Ultimately, it still comes down to that famous saying: The market is a voting machine in the short term, and a weighing machine in the long term.
Speculation is a zero-sum game—my lessons in speculation
The essence of reducing trading frequency
Investment vs. Speculation in “Enough”
Market Sentiment is Random
The market is essentially like a person with average intelligence. You might occasionally guess the market’s sentiment, but to make money, you need to guess correctly twice (the buying point + the selling point). And if you guess wrong just once, you lose money. This is a very simple mathematical problem.
Some Forces Want You to Trade Short-Term
There are always stories that make you want to trade short-term for quick money. This is similar to seeing news about a major lottery win—it is essentially an advertisement. This is because securities firms, exchanges, and tax authorities all like you to trade quickly and repeatedly. They are leveraging the greed in your nature to entice you into these speculative operations.
Never Make Investment Decisions Under Strong Emotion
Never make investment decisions under strong emotion. Whether that emotion is fear, excitement, sadness, or greed and impulse, they act like a fog obscuring rational judgment.
- When the market crashes sharply, the adrenaline-fueled fear might cause you to sell quality assets at a bargain price;
- During bull market euphoria, the dopamine-driven excitement easily tempts you to buy at high prices. Even sudden sad events in life can act like an invisible filter, distorting your perception of the risk-reward ratio. True investment wisdom lies in establishing a decision-making mechanism that is insulated from emotional fluctuations—replacing ad-hoc judgment with pre-set trading discipline, and hedging against human weakness with data-supported valuation models.