Bond

When many people first see US Treasuries, the easiest thing to do is misread a number.

When you see 4.5% advertised in the market, it’s easy to mentally fill in a simple phrase: “If I invest now, I will reliably earn 4.5% every year and continue receiving it until maturity.”

This statement is only half right.

4.5% often aligns more closely with an “annualized yield metric,” and does not mean that you receive cash of 4.5% every year. What actually reaches your account is the result calculated from three factors combined: coupon payments, the purchase price, and principal repayment at maturity.

In the turbulent and unpredictable stock market, we often use faith and expectations as our compass, attempting to navigate through the fog and reach the shores of wealth. However, when our voyage deviates from the guidance of the compass, it’s easy to lose direction, even to run aground. This essay is about one such journey, beginning with an unwavering obsession with Xiaomi, which rose and fell repeatedly amidst the waves of capital.