Compounding has positive asymmetry. A stock can only lose 100%, but it can gain multiples of that. This means a portfolio with one stock compounding at +26% and another at -26% doesn't break even over time; the winner's gains eventually dwarf the loser's total loss, leading to strong positive returns.

Historical data shows no exceptions to the rule that an asset class reaching a two-standard-deviation (two sigma) valuation above its long-term trend will eventually return to that trend. This statistical certainty applies to stocks, bonds, commodities, and currencies, making severe drawdowns from such peaks inevitable.

Counterintuitively, data shows that companies in higher market cap bands (e.g., $10B to $100B) have a statistically better chance of achieving a 10x return than those in lower bands. This supports the strategy of doubling down on winners, as the 'next double' is often easier for established platform companies.

Investors expecting an 'average' 8-10% return each year are often mistaken. Historical data shows returns are not normally distributed; the most common bucket of annual performance is actually 15-20%, followed by 30-35%. Years with average returns are relatively rare.

When an asset sees a massive price surge, it's effectively a "price compression" that pulls years of expected returns into a short period. This raises the probability of future volatility or stagnant performance, as the future gains have already been realized.

Contrary to popular belief, the 1929 crash wasn't an instantaneous event. It took a full year for public confidence to erode and for the new reality to set in. This illustrates that markets can absorb financial shocks, but they cannot withstand a sustained, spiraling loss of confidence.

A market enters a bubble when its price, in real terms, exceeds its long-term trend by two standard deviations. Historically, this signals a period of further gains, but these "in-bubble" profits are almost always given back in the subsequent crash, making it a predictable trap.

The asymmetrical nature of stock returns, driven by power laws, means a handful of massive winners can more than compensate for numerous losers, even if half your investments fail. This is due to convex compounding, where upside is unlimited but downside is capped at 100%.

Data since 1928 shows the average bull market lasts 2.7 years with a 112% gain, while the average bear market lasts 9.5 months with a 35% loss. This statistical asymmetry heavily favors patient investors who hold through downturns to capture the disproportionately larger and longer recoveries.