First level of thinking: group consensus

The second level of thinking: reverse thinking

When we want to go beyond the average, we need to think higher than others

effectiveness

Ineffectiveness

It's not completely effective or ineffective, it's a matter of degree Exploiting inefficiencies is the best way to make great investments Investment opportunities that exist between ineffective and effective

Technical analysis: can only reflect the past and cannot predict the future

Fundamentals: Able to better perceive the future

You need to have strong professional ability and rich experience, otherwise don’t buy on the left easily

Of all the possible ways to make money from investments, buying at low prices is the most reliable.

Investment profit paths: asset appreciation, leverage, selling above the asset value, buying below the asset value

Do value in the early stages of the bull market, and speculate in the middle and late stages of the bull market. Enjoying the bubble is dangerous but still attractive,

Risk is an event that is more likely than certain to occur

The risk of loss is mainly due to excessive prices. A stock with poor fundamentals may not lose money if its stock price is cheap enough. For good stocks, being too optimistic may lead to losses.

Risks cannot be eliminated, they can only be transferred and dispersed. Anyone who tells you a risk-free and high-yield way to make money is either a liar or you are a fool

Many people overestimate their ability to identify risks and underestimate the conditions needed to avoid risks.

Widespread negative opinion minimizes risk because all optimism is removed from the price

Risks exist in bull markets, but they cannot be observed or verified, so risk control at that time is not recognized. Only well-trained and experienced people can examine risks during boom times.

The difference between controlling risk and avoiding risk. Controlling risk is the best way to avoid losses, and risk avoidance is likely to be avoided along with gains. If you don’t want to lose anything, the best way is to go short, then you won’t make any gains.

Rule 1: Most things are cyclical

Rule 2: Some of the greatest profit and loss opportunities come when others forget Rule 1

Examples: excitement and frustration, optimism and pessimism, greed and fear, doubt and gullibility, risk aversion and risk tolerance, etc.

Three stages of bull market

Three stages of bear market

why error occurs

How to do it

There are two basic elements of a great investor:

Most investors are trend followers

What we need to do is to grasp the changing direction of the public's thinking, so as to judge our own positive direction.

Only when most people cannot see the value of the investment will the price fall below the value?

Risk comes from high prices, so cheap goods are the best opportunity

How to Find Undervalued Properties

The bull-bear cycle is very long and requires enough patience

Great opportunities to buy occur when asset holders are forced to sell. Such people abound in the economic crisis.

The key in a crisis is to stay away from forced selling forces and position yourself as a seller. To meet this standard, investors need to do the following:

There are two types of prophets: those who are ignorant, and those who are unaware of their ignorance.

Predictive Invalidity

things happening around you

market thermometer

What is a good decision? A good decision should be made by a logical, intelligent, and insightful person when the conditions arise and before the results occur. In the long run, good decisions will definitely bring investment returns. However, in the short term, when good decisions fail to bring investment returns, we must be patient.

Because most outcomes go against us, we must invest defensively. To improve our chances of success, we must act contrary to the crowd during market extremes: be aggressive when the market is down, and be cautious when the market is booming.

Offensive investing

defensive investing

The key is the balance between offense and defense

The causes of errors are mainly analytical/thinking or psychological/emotional.

Bubbles and crashes: When psychological factors lead some investors to hold extreme views that are not offset by the views of others, they can lead to prices that are too high or too low

An overheated market means investors are eager to invest their funds in the market in exchange for higher returns.

How to achieve added value

Must have deep insight into value

Build your own values ​​based on facts and analysis

Objective merit is not an investment opportunity. Buy well, not buy well

Limit Risk: Increase profit potential, buy below value. Buying growth stocks or hot momentum markets does no such thing

Price and value are influenced by psychology and technology, both of which may dominate in the short term

Economic and market cycles fluctuate up and down, and most people believe that they will continue in this direction forever. This kind of thinking is dangerous.

Group psychology shows pendulum-like fluctuations

Never underestimate the power of psychological shadow

Most trends eventually go too far

Determining the position of the cycle: when other investors are carefree, we should be cautious; when other investors are panicked, we should be more active

There is no difference between being too far ahead and making a mistake, and pricing too low does not mean it will rise quickly.

Understanding risks is as important as reaping rewards

Avoid losing investments and winning ones will follow

A margin of error can give you staying power and help you survive market downturns