——Previous review——
The rigid demand for investment is to hedge
I believe that you have been brainwashed since childhood, even I have been washed like this:
Want to make big money? Then you have to be adventurous!
This is the most common and harmful "fair legend" - in modern times, the word "urban legend" may be used. In all cultures, every child in the process of growing up is ashamed of "timidity" and "weakness". They are proud of "brave" and "strong" - and "adventure" is obviously a show of courage the most common way.
The most terrible thing in the world is not the risk itself, but you simply don't know that you are taking risks.
The "game" that we did when we were young, now I think it is really scary, and it is lucky to be able to survive. Because of this unnecessary adventure, even if the risk is low, can't stand the number of times you do it.
In many cases, if we have not done a detailed study, we will not find a lot of potential risks.
Be alert at all times:
Many risks are objective.
This is not a transfer of your personal will.
As long as there are uncertainties in this matter, there must be corresponding risks. How to avoid unnecessary risks through clever design is the most important investment skill we usually need to polish.
With regard to the concept of risk, the understanding of observers and practicing person is likely to be very different, even diametrically opposed.
What is this like? For example, when a brain surgeon performs a craniotomy, each of his actions "seems" as "dangerous". A little mistake can have serious consequences... but this is the observer's perspective. From the practicing person's point of view, first of all, his goal is to succeed rather than take risks; secondly, he is trained to do the work that the observer cannot do; and he is an expert, he knows what danger What is not dangerous, he knows how to do it is a real adventure, he should know what to do to effectively hedge adventure...
Therefore, throughout the process, the observers "have experienced" various dangers at all times, frightened, felt that the practicing person are constantly taking risks, and finally succeeded because of adventure.
In fact, all the attention of the practicing person was on how to hedge, not how to adventure.
So, please think about it carefully. When we see someone doing difficult moves - we are observers, they are practicing person - if they are "experienced," the so-called "experience" is more likely to be " "Hedging experience", not "adventurous experience"; and if without warning, we observers may have a misunderstanding, misunderstanding that the rich things that people have are "adventurous experience."
I bought a lot of bitcoin when the price was very low. Later, I didn’t sell it, and then when Market crash I also didn’t sell it. So someone said it: “Xiaolai, you are so bold!” Someone will comment "Yes, people who do big things have to dare to take great risks..."
Really? Really like what they saw and thought?
"Price is very low" means relative to the current price. The first batch of 2,100 bitcoins I bought was priced at $6 (March 2011) and now more than $3,539 (January 2019). In addition, Bitcoin has risen to over $19,188. And after had two or three times "cut in half"... In fact, people also thought that it was too expensive at that time, and couldn’t make any money... But actually, for me, when I bought at this time, it was not an adventure because:
If it is right, then it must be more than this price; I am simply selling the stock that originally cost 4,600 yuan, when it has been worth more than 100,000 US dollars, and then buying bitcoin, Therefore, even if they are all nothing, I have nothing to bear.
I started buying a lot after falling from the market to $12. The average price was about one dollar in the end. Until the budget is spent, I really didn't have any money to buy it. In this process, from my point of view, I didn't take risks. When I saw people panic and felt that "bitcoin is dead" (that was in the second half of 2011), I repeatedly read various reports and articles, and did not see any real reason... (This is very strange, and it is somewhat confusing to me; and in December 2014, after a big ups and downs, the articles on the Internet completely repeated the arguments at the end of 2011 - of course, they did not copy articles written by others a few years ago. Just didn't understand history...), so I think they are wrong (even if they have a lot of people, but there are no half-dollar relationships between person number and reason). So, according to my thinking, I should continue to buy, if I can't buy it, I will take it. Anyway, selling it is definitely wrong...
In the circumstances at the time, according to my own logic, not buying is an adventure! Because my conclusion at the time was that this thing could not be imagined in the long run.
At that time, the situation was very different. Even if they have a lot of people, who sell to me at a low price today, on the one hand, they said "thank you" (because someone actually paid money for it), another The aspect praises me for "so brave" (because they actually secretly rejoiced in their hearts at the time, they finally got rid of)...
Later, bitcoin prices rose to more than a thousand dollars (even once exceeded the price per gram of gold), and this rise occurred in just six weeks. I didn't sell it, and then it falling price two or three times, and I also didn't move. Is this really courage? Is this really an adventure? Actually it is not for me, the reason is very clear:
Far from the cost price I bought. For me, what are the risks?
It is important to note that the above example is my personal thought of investing in bitcoin myself. It is limited to being an example of “Practitioners tend to be more concerned about risk avoidance” and is not “investment advice”. Never misunderstand the words in the above examples, even use it as your investment basis - this sentence will be repeatedly emphasized in the future:
Your investment must be based on your own and only think deeply.
Everyone must always remember:
Listen to the majority, refer to the opinions of a few people, and finally make your own decisions.
This is a principle I have repeatedly mentioned on various occasions.
It's easy to listen to others, you don't need to think, just trust your brain to the public. But you also can't enjoy the benefits of "maverick and correct."
In fact, it is not just investment and financial management, this sentence can be used in all aspects of life.
We have always emphasized the preciousness of attention. The attention we have saved in various ways is to finally apply it to improve our judgment.
Enhancing your professional skills and learning how to avoid risks reasonably is the most important thing we need to pay attention to.
Therefore, unlike many people imagine, I am actually a risk averse type. When I was young, this was not the case. I often thought that adventure was proof of courage. Later, I read more books.
Adventure is often the understanding of other people's adventurers, not the actions of so-called "adventurous" successful people.
Columbus was called an adventurer because he really believed that the earth was indeed round - there were not many people who really understood it at the time - and he was convinced that he used action to prove, he used business to gain. The person who sees this will feels that it is an adventure. The person who does it has to do it because of in-depth thinking - because the person who thinks more deeply, the more inclined to follow the result of thinking firmly.
The concept of “Venture capital institution” (VC), which is familiar to everyone, is a concept that is generally misunderstood by the public. Even a lot of first-line entrepreneurs will more or less misinterpret institutions and individuals engaged in “risk investment”. The words they most often say might be like this:
Are you not a venture capitalist, why don't you risk investing in it?
This is the most typical "bias". The "Venture capital" model is actually very simple. Generally speaking, it is:
Lock in one of the fastest-growing areas, and then invest in a number of early-stage companies that are likely to grow at a rate to maximize revenue while probabilistically minimizing overall risk...
VC actually knows how to "do not take risks". The model design of venture capital is also for risk-avoiding, not risk-taking. There are two goals:
Maximize the benefits possible;
Minimize systemic risk.
In order to maximize the benefits, they first go to the areas that they believe are the fastest growing. For example, in the last decade, the development advantage of the Internet field, "natural" is thousands of times in other "traditional" fields. This "locked field" itself is also one of the basic means to reduce the risk of systematization, and then they have to screen in "such as who is the first", "who is the fastest growing" ... even "the top three" all investment once again; after that, it will be combined with other VCs to "unite together" and "together in the same boat"... These are all aimed at reducing systemic risk - rather than people taking it for granted "actually for risk."
In other words, although the name has the word "risk aversion", in fact, they are "hazard" masters, not "adventurous" masters - they do not bother to act as "brave". Although, when others say them like this, they don't care. Anyway, "educating others is not the top priority." Even some of them are happy to follow the public's understanding. From time to time, they say "the risk is that we take it, you just need concentrate doing things." If you do something well. In fact, the lower the risk, the greater the gains, is their core values. This is also the value that should be in the "capital" thing, isn't it?
Our language is very deceptive.
We say "brave" in fact, and actually express "recklessness"; we say "Venture capital" in our mouths, but we are thinking about "adventurous investment" and so on.
Many times our language has expressed our attitude.
For example, when it comes to investment, many people like to use "play" and "hype" to describe their behavior.
There is a lot of risk behind such a language. I feel that I am just playing, so it doesn't matter if I don't do well. I think that I am just hyping, so it doesn't matter if I take risks.
Because of this mentality, you can't take investment and financial management seriously, and you can't accumulate professional knowledge in this field, so it's no surprise that you can't get a satisfactory return.
As we have discussed before, in order to cooperate with others, we need to “intentionally give up part of the sense of security”, but this is certainly not to encourage blind adventure. Be sure to pay attention to safety in two things. Be sure to learn and accumulate experience on how to hedge:
In terms of capital security; in personal safety.
But why do people generally tend to ignore the existence of risk in capital? Generally speaking, because human beings generally do not have experience in asset management, the fear of capital risk has not yet had the opportunity to form “genetic memory”. If a child sees a gun on the table, he will pick it up very curiously, not afraid at all, and of course he does not know that it is a deadly thing... but if a snake appears behind him Even if the child hasn't seen what it is, he has already been so scared and shivering. Why is this happening? Because each of us has "genetic memory", there are a lot of fears, genes have already been implanted, no need to explain, no need to teach, natural understanding, natural will, natural feel.
Now let's take a look at it. The human understanding of wealth and capital is really not much, not long enough, not enough. It is too little, too short, not enough! Think about it, here are the unquestionable facts:
- Human cognition of wealth is not long. You see, humans have been using currency for thousands of years, and it has been a very short period of time in the long history of mankind;
- For a long time, the proportion of people with sufficient wealth among human beings has been very, very low. The proportion is actually low or even negligible;
- The entire human race, besides a nation (Jewish), both has so far demonized the concept of "Compound interest" - this is the most important concept in the field of wealth ( There is no need to follow a qualifier "one of them" at the end;
- Human society has never stopped turbulence, the same is true both at home and abroad, every big turmoil is essentially the killing of wealth owners, so about wealth Genes are actually difficult to continue to inherit;
- Humans truly recognize the benefits of the market (from a true knowledge research perspective, not “intuition”), just two or three hundred years (China is even worse, the 1980s Only re-opened the cognition of this aspect);
- Humans really study the law of economic operation, starting from Adam Smith, less than 300 years;
- The human exploration of the investment market began only more than 200 years ago (the US stock market began with an open-air transaction under a West Indian evergreen tree on Wall Street in 1792);
- The true perception of probability, starting from the 16th and 17th centuries, the study of probability from gambling, applied to capital, applied to risk assessment, this process has not started until the beginning of the last century, until now less than 100 years ...
That is to say, in the field of wealth and capital, the perception of risk is impossible for the whole human being to produce “genetic memory”. It is impossible to “naturally understand, naturally used, natural know how to do”. Of course, the most terrible thing is not to understand, but to understand that you don’t understand it, but you don’t know that you don’t understand it, even think you very know it.
The time when human beings and nature coexist in a large area is hundreds of thousands of years, which is rich in experience; however, human beings deal with capital, but it is equivalent to no experience at all. With regard to the genetic memory of adventure, human beings are formed in the process of "fighting with nature." But if you apply these experiences to "interacting with capital" and "coexisting with capital", it is basically not applicable.
This is a constant law of survival. Like drive, life is like that. Investment and entrepreneurship are all the same - as long as it involves people and capital:
Safety first;
Then the next principle is:
Become an expert;
Train your own learning ability, learn what you need, become an expert in that field, and then think, make decisions, and act like an expert.
Experts don't take risks easily- although movies and novels often show how they “take risks” at critical moments. Because it is mass entertainment, not so described, the public does not believe.
There are many benefits to becoming an expert.
First, you have reasonable expectations about your investment.
Those who have done consulting work have such experience:
The more people who are not prepared in advance, the more demanding they are, the higher the unreasonable expectation.
Real experts know that risks can never be completely eliminated, and thus will not make unrealistic expectations.
Second, you will remain rational.
Research has been done in psychology. When you take out a quarter of your total assets, you will not be able to turn a blind eye to it.
Real experts know how to distribute assets, keep them rational and make the most accurate judgments possible.
Finally, you will be calm.
Experts will also make mistakes, and experts will lose.
But as long as he is an expert in this field, he will definitely have the opportunity to use his knowledge to come back.
Knowing that you always have the expertise to rely on, it is easy to maintain a peace of mind in any situation.
Others may appreciate your courage, but you need to know that "brave" should never be something that needs self-certification - it really sings against the whole society, it teaches us to be "brave" but never tells us that was it needs this, not we need.
You know, only the idiots who vanity can prove that they have courage. What they don't understand is that the vanity is satisfied for a while, but they have already become the object of time crushing.
So be sure to be careful and serious:
Look at the fools to take risks.
See more, your risk avoidance experience is enriched.
How do you distinguish yourself from "watching a fool's adventure" or is it being considered a "fool in adventure"?
Here is a simple and plain judgment standard:
Can you clearly state the "action basis"?
If your basis is nothing more than "others do this", "everyone thinks so", "I get a gossip", etc., then your chances of becoming a "fool" by others are great.
A person with independent judgment can always give a clear basis, even if it is not correct every time, it must be corrected by feedback.
Only at this time, you are really honing your judgment. Otherwise, it is very likely to become a specimen for others to learn.
The final conclusion is this:
Be sure to think clearly before doing things. Think deeply until your conclusions are different from most people - to be "maverick and correct". At this time, the things you make, others will be scared, they think you are taking risks, but you know what is going on.
Finally, there is a book, must read: "Fooled by Randomness" by Nassim Nicholas Taleb, perhaps one of the smartest people on the planet.