception that investment success is purely based on luck, emphasizing that behind seemingly lucky outcomes lies a rigorous logic and understanding of market dynamics [1] Group 1: Scientific Aspects of Investment - The principle of mean reversion is highlighted as a fundamental rule in investing, indicating that after prolonged price increases, a decline is inevitable, and vice versa [3] - A case study is presented where a fund manager applied mean reversion logic, reducing exposure to a high-valued stock and reallocating to undervalued consumer sectors, resulting in top-tier performance by late 2024 [3] - The A-share market's liquor sector is cited as an example of mean reversion, demonstrating cycles of price increases and decreases, ultimately aligning with reasonable valuations [5] Group 2: Artistic Aspects of Investment - The unpredictability of market sentiment is discussed, noting that valuation is often subjective and not an exact science, as illustrated by differing valuations from renowned investors like Buffett and Munger [7] - The article emphasizes the importance of understanding industry dynamics and market sentiment, with examples of contrasting views on the AI sector's valuation in 2025 [7] - A notable example is provided where a tech company's stock price dropped 70% due to poor performance, leading to a significant rebound of 50% after being identified as undervalued [7] Group 3: Avoiding Luck Traps - Two key principles for avoiding reliance on luck in investment are outlined: avoiding being trapped by sunk costs and considering opportunity costs [9] - A case is mentioned where an investor held onto a losing stock due to sunk costs, resulting in increased losses, highlighting the need for decisive action upon recognizing fundamental issues [11] - The importance of evaluating whether current investments are the best use of capital is stressed, with a reference to Buffett's analogy regarding player batting averages [11]

Core Viewpoint - The article discusses the evolution of economic thought through paradigm shifts and integrations, emphasizing that each theoretical change in economics occurs through these two stages, which is distinct from the natural sciences [19]. Group 1: Paradigm Shifts in Economic Thought - The first paradigm shift in economics occurred in the 1770s, marked by the publication of Adam Smith's "The Wealth of Nations" in 1776, which transitioned the focus from "wealth management" to "wealth production" [20]. - The second paradigm shift took place in the 1870s with the rise of the marginal utility school, which challenged the classical economics' labor theory of value and introduced the "subjective value" paradigm [43]. Group 2: Paradigm Integrations in Economic Thought - The first paradigm integration occurred in the 1840s with John Stuart Mill's "Principles of Political Economy," which combined the "wealth management" and "wealth production" paradigms into a complementary theoretical framework [32]. - The second paradigm integration happened in the late 19th century with Alfred Marshall's "Principles of Economics," which synthesized classical economics' "objective value" and the marginal utility school's "subjective value" into what is known as "neoclassical economics" [51][52].