The ability to think independently and deeply is as essential for investors as a sensitive palate is for a chef or steady hands are for a surgeon. Investing consists of 7 dimensions, each building upon the previous one.

Ultimately, advanced investing can be boiled down to these seven dimensions.

One-Dimensional Investing

In the one-dimensional world of investing, the focus is solely on individual companies. The overused slogan "a good company equals a good investment" can be misleading for beginners unfamiliar with the stock market. Any attempt to oversimplify or dogmatize investing often results in losses.

In this realm, the perceived quality of a company is seen as the sole truth of investment. A company that is good today, tomorrow, and the day after is expected to remain good indefinitely. Another popular saying in one-dimensional investing is "buying a stock is buying a part of the company." This quote from Warren Buffett doesn't consider his early days as an active value investor, where he would find companies priced below their net asset value, purchase enough shares to influence the board, and unlock suppressed value. Most investors do not buy enough shares to influence company decisions, so stocks priced below net value may remain undervalued.

Two-Dimensional Investing

For two-dimensional investors, the concept of price is added to the understanding of companies. The value of a company's stock can vary greatly among individuals due to differing cognitive abilities. When there is a significant gap between a stock's price and its actual value, and this discrepancy becomes widely recognized, investor actions tend to narrow this gap.

Other investors may buy at higher prices because the company’s value is being elevated through asset injections or restructuring. Stock prices rise not only due to artificially enhanced company value but also because investors believe they can sell at even higher prices. This continues until the methods of value enhancement are exhausted and fail to attract new buyers, leading to a collapse in stock prices. Soros's theory of reflexivity aptly explains this behavior.

Three-Dimensional Investing

In the three-dimensional world of investing, external factors are added to the company and price considerations. Just as farmers don't plant in winter, many investors betting on a rebound with a good company at a good price (which doesn’t necessarily mean cheap) often find themselves stuck. This is akin to farmers planting based solely on temperature, ignoring that similar temperatures occur in both autumn and spring. Autumn’s cold winds signal winter's arrival, while spring’s chill invites summer warmth.

The stage of industry development and its position in the current era determine whether a company's management is struggling against the tide or sailing with the wind. Would Steve Jobs have had the same impact if he were in the coal or steel industries?

Four-Dimensional Investing

In the four-dimensional investing world, time is added to the mix of good companies, good prices, and external environments. Time amplifies the consequences of choices. Correct actions make time your ally, while mistakes make it a tormentor. Time is the "east wind" that drives events toward your envisioned outcome. Holding a company long enough means encountering all conceivable and inconceivable black swans.

Consider a company that increases tenfold over ten years, with declines in the first three years, stability in the middle three, and a tenfold increase in the last three. A time-savvy investor would focus on other opportunities during the first six years and only invest in the final three. In investing, avoid being the last one in or the "wave" that crashes too early on the shore.

Five-Dimensional Investing

In five-dimensional investing, risk is added to the dimensions of company, price, macro environment, and time. Risk itself has three dimensions:

1. Systemic Risk: This is the risk inherent in the entire market, such as economic crises like the one in 2008. While inevitable if you participate in the market, it should not be overly feared, as systemic risk is part of the nature of investing. The only way to avoid it is to stay out of the market entirely.
2. Personal Risk: This involves the investor’s own abilities and mindset. Achieving a competent level requires years of learning and practice. Unlike other fields where average performance might be sufficient, in investing, only a small percentage consistently profit. Statistics show that in futures trading, 90% lose money, 8% break even, and only 2% make a profit. Stocks may be slightly easier, but long-term profitable investors are still rare.
3. Success Dependency Risk: This risk arises from reliance on strategies that have performed well in the past. Investors may become overconfident when a strategy succeeds temporarily, but it’s crucial to recognize whether the strategy has sustainable value or merely fits a particular market condition. Like a stopped clock being right twice a day, the validity of an investment strategy is hard to discern until it fails.

A five-dimensional investor must skillfully navigate these risks, demonstrating true expertise through their approach to each.

Six-Dimensional Investing

Investing is the art of making choices, centered on making the best decisions for the future. The best opportunities aren't limited to the stock market, which is merely a platform reflecting the intrinsic value changes of qualified participants in the real economy. A truly perceptive investor can identify opportunities in both traditional capital markets and the real economy. As global economic interdependencies grow, no modern economy operates in isolation; every country and industry is interconnected.

For instance, when the U.S. government considered lifting the decades-long ban on crude oil exports, it signaled a long-term decline in oil prices, impacting industries like shale gas and renewable energy. Such signals from the oil market can lead to diverse investment strategies across various industries and countries. This cycle's trigger point was the 2011 Japanese nuclear crisis, which halted nuclear power in Japan and led Germany to phase out nuclear energy, affecting uranium prices and spurring investment in solar and wind energy.

A six-dimensional investor possesses the ability to see how one market's movement can affect the entire system. They can derive profitable strategies across different countries, markets, and instruments from a single piece of information. By using hedging techniques, they can minimize overall portfolio risk while leveraging small positions with high-risk tools to amplify gains.

The Seventh Dimension of Investment

The first six dimensions of investment focus on the investor as a subject, using their own thinking to filter and perceive the external world. However, the seventh dimension differs by reflecting the external world's perception back into the investor's internal realm. When an investor strives to identify multi-bagger stocks, these stocks are, in turn, filtering the investor.

Anyone who has traded US stocks for a few years has likely purchased NVIDIA Corporation(NVDA.US), a stock that has risen over 10 times its original value. Yet, very few people have achieved tenfold returns. While investors analyze various indicators, macro industry trends, and engage with key company figures, the stock itself may be evaluating the investor.

Investor differences are as unique as individual appearances. With the same stock, some gain while others lose, and only a rare few achieve massive returns. These few successful investors, like major multi-bagger stocks, are irregularly distributed. Investors often retrospectively identify common traits of successful stocks, while these stocks test whether investors possess the rare internal qualities to fully absorb external opportunities, thus creating the seventh dimension's differentiation.

It's akin to some merely applying a thin layer of butter, while a select few melt the entire block, absorbing its essence like a sponge, and becoming that butter once solidified. The seventh dimension involves using the self as a vessel to filter external opportunities, while the external world filters the investor's internal qualities through market opportunities.

Beyond effort lies luck, beyond luck lies talent, and beyond talent is internal capacity. Whether external perceptions are fleeting or retained and refined over time is key to the seventh dimension's differentiation. Pursuing this dimension is like viewing the Himalayan peak from its base—visible yet elusive. The path to achieving it involves setting lofty, long-term goals, ensuring correct direction, and steadfastly taking each step.

In summary, independent deep thinking is crucial for investors, much like a chef's sensitive palate or a surgeon's steady hands. Each of the 7 investment dimensions must build upon the previous one. Understanding and mastering different dimensions, and refining experience through practice, are essential for professional investors.