Capital Looks for Asymmetry, Not Certainty

Capital, in essence, pursues value appreciation and expansion. This pursuit often manifests as a preference for "asymmetry" rather than a thirst for certainty. Asymmetry refers to the expectation in investment or capital operations of obtaining higher potential returns with lower risk or cost; that is, losses are controllable in adverse situations, while profits are substantial in favorable situations. This logic stems from the profit-seeking nature of capital, which naturally tends to seek opportunities with high uncertainty but high potential returns to achieve its own value appreciation.Capital profits from information asymmetry by exploiting it as a form of "knowledge tax," but technology is breaking this monopoly. From high-frequency trading to fraudulent marketing, information asymmetry has become a means of production, while blockchain and social platforms are driving the democratization of information. This battle for the right to know will reshape the rules of competition in the digital economy era.

Investment Misconceptions Analysis

1. Short-Term Fluctuations and Long-Term Prospects

At the most fundamental level, judging the difference between an event and expectations, rather than simply assessing whether the event itself is favorable or unfavorable, is more crucial. Macroeconomic events and short-term fluctuations in corporate market capitalization are often difficult to predict and may not reflect a company's long-term prospects. Therefore, investors should not overemphasize these short-term fluctuations.

Most people buy stocks with the intention of selling at a higher price; they tend to view stocks as trading objects rather than long-term holdings. This mindset often leads them to ignore the ownership aspect of stocks and focus excessively on short-term price movements, a behavior akin to gambling or speculation. Investors should focus more on long-term value.

Benjamin Graham famously said, "In the short run, the market is like a voting machine, but in the long run, it is more like a weighing machine." This statement profoundly reveals the nature of the market. Rather than trying to guess short-term market trends, investors should carefully weigh long-term value to achieve superior investment performance.

2. Volatility and Market Perception

Volatility is a common phenomenon in the market, but most investors should not overemphasize it. In fact, Warren Buffett once pointed out, "We prefer a 15% volatility return to a steady 12% return." This emphasizes that investors should pursue more challenging investment opportunities.

True investment returns come from the growth potential of long-term holdings, not short-term price fluctuations. Frequent trading leads to emotional decision-making, increases costs, and risks missing out on long-term gains. Therefore, investors should patiently wait for market upturns rather than blindly following the crowd or trading frequently.

Furthermore, "don't confuse a successful investor with a bull market" is an important investment principle. Managers with the skills needed to achieve asymmetry can generate good returns from factors beyond market upturns.

Asymmetry and Investment Skills

In the investment world, asymmetry represents superior investment ability. Alpha skills allow a minority of investors to profit more when the market rises and lose less when it falls. Investing should focus on long-term performance and asymmetry to achieve returns that outperform the market.

Howard Marks explored in his November memo: "What really matters to investors?" Short-term events, a "trading" mentality, short-term performance, volatility, and overtrading are all considered the least important factors. Identifying managers with asymmetric advantages is crucial for investors.

Investors who tend to prefer stable returns should perhaps reflect on whether their aversion to volatility stems from financial considerations or emotional factors. Warren Buffett once said, "We prefer 15% volatility to 12% stability." Those who prefer stable returns should perhaps reflect on whether their aversion to volatility is driven by financial considerations or emotional factors.

The Widespread Impact of Asymmetric Risk

Asymmetric risk is not merely a financial term; it exists in all aspects of our daily lives. Information asymmetry and imbalances in power and responsibility are all manifestations of asymmetric risk, leading to systemic risk. Taleb points out that these asymmetries can lead to minority dominance. In this context, the "stakeholder" principle is not only a means of risk aversion but also a tool for cognition and decision-making. By making everyone bear the consequences of their decisions, we can learn from mistakes and drive the evolution of the system. Risk also provides valuable insights into how to make informed decisions in an uncertain world. In every decision, we must ask ourselves: am I truly "involved"? Only then can we take control of our destiny in this complex and ever-changing world and avoid being swallowed by asymmetric risks.

Conclusion

In markets with information asymmetry, capital often builds barriers by precisely manipulating information flow to obtain excess profits. The core of this strategy lies in creating a cognitive gap—keeping one party in an information disadvantage while the capital occupies an information advantage.