知彼知己，百战不殆。

Investment Interpretation

This principle emphasizes that investment success comes from understanding both the external environment and your own unique capabilities. Knowing the market allows you to identify opportunities and risks, while knowing your edge ensures that you act where your insights or skills provide a competitive advantage.

Key insights:

• Investors cannot control the market, but they can control where they have an informational or analytical advantage.
• Overextending into unfamiliar markets or sectors increases risk and reduces the likelihood of consistent success.
• Sustainable returns are generated by operating where your knowledge, experience, and strategy outperform others.

Investment Application

Million Leaf applies this principle through focused analysis and strategic positioning:

1. Market Intelligence
   • Continuously monitor macroeconomic indicators, sector trends, and market sentiment.
   • Identify structural changes, cycles, and emerging opportunities.
2. Competitive Advantage Identification
   • Focus on industries, sectors, and companies where you have expertise, analytical insights, or access to superior information.
   • Avoid investing in areas where you lack understanding or cannot accurately assess risks.
3. Informed Decision-Making
   • Leverage market knowledge to identify favorable entry and exit points.
   • Use insights to optimize portfolio allocation while maintaining diversification and risk controls.
4. Edge-Driven Strategy
   • Align investments with areas where your competitive edge enhances the probability of success.
   • Concentrate capital in high-conviction positions where your edge is strongest.
5. Continuous Adaptation
   • Update your understanding of both market conditions and your own capabilities regularly.
   • Adjust strategy and focus as your edge evolves or as market dynamics shift.

Summary

By knowing the market and their edge, Million Leaf ensures that investments are both opportunistic and strategically aligned. This combination of awareness and capability creates a disciplined framework that maximizes potential returns while managing risk.