In fact, most people think that if they survive the bear market, the bull market will come, and they can get back what they lost in the bear market. But what is the reality? Everyone knows that as long as they survive, they will be rich, but there are always very few people on this road. Everyone understands that the stock market only has four hours of trading time every day, but only those who are at the center of the stock market know how vast these four hours are. What's more, for those who are in the bear market? Every trading day can be said to be torture.

I have spent more than 10 years in the stock market. I have experienced the alternation of bull and bear markets and have seen too many rises and too many falls. Here I will briefly talk about my views on the bear market and talk to you about why so many people can't survive it.

1. Don’t believe in the future of the industry, just want to make money

Think about it logically, if you don’t believe that the trend of this industry will be positive, how can you make money here?

At this stage, I think we have all seen it before, the market may fall back in half a day after rising for a few days, and the short-term risk-return ratio is not high.

For this type of friends, who don’t care what BTC is or whether blockchain has a future, my personal suggestion is to find a high point and run away, forget it, because you can’t outlast those friends who have “faith”. Once you fail to control it well, you will have to face the dilemma of cutting your losses.

We’ll wait until each community starts going crazy again for a week and then we’ll talk about it.

2. Not investing your spare money

What is idle money investment? After investing the money, you can treat it as throwing it into the water. The disappearance of this money will not affect your life.

This is easy to say, and as a self-media, we have to make a statement of advocacy at the bottom of every article, but it is not easy to actually do it.

First, when many people think this is an opportunity, they will naturally want to invest more money, fearing missing out, which is human nature. Second, there are always various "temptations" in life, such as buying a new iPhone, renovating the house, or buying a new car, but if you don't have much spare money, you will always think of the stocks you have.

From another perspective, as mentioned in the book "The Cultivation of Leeks", it is a lack of strength. The same 10,000 yuan, for the rich, is just lost, but for others, they may need it immediately, so they naturally cannot accept the loss and will sell it at the slightest fluctuation.

3. Loss aversion and fear

Everyone has fear of the unknown. If the price goes up a little, they are afraid that it will fall back immediately, so they sell out quickly. If they see the price falling, they are afraid that it will fall further, so they sell out quickly.

This was how I was in the early days. For new friends now, coupled with all the messy news in the media, it is even easier to panic.

In "Leek Cultivation", there is such a formula:

Reward-risk ratio = possible reward % possible risk

If you want to avoid panicking about prices, in addition to learning more about the industry, a more realistic way may be to increase the "return-risk ratio" as much as possible.

Try to increase the numerator as much as possible, such as choosing high-quality targets and holding them for the long term until they have increased by XX times; try to reduce the denominator as much as possible, such as continuously improving your ability to make money off-market, investing your spare money, and reducing your holding costs as much as possible.

The formula in the third point, as I understand it, means that there is a "cost line" for investment. Once you cross it, you will feel comfortable and can attack or defend at any price. However, there will still be a large number of people who cannot cross this "cost line" due to the above three reasons and related factors, and end up wandering between profit and loss.

Speaking of formulas, let me say a few more words here. The return on investment depends on a simple compound interest formula: FV=P(1+i)^n (P is the principal, i is the compound rate of return, and n is time). In this formula, the compound rate of return (i) and time (n) are the core variables, while the principal (P) is defined as a constant.

From a purely mathematical perspective: as long as time is infinitely extended, the principal (P) as a constant will have less and less influence on the final result. From this point of view: the principal (P) seems to be very important in the short term, but not in the long term.

However, investment is not a simple mathematical formula, but a decision-making process mixed with complex human nature. Therefore, in actual investment decisions, most people make the following choices among these three:

1. Compound rate of return (i)

Everyone will try every possible means to improve, but it turns out that improvement is extremely difficult and there is a lot of uncertainty;

2. Time (n)

It is fair to everyone, but what human nature is most unwilling to do is to wait. “Getting rich slowly” seems simple, but it is actually very difficult.

3. Principal (P)

Finally, the mentality of quick success and instant benefits often leads many investors to worry about the principal (P) - such as increasing the principal investment, or even increasing leverage.

Based on his clear understanding of human nature, Buffett constantly reminds everyone to "invest with the right money" and advises investors not to increase leverage. However, how many people really understand the truth behind this?

Only when the bear market comes, the market keeps falling, the account suffers losses and is on the verge of collapse, will many people realize that the capital they used for investment was not "right money" - because they simply cannot withstand the test of the bear market!

Therefore, if the market has fallen to where it is today, and if you clearly feel that you can no longer bear it, the first thing you should ask yourself is: Is the capital I use to invest “appropriate money”?

Magnifying the principal (P) seems to be the simplest, fastest and most certain way to increase the final return. However, most people forget that the principal is the factor that has the greatest impact on human nature. Once this factor becomes larger, the test on human nature will be magnified exponentially. Ultimately, a simple investment decision may turn into an unbearable burden on life, leading to a collapse of mentality, deformation of operations, and even no return!

The principal is the beginning of everything and the foundation of everything. It is an issue that everyone needs to think about clearly before starting to invest, but even after suffering setbacks, it is still an issue that deserves everyone's reflection.

Seeing this, many fans will ask, does it mean that the bear market is far from ending? Of course not, the bear market will end, and there are ways to survive the bear market. Let me share my own feelings:

1: Logic, will the bear market definitely end? I think most people would agree that the bear market will definitely end. This is the biggest logic. A decline will definitely cause a decline in valuations, and a decline in valuations to a certain extent will definitely end the bear market.

2: Some people say that the bear market will end, but now there are too many problems and the economy is too bad. This is the second logic. The bottom of the bear market must be expected to be very bad. It is so bad that everyone can see it clearly, so bad that those who should cut their losses have cut their losses, and so bad that you dare not buy, so at this stage, the transaction volume must be getting smaller and smaller. Just like a friend asked me today what to do, saying that he felt that he should increase his position, but he didn't dare to buy.

This is the characteristic of the bottom. Why is the transaction volume at the bottom very small? Because no one buys. Why is no one buying at the bottom? Because expectations are very bad. Therefore, the bottom of the bear market must be very bad, with various negative factors. Otherwise, how could it fall so much?

3: For the stock market, the only chance for ordinary retail investors to win is from the trough brought by pessimism. If you don't hold positions at the trough, most people can't avoid the fate of leeks. Although holding positions may not necessarily avoid it, it is something that must be done in stock trading. I warned myself that all troughs occurred under pessimistic expectations.

This is what I said before. When the bull market ends, the price will definitely fall back to the price when the volume increased. The transactions after the volume increased are all optimistic transactions, so they cannot be maintained. Therefore, we say that only by holding positions at the lowest point and getting through it can we avoid being hurt by the bull market. If you cannot hold positions now and are dominated by fear, and then enter the market when the market is optimistic in the future, it will be difficult not to be hurt. Remember, hold positions when you are pessimistic.

4: About mentality

I am not in a good mood when the market is falling. There is only one situation where you like the market to fall, that is, you have a lot of money ready to buy. Who likes the shrinkage of assets?

I have two methods.

First, minimize the retracement. Take Hengrui Medicine as an example. Although it rose a lot before, many people cannot make money when it drops from 100 yuan to 30 yuan. The key is that it is difficult for people to remain rational under such a decline. Under irrational conditions, there is no difference between clearing a position and going bankrupt.

Therefore, reducing drawdown is not so unnatural.

As for how to reduce the drawdown, everyone has their own ideas.

In fact, there are some people who don't care about the drawdown. They have large amounts of capital and have invested heavily in some extremely optimistic stocks, such as Moutai and the bosses of China Merchants Bank. I think once I have enough funds, I will understand their strategies.

Second: Another way to keep your mindset is to calculate your earnings by annual basis, not by the highest point.

No one can guarantee to accurately predict the highest point and then reduce the position. The account at the highest point is a highlight moment, but it is an extremely weak moment. It is just a moment, and it cannot represent the amount of our assets in that account. Even only the numbers in the bear market can represent our assets.

Conclusion

A bear market is painful, but if you just indulge in the pain and self-pity without taking the opportunity to reflect and improve yourself, you will truly waste the huge "tuition" you paid in the bear market.

Investing itself is a process of constantly making mistakes, constantly reflecting, and then growing, and a bear market is the best time to accelerate this process. Therefore, we should not only cherish the opportunity to make arrangements in a bear market, but also cherish the opportunity to improve ourselves in a bear market.

Finally, I would like to quote a passage from Principles to encourage everyone: "I have met countless people, and none of the successful ones are gifted. They often make mistakes and have many shortcomings. They succeed because they face their mistakes and shortcomings and find ways to avoid making mistakes and solve problems. So I think that making full use of the process of facing reality, especially the painful experience of struggling with difficulties and obstacles, and trying to learn lessons from it, will definitely help us achieve our goals faster."

Success is not accidental, opportunities are reserved for those who are prepared#BTC