Today, let's talk about our understanding of investment and some new thoughts I've had recently.
Among the many words related to returns, I particularly like the term "winning probability" because investment is essentially a game of probability. Entering the market is like entering a big gambling table, where there are not only institutions but also individuals. Among these participants, there are gamblers, speculators, self-proclaimed value investors, and so on. It can be said that this gambling table treats almost every participant equally, but winning is still difficult.
All participants hope to win in every gambling round, but the results often go against their wishes. Most participants, for various reasons, are unable to achieve the desired results and withdraw from the game early. Some have lost more times than they have won, and some may have never won at all, eventually permanently exiting the gambling table. It's important to know that once you exit, there will be no chance of winning anymore.
Never quit the gambling table, especially when you are losing miserably. At the very least, maintain the identity of a participant and leave yourself a chance to win.
Being in the market as a participant on this big gambling table, there is never a moment when you are not affected by market fluctuations. These fluctuations are what we call rises and falls. For a qualified participant, this is a normal occurrence. They are not affected by these fluctuations but instead benefit greatly from them. They find the right position within the fluctuations and choose to participate in gambling rounds with higher winning probabilities, ultimately gaining an advantage over most people.
On a big gambling table, if you can continuously participate in gambling rounds with higher winning probabilities, the final result will likely be more wins than losses. That's enough. It's highly unlikely to win every gambling round. Recognizing this point, at least you will spend more time on this big gambling table than others, and naturally, your winning probability will be higher in the end.
No one can accurately predict the right market position. We can only buy and sell at positions we believe to be appropriate. Most of our decisions should be based on some reasoning, whether right or wrong. At least this reasoning can convince ourselves to invest in a certain asset to some extent. Otherwise, any buying or selling operation at this time is just following the trend, either chasing the rise or chasing the rise on the way. As for considering costs and value, considering risks and potential returns, these will be gradually improved later on. At the beginning, we definitely won't consider them so comprehensively.
Since it is a game of probability, we must be prepared to lose. When the winning probability is higher, we can appropriately increase the aggressiveness of our assets. When the winning probability is lower, we can take partial profits and combine them with our actual situation to increase the defensiveness of our holdings. We continue to wait for the next opportunity to operate. Periodic market fluctuations are the norm and the fundamental source of returns.
That's all for now.