1/ It has been more than eight years since my investment club was established. I was chatting with a friend a few days ago and mentioned the first gathering of club members in City A in 2016. There were about 20 people present. Seven years later, he was the only one still in the group. During the same period, there was a group gathering in City B. Among the ten people present, six were still in the group seven years later. The party in City A was held in a Yunnan cuisine restaurant owned by a group friend. The environment was elegant and lively. Everyone enjoyed their meal and spoke enthusiastically. The room at the meeting place in City B was much smaller and the atmosphere was noticeably duller. But seven years later, there was such a big difference in whether the group members stayed or left in the two places, which was completely unexpected and made people feel full of emotions.
2/ During the internal discussions within the club, I recommended some investment targets earlier. Because of my in-depth research, I integrated knowledge and action, and obtained good returns after long-term holding. The most dramatic thing here is Tesla. Everyone started discussing it in 2015. The pros and cons have been extremely quarrelsome, and a few people have even participated in short selling. There are also some people who can’t stand the boring arguments and quit the group. By the summer of 2019, Tesla’s stock price was down more than 30% from its peak in 2015. After four years of debate, the opposing side appears to be right. Then there was a sudden surge of more than 20 times in two years, and everything is history. You can see the author’s old articles.
Wang Chuan: List of sixteen articles about Tesla in the past five years
3/ Why is the practice of long-termism so difficult? Why are there such big differences between the group friends in City A and City B? After repeated deliberation, my conclusion is:
The key lies in the scarcity of resources.
4/ Persistence in long-termism requires sufficient resources to withstand surface fluctuations. If you insist on something for four years, even though there is substantial progress visible to the naked eye in all dimensions from first principles, there are still floating losses on the books, and there are all kinds of negative noises from the mainstream media, even if you agree with it in your heart, Nor can I bear the pressure from my boss/customers/family members and continue to persevere.
5/ Most of the friends in City B are private entrepreneurs with a solid foundation. There is no pressure to get rich quickly, nor do they need to rely on investment to earn living expenses immediately. They do not manage assets for others, so there is no pressure on short-term performance. There is no need to stick to it for seven or eight years. question. Many people in City A are either in the early stages of starting a business or are still working hard in the workplace. They are under great pressure to achieve short-term results and are always looking for new opportunities that will yield immediate results. Even if you encounter a good long-term opportunity, you will either sell it too early and the profit will be limited; or if you encounter a bear market, even if you admit it in your heart, you can only give up due to performance pressure. What’s more, many people actually don’t study things deeply enough. If there is some negative news in the media or there are some beautifully packaged temptations, they can’t resist it.
6/ The direction with the least resistance to the evolution of a person or group is the direction in which he is likely to obtain the greatest positive feedback. This depends on the characteristics of the network that connects him to the outside world, and the choices these network connections give him. The paucity of resources essentially means the paucity of options. The right to choose honestly determines the evolutionary direction of least resistance, which is more accurate than any swearing and swearing.
7/ There is a strange cycle here that is terrifying if you think about it: Because of the lack of resources, you have repeatedly fallen into various scams that promise to get rich for nothing; because of the lack of resources, even if you encounter a good opportunity, you will cash out after making a little money. , cannot wait patiently for the saplings to slowly grow into towering trees; or because of the lack of resources, what we hear, see and receive all day long are all kinds of noise and specious and harmful information. When you see that a friend is still doing things in the same way after several years, laboriously and inefficiently, without any essential progress, or even actually deteriorating due to age, and is unwilling to really improve even if you say it, you will feel sad. There will be an instinctive feeling of physical pain, followed by a sigh.
8/ No one starts out resourceful. How can the resource-poor make the long-term leap? Here I highly recommend a new book by Dan Sullivan and Benjamin Hardy: “10x is easier than 2x” (10x is easier than 2x). To summarize the core spirit of this book:
i) Because of an unthinking instinct, many people think that the growth of wealth is to work harder on what they are doing now. This is 2x (twice the number) thinking.
ii) 10x (tenfold) growth is actually easier in the long run than double. Because once you ask yourself with a 10x vision, you will actively force yourself to filter, give up, and reject various opportunities (even scams) with limited long-term growth potential. You will make yourself highly focused and only do those with potential. Things that will make you grow tenfold. This filtering method also applies to people. This kind of giving up conflicts with their daily habits at first. Many people are unwilling to give up and have serious resistance. Therefore, we must sit down calmly and deduce carefully, and thoroughly understand mentally the necessity of “decisively giving up” low-value behaviors or opportunities for long-term 10x.
iii) Because you decisively rejected many low-value opportunities, you have more time. More time allows you to focus on in-depth research and improve your ability to identify and capture high-value opportunities using first principles at the bottom level.
iv) Because you force yourself to continuously accumulate various new small advantages in architectural design, sooner or later you will make a breakthrough and realize the 10x dream.
v) Go back to the first step, re-examine your daily work and study, re-filter and abandon old low-value habits, and start the next 10x chapter.
9/ If you do a thought experiment, you would increase your net worth a thousand times in thirty years. The goal sounds ambitious and difficult to achieve. Your first instinctive reaction is: It’s impossible! But break it down and that’s a tenfold increase every ten years. (The following calculation is for simplification purposes and does not take into account tax factors). Broken down again, it is 3.2 times every five years.
10/ How to achieve 3.2 times in five years? According to simple backward calculation, this requires a return of about 26% per year. But the development of things never moves forward without twists and turns. The reality is that the market often fluctuates wildly between bulls and bears like a psycho. In order to capture substantial returns, you need to wait for most of the five years, accumulate information and resources, and wait until the opportunity comes when everyone is panicked and lacks resources (after comprehensively analyzing various qualitative and quantitative factors of fundamentals) Only make the investment if you feel that there is a high probability that a certain investment will have a return of well over 3.2 times within five years.
11/ After understanding this logical framework, you must reject most of the noise and temptation in the market. Say no to most things. We have not entered into a kind of continuous self-reinforcement for all kinds of invitations and gossips from the outside world that are trying to be empty-handed. Monopoly status stuff, wait, say no. At least 3.2 times in five years becomes a simple and crude red line. Not touching things beyond the red line has become a kind of conscious self-discipline.
12/ Suddenly enlightened after “saying no”. This means that you have a lot more free time than before, so you can conduct in-depth research at your own pace. Then continue to discover new opportunities that others cannot truly understand and thoroughly implement. In this way, when outsiders think you are just lucky, survivor bias and hindsight, you just smile and don’t explain. You can see the author’s old article below.
Wang Chuan: Why can’t people keep their assets three times in four years?
Wang Chuan: Will Amazon’s cloud services swallow up the US IT industry? (Part 1)
Wang Chuan: Looking at Bitcoin from the mental model of brand and application scenarios
13/ Further derivation, in order to continue to enjoy the fruits of your labor in the next thirty years, you must invest a lot of time and resources with a rigorous attitude to maintain physical health and freedom. Otherwise, in your seventies and eighties, you will suffer from Alzheimer’s disease, rickets, osteoporosis, incontinence, various pains, cardiovascular diseases, etc. Even if you have a fortune, it will be in vain.
14/ Then, you will have the time and interest to practice Tai Chi, Zhanzhuang, yoga, running, swimming, intermittent fasting, and continue to pay attention to the latest developments in other cutting-edge anti-aging technologies. This will give you more years to grow tenfold in unexpected, emerging new dimensions.
15/ Science fiction novelist Frank Herbert famously said: “Seek freedom and become captive of your desires. Seek discipline and find your liberty.). The self-discipline of continuously and strictly discarding low-value things is the liberating path to long-termism of high-value growth.
About the author: Wang Chuan, investor, currently lives in Silicon Valley, California. WeChat ID 9935070, Twitter account “Svwang1”, Sina Weibo “Silicon Valley Wangchuan”, website chuan.us. All articles express the author’s personal opinions for reference only and do not constitute investment advice for the assets mentioned. Investments are risky, and entry into the market is subject to cautious.
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