It takes three bull and bear cycles in life to become wealthy.
This is the insight I have gained from nine years of speculation:
An ordinary person
If no one leads, points out, and you rely entirely on your own understanding.
You basically need to go through three bull and bear cycles to make big money.
And it requires some talent and a bit of luck.
1/ The first cycle
Ordinary people lack information, resources, and background, and have no one to guide them.
So only when the media extensively reports can people pay attention to the market.
And you just entered the market, completely unaware of what fear is and what cruelty is.
Although your investment position is not large, with full ambition, you are slaughtering everywhere; you have never felt that money is this easy to make.
After a taste of sweet rewards, various myths of getting rich quickly gradually appeared in the market.
You start to regret why you didn't go all in; you missed a great opportunity.
You start to increase your position and even use leverage.
You are making money faster; you lament, had I known making money was this easy, why would I have worked?
So when you want to make a big move, you are instead made a big move against.
When everyone knows and is fully invested, that's the tail end of the bull market; it’s the easiest time to make money, but also the time of the greatest bubble and highest risk.
At this time, you only have ambition but no patience; the outcome is basically very tragic.
As long as they are ordinary people, everyone's performance is roughly the same.
2/ The second cycle
Most people cannot survive the bear market of the first cycle.
Having experienced a bull market, you resigned, and deep down you have already denied the value of labor.
Worse than losing cash flow from outside is that after you use leverage, you are now in debt; every month you have to repay principal and interest, and time becomes your enemy.
In the bear market, various extremely narrow fluctuations + false breakthroughs + rapid declines slowly lead to despair.
You find it extremely difficult to make money in the market at this time.
Hot topics frequently appear, but they are always 'short-lived' until your ambition is worn down.
Once you 'chase the rise', you will lose money; once you are no longer greedy and do some 'trading in waves', you can occasionally earn.
The market has always punished those who dare to chase the rise and rewarded those who trade in waves.
The long bear market leads everyone to form the 'inertia thinking' of trading in waves.
The strategies from the bull market no longer apply.
The biggest blow to you is not losing money + being in debt, but suddenly discovering that you are 'worthless'.
It turns out that the money you made was all due to luck, and now you are losing it in the bear market with your own strength.
This creates a strong contrast with the confident you during a bull market.
You are in despair; you suddenly feel that the previously mundane days of working were actually quite good.
You look at the coins that have dropped 90% and then dropped another 90%, and you think they are all scams.
At this time, those with money are not brave, and those with bravery have no money.
You uninstalled the market software and returned to real life.
Gradually, the bear market showed no fluctuations; no one in the group was talking anymore.
At this time, the market quietly advances three steps and retreats one step, continuously rising, until one day it suddenly hits a new high.
You see that the coins you have been stuck with for years have finally returned to the cost.
At this time, no one in the group is talking, only occasionally someone asks: Is the bull market here?
As an old investor who has experienced a round of bear market's beating, you finally made it through and habitually sold everything with a sigh of relief.
After recovering the cost, you haven't really paid much attention to the market.
You don't believe the bull is coming; without incremental funds, how can the bull come so easily? You think the market will definitely fall back 100%.
Unexpectedly, after selling, the market kept rising fiercely, and when it fell, you were very happy, but a few days later, it surprisingly rose back up, hitting new highs.
Hot topics are continuously emerging and brewing, and people outside the circle begin to enter the market, occasionally hearing news of newcomers making a lot of money.
And more and more brothers in the group are asking: Is it really a bull market?
You find that many old investors who entered the market around the same time as you either disappeared or stopped talking.
Some have lost everything and been eliminated by the market; some have suffered badly in the bear market and are scared of losing.
Most old investors, like recovering gamblers, put their daily earnings into the platform, but when betting, their hands tremble even when lighting a cigarette.
After becoming a startled bird, you are afraid to lose, and your confidence and ambition are naturally gone.
This kind of market is basically useless even if it stays in the market.
Chase the rise? At this time, most old investors have lost their courage, and they dare not participate in the hot topics.
And you are very disdainful and unconvinced, thinking this is a bubble that will collapse sooner or later; everyone believes it is a scam.
But just watching the market rise is not enough; you can only seek stability and buy familiar old stocks from the last round.
Only until the market continuously hits new highs, and the frenzy of the bull market begins in the latter half, do the old investors in the group start to become active.
The bull market has really come.
Old investors only start participating in the new narrative to make some money.
At this time, the old stocks in your hands started to rise.
You know the market is about to end because you were all in at this time last round, and it trapped you for three years.
Although you didn't make much money, the bear market taught you what risk and cruelty are during the three years, and you silently cleared your positions.
After four to five years of ups and downs in the market, you haven't gained wealth but have gained experience.
You are still frustrated this round, but you begin to face yourself.
So in the second cycle, although you won't lose money, you have lost ambition and only have patience, still unable to make big money.
3/ The third cycle
Only those with endurance and good comprehension can reach this point. Experiencing a bear market + a complete bull-bear cycle is like a five-year-old child experiencing two springs, summers, autumns, and winters.
You start to realize that there are actually four seasons in the capital market.
And summer will definitely make everyone hot and unable to resist the temptation to go swimming naked; but in winter, those who haven't come ashore or haven't put on their clothes in time will freeze to death.
You also know that the sun will shine in winter and hail will fall in summer, but over time, extreme weather cannot escape the cycle of seasons.
You gradually discover the certainty of the market: seasons repeat, while human nature never changes.
The patterns are remarkably consistent; ups and downs reveal that there is nothing new in the capital market.
At this time, those who have been in the market are actually just a minority.
And those who can honestly face themselves and are good at reviewing are basically few and far between.
They will summarize an investment system that suits themselves.
At least you have some experience with the market's emotions.
Munger once said:
'Successful people in the capital market often need rare contradictory dual attributes, namely the coexistence of ambition and patience.'
At this time, you balance ambition and patience, and you also have experience + self-decision-making.
So in the third round of the bull market, being able to grasp the rhythm and making big money is a natural outcome.
If luck is on your side and you have a virtuous ancestry, you might achieve financial freedom.
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(Tao of Heaven) Li Rui said:
As long as it’s not what I feel or comprehend, you can't give it to me, even if you do, I can't hold it. Only what I feel and understand myself can I achieve; what I can achieve is mine.
How much you can comprehend depends on your current state and experience; how much you can achieve depends on how much you can comprehend.