Chase the rise and kill the fall

Since the Spring Festival of the year of the Ox, the performance of the market has been testing people's hearts. Continuous adjustment, wide shocks, repeatedly test everyone's state of mind, accidentally "force" you to make mistakes: chasing the rise and fall, the cycle, trapped in the whirlpool of human weakness.

How to avoid it? You might as well start with the following three things.

Know yourself

Don't think it's funny, you really don't know yourself. In other words, in the ups and downs of the capital market, many people who do not have enough concentration will lose themselves. We use three questions to help you find your original intention to invest.

What is the goal of investment? That is, how much money, how long, how much money do you earn?

Where does the money you invest come from?

What is the maximum loss you can accept?

If you can't answer the above questions, please don't! Yes! Open it! Start! Throw! Capital picture

If you already have the answer, let's see how these questions can help you.

What is the goal of your investment? That is, how much money, how long, how much money do you earn?
Picture
The question is to test the rationality of your investment.

If you want to invest 10,000 yuan to earn a house in Beijing within a year, which is beyond the scope of normal investment, you might as well buy a lottery ticket.

No matter which investment method you choose, you need to establish reasonable expectations.

Here are the performances of several common investments over the past five years, which you might as well compare with your "wealth dream". Investment taboos start from dreaming, and you need to keep your feet on the ground.

Market performance of some investment products since 2016

Where does the money you invest come from?
Picture
This question is a test of your ability to deal with investment difficulties.
The only constant in the capital market is volatility, and the market is often reborn in the agony of decline. As investment guru Peter Lynch said:

When the stock market plummets and I worry about the future, I recall 40 sharp falls in the past to appease my somewhat frightened heart. It turns out that even in the biggest stock crash, share prices eventually rose back and rose even higher.

What happened to those of us who doubled in the fund for two years? "to reveal to you what kind of market test those investors who have gained attractive returns have experienced, you can click to see.

Historical data show that although the general equity fund index has doubled since 2019, it has experienced four major withdrawals, which means that holders undergo a psychological test every six months on average.

If your initial principal is borrowed, you are playing with fire! Please stop!

If the money you use to invest is your own, but it's all daily money, or fixed necessary expenses such as repaying loans, then when the market goes through a short-term pullback, you may be forced to get out of the car at a low point before you can rebound. Eat the actual loss.

Only when the money you invest is spare money, do you have the strength not to be thrown out of the car by short-term fluctuations.

What is the maximum loss you can accept?

The biggest loss here means that how much you lose will not affect your normal life. At the very least, you can eat and sleep so that your emotions don't get out of control.

Considering that most people have no resistance in the face of returns, we recommend that you learn more about all past losses before you start investing (what is the worst case? How long did the loss last? How often? (etc.), ask yourself, if you meet, can you bear the picture?

We often say that investment should do things within the scope of the ability circle, in fact, there are two meanings:
Invest only in areas you know, or only ask people you can trust to vote for you.
Take the risk you can bear and earn a return that matches the risk.

I hope you all understand that investment does not need to challenge their own limits, the most important thing is to find what is suitable for you.

02

Know what kind of money you can make.

There is a saying in the capital market that is very clear, that is, "the money earned by luck will be compensated by strength."

If you want to make money from investment, you must have "excellence".

The so-called "excellence" is to "know" better than who, including: better understanding of a company; better understanding of the laws of the market; better understanding of human nature; better understanding of the people who help you invest; better understanding of your weaknesses.

In short, you should always know a little more than others.

Let's take fund investment as an example. Before buying, can you confidently answer:
Why did you choose this fund (apart from the high returns, can you name at least three reasons why you are optimistic about it? )
Why buy it now (except that it's hot, can you give three reasons why you don't wait? )

Let's put aside whether the answer is right or wrong, but you should at least have the answer first, because it is a test of how much you know about the subject of the investment and the person you are going to entrust.

The editor once asked some friends who lost money on investment funds: why did you buy it in the first place? Their answers are strikingly similar: um... It looked very popular at that time, and the profit was good.

All that is left is silence, and perhaps only at this moment will they be able to realize where the problem lies.

Know how to manage yourself

Manage your own ability

To improve your investment ability is to "understand" yourself better than others.

Take investment funds as an example, you can learn more about the funds you want to invest in from the following four aspects:

Look at the seniority of the fund manager. Graduate college, major, working experience, length of employment, fund size of trading, don't let go of any of the details you can know about him.

Second, look at the investment concept. The investment concept described by the fund manager is the fastest way for you to understand the logic of the operation of a fund. If there is a consensus, it is worth trusting.

Third, look at long-term performance. Yes, it depends on how long it is, not only the complete performance of the fund since its inception, but also the complete performance of all other funds managed by the fund manager.

Do not just look at the cumulative income, to look at the market situation year after year, split the cumulative income into each year to see, it is best to explain the source of income, and to see whether this source is consistent with the investment concept described by the fund manager. Just as we evaluate a person's character, the unity of knowledge and practice is good.

Fourth, look at withdrawing control. This indicator is used to see if you and the fund manager share the same temper. If the fund manager seeks the volatility caused by the return, you can accept it, then it is possible to live and get the return.

Manage your emotions

Greed when rising, fear when falling is the result of human nature, it is difficult to control, sometimes with the help of external forces.

For example, don't force yourself to make decisions frequently, especially when the market is volatile.

We might as well set a decision-making closed period that is not affected by the ups and downs of the market. Take the general stock fund index as an example, the open decision is made every three years.

Data show that the general equity fund index has risen 1268.03% since 2006, outperforming the market by 1072.16% in the same period.

If, as agreed, you are given the opportunity to decide whether to stay or not every three years, you will find that the decision to stay is not difficult, because the returns in the five three-year closed periods since 2006 have been positive.

But if you give up the closure period, you will find that the process is extremely painful, because each three-year closure period has encountered more than 15% of the market correction, of which the maximum pullback is even more than 50%. It is believed that if you are given the right to choose, there will not be too many people left.

This is a helpless phenomenon faced by fund managers: "the fund has made money, but the base people have not made any money."

The trend of General Equity Fund Index since 2006

In addition to avoiding frequent decisions, you can also harvest chips wisely by casting. Use the set investment discipline to draw your wealth smile curve.

Fixed smile curve

If the purpose of setting up closed-end management is to let you catch the big trend, don't ignore the small twists and turns. In that case, fixed investment is to help you break a big decision (one-time input) into several small decisions (batch input), reduce the cost of thinking, and thus constantly dilute the cost of your chips, waiting to be spent.