Focus on Luck - The Most Important Thing to Invest Series 13

Dear friends, our “Self-Development Series for Value Investors” and “How to Improve Your Trading Mentality Series” have been very popular until now. We hope everyone can learn useful knowledge from them, improve their trading mentality, and adjust their ability to adapt to severe market conditions. If you still want to review this series, you can follow our 3047 iron ore ETF public account to review it at any time~

Starting this week, we will begin updating the “The Most Important Thing to Invest” series, which is also updated every Wednesday, so I hope everyone will pay more attention! If you have anything you want to know, you can also leave a comment in the comments section. We will try our best to provide you with the investment content you are interested in.

“The Most Important Thing to Invest” was evaluated by Buffett as “a rare and useful book”, and he read it twice himself. This book condenses the author's own investment ideas and personal experience over the years, incorporates the opinions of several other well-known investment experts, and summarizes the most important investment issues through reverse investment. This book is of great practical significance. You must be patient when investing. If you don't want to eat hot tofu in a hurry, you should always be aware of risk prevention. I believe investors will benefit greatly after reading this book.

The field of investment is not an orderly and logical place where the future can be predicted, and specific actions can always produce specific results. In fact, investing is largely determined by luck. Some people like to call it “chance” or “randomness”. In other words, the success our investors have achieved is greatly influenced by chance factors. When judging whether investment results are repeatable, we must consider the impact of randomness on investment managers' performance, and whether their performance depends on skill or simple luck. In the short term, many investments are successful only because they did the right thing at the right time. At any point in the market, the most profitable traders are often the ones who are most suitable for the latest cycle. In boom times, those who take the most risks often get the most returns, but that doesn't mean they're the best investors.

Most people acknowledge that the future is uncertain, and they think that at least the past is known and certain; after all, the past is history, absolute, and unchangeable. The quality of decisions does not depend on the outcome; subsequent events lead to successful or unsuccessful decisions, and these events are often unexpected. Good decisions are meant to be made by logical, intelligent, and insightful people when conditions arise and before results appear. Due to the risk of loss, many times that affect the correctness of decisions cannot be predicted or quantified in advance. Even after the fact, it is difficult to determine who made good decisions based on reliable analysis but failed due to rare events, and who profiteered by taking risks. In the long run, good decisions will definitely bring return on investment. In the short term, we have to be patient when good decisions don't yield return on investment.

We should spend our time discovering value from known industries, companies, and securities, rather than basing our decisions on speculations about more uncertain macroeconomic and market performance. Given that we cannot accurately predict the future, we must maintain our value advantage by holding stocks firmly, understanding stocks analytically, and reducing purchases when the timing is poor. We must act against cohort in extreme situations in the market, be proactive when the market is sluggish, and be careful when the market is booming. Respecting risk moderately, knowing that the future cannot be predicted, understanding that the future is distributed by probability and investing accordingly, insisting on defensive investing, and emphasizing the importance of avoiding mistakes is everything about smart investing.

This article is for sharing purposes only and does not constitute any investment advice.