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Mad Cow Trap: Impulsively enter when you shouldn't enter, and panic cut when you shouldn't!
Stock Market Horror: Madness and Lessons from "Mad Cow" to "Dead Cow".
The myth of "getting rich overnight" has been shattered, and the once "mad cow" has become a "dead cow", leaving behind a piece of chicken feathers and the wails of countless investors. A real estate developer, with a principal of 83 million and leverage, lost more than 100 million yuan in a few days, and all the villas and shops were mortgaged, and he was almost bankrupt. This is not only a simple investment failure, but also a confrontation between human greed and fear, and a painful lesson in the lack of understanding of the market.
1. The Fog of Cognition: When "Common Sense" Becomes a "Scarce Product"
The market is full of all kinds of "experts" and "masters", who preach that "the bull market is coming" and "you can make money by buying with your eyes closed", portraying the stock market as a paradise full of gold. In this atmosphere, many people are trapped in it and lose their basic judgment. As mentioned by the author of the original article, the experience of pyramid schemes, a simple temptation to "make a windfall" is enough to make people lose their minds.
However, the essence of investing is the discovery of value and the management of risk. Warren Buffett once said, "Risk comes from not knowing what you're doing." Blindly following the trend and chasing hot spots is tantamount to gambling. The collapse of liquor stocks in 2021 and the new energy bubble in 2022 have proved this time and again. According to data from the China Securities Depository and Clearing Corporation, the number of new investors in 2022 decreased year-on-year, but this does not mean that investors are more rational, and there is still a large number of irrational behaviors in the market.
2. The timing of entering the market: is it an "opportunity" or a "trap"?
"Impulsively enter when you shouldn't enter, and panic cut when you shouldn't cut", this is a common problem for almost all retail investors. When market sentiment is high and stock prices soar, FOMO (Fear of Missing Out) sentiment spreads, and people flock in for fear of missing out on the "opportunity to make a fortune". However, taking the plate at a high level often means becoming a "leek" and carrying a sedan chair for the dealer.
On the contrary, when the market fell and panic spread, people left the market one after another, for fear that the losses would further expand. However, cutting meat at a low position often means missing the opportunity to buy the bottom. As Graham, a master of value investing, said, "The stock market is a voting machine in the short term, and a weighing machine in the long term." Only by sticking to value investing can we cross the bull and bear and obtain long-term stable returns.
3. The essence of investment: is it "speculation" or "value"?
Many people see the stock market as a place to get rich overnight, chasing hot spots and hyping up concepts rather than focusing on the intrinsic value of a business. This kind of speculation is destined to be unsustainable. As John Maynard Keynes said, "Speculation is like playing a game of drumming and passing flowers, as long as the music doesn't stop, you have to keep passing, but in the end someone has to catch the last flower." ”
True investment is based on in-depth research and judgment of the company's value. We need to analyze the financial status, profitability, competitive advantage, etc. of the enterprise, rather than blindly following the herd. For example, the long-term value of Kweichow Moutai lies in its unique brand and scarce production capacity, rather than short-term market hype.
Fourth, the future trend: the return of rationality and value
With the strengthening of regulation and the popularization of investor education, the market will gradually move towards rationality. The concept of value investing will gradually take root in the hearts of the people, and speculation will be suppressed. In the future, the stock market will pay more attention to the long-term value and sustainable development of enterprises.
Of course, the market is always uncertain. Black swan events, macroeconomic fluctuations and other factors will have an impact on the stock market. Investors need to continue to learn and improve their awareness in order to better respond to market changes.
So, how do we invest in a challenging market environment?
Learn investment knowledge and improve your cognitive level.
Read classic investment books, learn professional investment knowledge, and understand the rules of the market.
Control risk and avoid excessive speculation.
Don't put all your eggs in one basket, diversify your investments and control your risks.
Value investing, holding for the long term.
Choose a business with long-term value and hold it for a long time to get stable returns.
Be rational and avoid trading with emotion.
Don't be swayed by market sentiment, stay rational and make objective investment decisions.
The stock market is a mirror that reflects human greed and fear. Only by defeating the demons within you can you be invincible in the stock market. In the future, I hope that every investor can invest rationally, value investment, and obtain long-term and stable returns in the stock market.