What is greed? For greed, the most straightforward and clearest definition is as follows:
Greed is what you want to be not your own.
In the Catholic doctrine, there are so-called seven sins, and greed is one of them; however, if you look closely at the remaining six, you will find that they all originate from greed:
Pride: It’s because pretending (or pretending to believe) that you have the rights to have that don’t really belong to yourself any power;
Envious: It’s because you want something you don't have yet, but you've found that someone else already has it;
Anger: Because you don't have the ability to solve problems, you want that ability but haven't;
Sloth: It's because it is clear that need labor to be exchanged, but you don’t pay anything, then still want to get it;
Overeating: This is really not a crime, unless it is not your; in ancient times, it was sin because the material was really poor at that time, so the part that "eats more" is actually "from the others have grabbed it," or "If you don't overeating, you may have the opportunity to let others not starve to death..."
Lust: It is because "when the other party does not cooperate, it is not their own", but still wants - the other party will cooperate with each other, it is no crime.
I personally don't have religious beliefs, but I don't exclude reading various scriptures. To be honest, from the texts left in ancient times, we can see many meaningful observations and very inspiring wisdom.
In the field of investment, "greed" is like a devil, with countless incarnations, omnipresent, and almost always "invincible." If you have been framed by the "greed" devil, don't be surprised, because it is too normal - be framed, but you haven't died yet, you should be very lucky; Have been framed, but haven't dead, and then even awaken, that is the fortunately.
The most terrible situation is this:
The greed of many people comes from ignorance. When people want something that doesn't belong to them, it is greed. However, when they do that, it is very likely that they do not know that it is greed. It is very likely that they do not know that the thing did not belong to them. They take it for granted that they "have supposed to" have that thing...
For example, borrowing money but not willing to give interest, it is a kind of greed. Historically, the Jews understood the relationship between money and time earlier and more firmly. They not only charge interest but also charge compound interest. Therefore, they were hated by people of all other races for a long time, and they would "kill the Jews" and not only put it into action once.
First, interest should belong to the lender; second, money will generate interest in the process of time flow, so in theory, there is no "no interest money" in the world, even in certain circumstances have negative interest. Therefore, "unwilling to pay interest", that is "want to actually belong to someone else’s money" - Are you saying this is greedy?
However, when we look at historical phenomena calmly, we will find that this kind of "greed" comes from ignorance. Many times it is not "intentional", and even the whole society is ignorant. Even a lot of people's stupid, they are foolish to learn from society, and they are stupid education by most people, not born so naturally.
About interest is like this, then, what about return on investment? From 2011 to 2015, the Internetization of private lending in China, namely P2P, is very popular. When a platform gives an annualized 25% benefit, it actually shows that the crisis has gone everywhere.
You can go online and search for a search to see what the big bank's one-year whole deposit rate is? In recent years, it is just 1.75%.
We know a basic principle:
The greater the amount of capital, the more difficult it is to obtain the same rate of return.
It would be easy to earn 10 dollars with 100 dollars. However, if you use 10 billion dollars to earn 1 billion back, the difference in difficulty between the former and the latter is very different. The bank's capital level is too large, so the interest that can be given is not high enough. Banks must also borrow money for anyone to earn "interest spread."
The interest rate of small-scale short-term borrowing has not been low, but if the interest rate is high to a certain extent, reaching more than 15%, there is already a high systemic risk. If it reaches more than 25%, it will basically collapse within two years (that is, eight quarters). However, there have been frequent occurrences of various "Private lending area" in China. What is said is that most people simply don't know that the return on investment of more than 15% "is likely not to be their own", so they are ignorant and fearless.
The ignorant and fearless ending is usually not good and is very "sinful." So many times, greed is not necessarily a "crime" because it is often not intentional; greed is ultimately "suffer sinful punishment", because greedy people are passive and ignorant of what is going on, they already have to bear the bad consequences.
Let's look at the record of top investors in the world:
Buffett: Berkshire Hathaway, the compound annual growth rate of 21.1% in the 43 years until 2007;
James Simons: Renaissance Technology Corporation, the Medallion fund, since its inception in 1988, for 30 consecutive years, the average compound annualized return rate is as high as 34%;
Joel Greenblatt: Gotham Capital, in the 20 years from 1985 to 2005, the compound annualized return rate reached 40%...
These are all "God-like" existences. So, what should a "passing standard" be like? Buffett is also a PR master (Public Relations). Although many "advanced" investors are not very high on Buffett's evaluation, Buffett is indeed the most influential in the public domain - of course, we have a saying, "Literati look down on each other," in fact, in the field of investment, "look down on each other between investors" is more and more absolute. The "reference standard" given by Buffett is absolutely pertinent:
I have to make sure that I buy stocks that earn at least 15% compound annualized rate of return.
This is still under the premise of the industry's deep research and understanding of the enterprise - this is very important, know and fear, can be fascinating. An analogy of the great person Greenblatt is particularly exciting. It is worth remembering: buying stocks but not knowing what to buy, just like holding a torch through an explosives factory, you may survive, but you are still a fool.
15%, this is a number to remember. However, before that, we have to go back and pay attention to the wording:
Compound annualized return (or "yield")
Most people only know how to discuss "return rate" instead of "annualized return rate", not even "compound annualized return." Once we discuss the "composite annualized rate of return", we are not talking about one year, not two years, for many years, generally more than ten years, or even twenty or thirty years...
Therefore, unlike most people think, "value" is not in the first place. "Long-term" should be ranked first, then "value", that is, "long-term value" - this is ours things to pursue. What is "temptation"? The temptation can be defined as follows:
Valuable, or at least seemingly valuable, but not "long-term value"...
In other words, everything that does not belong to "long-term value" can be counted as "temptation" - this is a truth that can only be truly profoundly understood after at least ten years have elapsed. Is it "how painful!" It depends on whether the moment you see it can be absorbed thoroughly and deeply.
Please keep in mind that what you are pursuing is "at least a long-term compound annualized return of 15%".
Once your goal is like this, the things that are "into the eye" are different, and what you can see seems to be another world. A lot of things that you would involuntarily pay attention to before, like "suddenly disappeared completely", while other things, like "suddenly pop out", it feels amazing.
Most people are only "short-term investors" for life, and because they do not insist on their long-term concern, they accept various "temptations" with confidence, so they are concerned about "another world." It's hard to imagine short-term investors in the stock market not paying attention to the K-line chart - what do they care about without paying attention to this? It's hard to imagine that they don't go around to find out about the news - they don't have the ability to analyze but they want to analyze the results. This is greed, but what else can they do besides greed? It's even harder to imagine them passing through the gunpowder factory (they don't just know that they are holding a torch in their hands), and then find that they are still alive. Then they wouldn’t be complacent, they would "naturally" stop using a torch to pass through another gunpowder factory for life...
After everyone enters the stock market, they will look at the K-line chart for a while because:
1 Didn't understand it at first, but there is nothing else to see;
2 The K-line chart is very stimulating and always makes you feel "what you see is what you get"...
Looking at the historical fluctuation, almost no newcomer has not flashed the idea: "If I sell it here (high point), then buy it back here (low point), wow, I must earn a lot!"
This is an out-and-out illusion, because that's just a record of market history data, not a practical experience of the illusionist in the future. One day they really know where them are, from the perspective of them own immersiveness, the price of every moment seems to be the highest point and the lowest point; and once starting to pay attention to the K line, it is basically difficult to think about the long-term - because the feelings and impulses of "live in the moment" are so strong, their brains are stimulated by various intuitions, and they can't think of themselves. In the face of "random walk" (please reread the contents of the previous week), turn yourself into a gambler in minutes, but you don't know it yourself - another inattention has been confused by the transformation of the greedy devil.
Buffett’s teacher, Graham has an extremely exciting analogy:
The stock market is a voting machine in the short term and a weighing machine in the long run.
When I first read it, marvel is absolute! And, suddenly, because of this analogy, I feel very relaxed:
Since the stock market is only a voting machine in the short term, it is better to let others vote. Anyway, the voters was very many in every time. Whatever don't need me to vote, and don't have to vote repeatedly. If the stock market is a weighing machine in the long run, then it is not necessary for me to do this. I only need to do one thing and try to find the "heavy" who is the heaviest in the future. It's easy to find a fat person, just see who is "more and more tasty".
Although the last sentence is beginning to be close to jokes, to this day I can remember that thinking clear the moment of relief the first half of the idea (or "reminded" by others). As for the last sentence, it is not entirely a joke - it is just a simplification of things. However, the reason why I feel relieved is because I thinking understand that "how to find the fat man in the future" should be sure to have the opportunity to learn. This learned, then I want it again, it is not "greed" because I have the ability, such things should belong to me. Are you saying that this is super relief?
Thinking and action
- Please review the definition of "greed" carefully, and take out the pen and paper: Where have I been "involuntarily" greedy in the past? What is the harm that brings me? Did it even lead to a certain degree of disaster? What are the lessons learned? How to avoid it later?
- Please review the definition of "temptation" and take out the pen and paper: Where have I been "involuntarily" tempted in the past? What is the harm that brings me? Did it even lead to a certain degree of disaster? What are the lessons learned? How to avoid it later?
- If you start to pay attention to "long-term", then the most important thing in the investment field is analysis and research. This is true, but what should be analyzed? What to study? Although there will be explanations in the future, can you start doing something myself?
- If I want to be a "long-term investor," what is not needed or should not be analyzed and studied?
- Even if I don't have the money to "actual investment," can I analyze and study the same? How to make yourself keep interested in "no cash rewards"?