Common Misconceptions of Investors and Possible Paths to Financial Freedom

A study of the Hurun Wealth Report shows that there are only three types of people who achieve financial freedom: business owners, stockholders, and real estate speculators. With the inflection point of the fertility rate and policy restrictions, stock trading has almost become the only possible path for ordinary people to achieve financial freedom.

In the process of investing, two experiences are very important and rare. The investment system will be more perfect only if they have all experienced it.

The first is to more than triple the stocks held in heavy positions.

This is the most important way to achieve financial freedom. Doubling the light position, and earning 10% of the heavy position is just money. But if you understand and take heavy positions in big bull stocks such as BYD, Longji, Tesla, China Shenhua, COSCO, Muyuan, China CDFG, etc., and the profit exceeds 200%, you can achieve a certain degree wealth spanning. Then wait for the next opportunity to understand it once or twice, and you will almost be able to truly realize the freedom of life.

Most retail investors will only engage in long-term deadlocking when they are locked in, and if a profitable stock earns 20%-50%, they must be worried about returning it and running away if they can’t hold it. This is due to human nature, and the pain of loss is far greater than the happiness of gain. After staying in the market for a long time, you will feel that making money is just a number, you will be numb, and not very happy, and the pressure and fear brought by loss or profit retracement far exceed happiness. Therefore, it is the best choice for most people to stay away from the stock market, which will at least reduce a lot of pressure~

At this time, what if you encounter a ten-fold stock or a twenty-fold stock? Ordinary people tend to regretfully brag about their experience in selling airplanes, and talk about it to everyone they meet.

In fact, this is the reason why most retail investors lose money. If you lose money, you will not stop the loss, or even carry it to a large proportion of the loss, and then there will be a profit at the bottom. If you make money, you only make 5%-10% and run away, selling big bull stocks. How can I make money from a mathematical point of view in the long run?

The second experience is the stock that encounters a thunderstorm, but the heart has a distant expectation for the stock, which is also the original intention of buying. In this way, in order to wait for the realization of the expectation that may be half a year later, you can hold the shares until the return of the capital, ignore the loss ratio in the middle, and hold firmly without going to the market. Ultimately break even.

To give my own example, I once encountered a thunderstorm in Perfect World in January 2022, and lost more than 40% in the middle, but I always had the expectation that the version number would resume and superimpose the Magic Tower’s overseas launch, and I knew there would be a wave of speculation. Cover the position, and finally get a small profit in August 22, leaving few positions for observation.

Buffett said that there are not many opportunities in a person’s life to understand. If you encounter one, you must grasp it for God’s sake~ He did the same.

So how can you hold a stock with a profit of more than 200% and still not sell it?

The answer is long-term follow-up, real understanding , superimposed super-strong expectations difference and the determination to lie still , all of which are indispensable.

Stock trading is essentially a process of buying, holding and selling . There are only three actions. Buying is not difficult , and it can be done with value investing ideas and in-depth research. It is more difficult to hold . The ten-fold stock in history is not made by a single fund. After the large capital enters, it may make a profit of 50% and then reach the target. There will be an adjustment, and now due to the intervention of quantitative funds, the major adjustment may not be the previous 25% but more than 40%. I personally have expected these, so although I am under pressure to adjust, I don’t feel too painful, but due to human nature, most stockholders can’t bear the retracement of holdings. The core of wanting to be firm in holding is to believe that one’s logic will eventually be recognized, and firmly carry out value investment. As for selling , this is the most difficult one . Different people have different opinions here. Buffett has never taught us, because he taught us how to sell? [斜眼] Of course, as long as the purchase is done well, it must be from the perspective of value investment that the purchase price is not high, so it is difficult to lose money, it is just a matter of earning more and earning less~

For ordinary investors, only long-term heavy positions can finally achieve financial freedom. I know many successful investors like this, and hope that I can eventually become one of them~

The above is a little bit of my own experience, not necessarily correct, welcome to exchange and correct me.

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