Nine Investment Principles: The Wise Path to Stable Returns
In the ever-changing world of investment, achieving long-term stable returns is no easy task. However, adhering to some basic principles can help investors avoid many common pitfalls and walk a smoother path. Here are nine investment principles that have stood the test of time and have been validated by countless successful cases.
1. Humility and perseverance go hand in hand
Many people enter the market with a mindset of "I am smarter than others," believing they can predict every market fluctuation. However, it has been proven that the most effective strategy is often to find a direction that suits you and to steadfastly move forward. As stock guru Warren Buffett said, "Investing is actually very simple, but it’s not easy." This reminds us to maintain a humble attitude while possessing sufficient patience and perseverance.
2. Risk control takes precedence over aggressive actions
When your investment portfolio suffers significant losses, you may feel despair, but that is not a reason to throw caution to the wind. On the contrary, in such situations, you should think calmly, assess the situation, and seek opportunities for turnaround. Remember, preserving your principal is always the top priority because only by staying in the game can you seize the next opportunity.
3. Avoid anxiety caused by frequent trading
Unlike most professions, in the investment field, excessive effort can lead to more mistakes. Frequent buying and selling not only increases costs but also easily leads to emotional decision-making. Therefore, learning to take timely breaks and restoring a calm mindset is crucial for making rational investment decisions.
4. Rationally treat profits and desires
Linking profits to personal desires is one of the most dangerous things; it can trap you in a vicious cycle of greed and fear. Successful investors understand how to set reasonable expectations and strictly adhere to established rules, rather than being swayed by momentary emotions.
5. Mental state determines system efficiency
If you find yourself filled with struggle, it indicates that the current operating mode may no longer be suitable. The best course of action at this point is to pause, reflect, and adjust, ensuring your mental state is at its best before proceeding.
6. Emotions should be independent of financial decisions
Treating making money as a source of happiness or viewing losing money as a source of pain can severely affect your judgment. Excellent investors can remain calm and objective in any situation, not allowing external factors to interfere with their decision-making process.
7. Stop-loss is to validate direction, not merely to stop losses
The purpose of setting a stop-loss point is not merely to limit losses, but more importantly, to help us confirm whether our initial investment logic is valid. If there is no suitable entry point, it may be best to calm down and wait for a better opportunity. After all, the market is never short of opportunities, but what is lacking is patience.
8. Go with the trend to ensure stability and longevity
Once a trend is established, holding onto assets without movement is often the wisest choice. Trying to go against the market or frequently switching positions only increases unnecessary risks. Following the trend and patiently holding stocks is key to achieving wealth appreciation.
9. Long-term vision surpasses short-term benefits
As an old saying goes: "A general on the march does not chase small rabbits." Truly great investments are based on long-term vision and strategic planning, not chasing short-term small profits. Cast a long line to catch big fish; focus on those value targets with sustainable growth potential to reap more substantial returns.
By repeatedly learning and practicing these principles, I believe every investor can find their own path to success in a complex market environment.