---
title: "Primary and non-primary"
type: "Topics"
locale: "en"
url: "https://longbridge.com/en/topics/39957080.md"
description: "In investing, there are only two fundamental principles. The first: Value is the discounted present value of the future cash flows generated by an asset. You can say it's vague, but this is fundamental, and precisely the charm of investing—it encompasses everything in one sentence. You need to think about each word: generate, how is it generated? Future, how far into the future? Cash flow, what kind of cash flow? Discount, with what? The second: Investment returns come from the difference between the starting price and the final value over a certain period of time. This sentence may seem similar to the first, but it's not. There is a key element here: time..."
datetime: "2026-04-16T06:06:18.000Z"
locales:
  - [en](https://longbridge.com/en/topics/39957080.md)
  - [zh-CN](https://longbridge.com/zh-CN/topics/39957080.md)
  - [zh-HK](https://longbridge.com/zh-HK/topics/39957080.md)
author: "[Variansu](https://longbridge.com/en/profiles/14132361.md)"
---

# Primary and non-primary

In investing, only two principles are first-order.

First: Value is the discounted present value of future cash flows generated by an asset. You can say it's vague, but this is first-order, and precisely the charm of investing—it encompasses everything in one sentence.

You need to think about it word by word: generate, how is it generated? Future, how far into the future? Cash flow, what kind of cash flow? Discount, discounted at what rate?

Second: Investment returns come from the gap between the starting price and the final value over a certain period of time. This sentence seems similar to the first, but it's not. There's a key element here: time. Time represents change, the game between certainty and uncertainty, leading to the final value.

Apart from these two, everything else is non-first-order.

First-order is the never-wrong mathematics. Non-first-order is a narrative, a viewpoint, a quick answer that depends on when and where.

Listing the non-first-order can eliminate all investment myths and return to correct understanding. All non-first-order expressions are biases.

Concentrated investing is non-first-order.

Diversification is non-first-order.

Long-term holding is non-first-order.

Growth investing is non-first-order.

Low valuation multiples are non-first-order.

Asset allocation is non-first-order.

Investing in good companies is non-first-order.

Investing in technology is non-first-order.

Investing in explosive-growth industries is non-first-order.

Investing in excellent CEOs is non-first-order.

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