Do you understand the account of cryptocurrency speculation?
Many people do not understand cryptocurrency speculation for their entire lives.
If you have 1 million yuan, it first rises 100%, then falls 50%, how much is left?
The answer is 1 million yuan.
If you have 1 million yuan, it first falls 50%, then rises 50%, how much is left?
The answer is 750,000 yuan.
If it rises 50% first, then falls 50%, how much is left?
The answer is also 750,000 yuan.
If you have 1 million yuan, the annual steady rate of return is 30%, how much is left after 1 year?
The answer is 1.3 million yuan
How much is left after 2 years?
The answer is 1.69 million yuan.
What do the first two examples illustrate? They illustrate that in cryptocurrency speculation, controlling retracement is always the first priority. In real life, many people may be able to achieve 100% or even 200% profit in the short term, but in the long run, as long as the return retracement exceeds 50%, the final result is still to be beaten back to the original shape by the retracement, and it is all in vain.
What does the third example illustrate? It shows that a steady annualized rate of return is not inferior to a high rate of return with higher volatility. A steady return of 30% per year is already quite impressive! On this basis, with compound interest growth every year, the return will become very considerable over time!
From the perspective of a stock market master, why can Buffett become a stock god? It is not because he can easily double his profits in the short term, but because he can maintain a profit of more than 20% for 47 years.
Many people may be able to achieve a profit of more than 20% in the short term, but it is rare for them to be able to maintain it for more than five or ten years. Therefore, we should all keep a normal mind, be down-to-earth, and always believe in the power of compound interest.
Be sure to do a good job of position management!
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