Ordinary people want to make profits in the market, essentially by looking for opportunities for invalid pricing
Market pricing is effective in 99% of cases, and most ordinary people have no way to make profits in this environment, because the potential profits have been calculated and divided by smart people, institutions, and insiders in the market.
Opportunities for invalid pricing are basically reflected in two forms:
1. Find invalid markets: Generally speaking, such markets are relatively new, full of public prejudice against them, and competition is not strong. For example, various arbitrage opportunities, local dogs, etc.; that is, what everyone knows: alpha. This requires you to have a keen sense of news and the ability to quickly learn rules and find potential loopholes.
2. Wait for the 1% invalid moment in the market: Most of the time, keep a low risk exposure, do arbitrage, eat interest, and profit from other people's mistakes when the market is irrationally priced and invalid. For example, buy at the bottom of a crash, buy puts with a certain position during a frenzy, etc.
Why does Buffett hold a huge amount of cash all year round? Why does Seth Klarman only have a 50% position all year round? Why does Howard Marks always wait for a crash to pursue the extreme moment of the market pendulum?
Because one good opportunity is greater than 100 mediocre opportunities, and the opportunity to make huge profits is generated when you buy at an extremely low price. Indeed, what you need to do is very simple: evaluate the value of the target, and then wait for the market to be invalid and buy it. At this time, the market will give you money.
Of course, it is not easy to do so: talent, hard work, the courage to step out of the comfort zone, independent thinking against authority, patience, good attitude, etc. are all indispensable.