The Six Major Characteristics of Retail Investors!
1. Pretending to Understand
Retail investors often lack a deep understanding of the market but are unwilling to admit their ignorance. They jump to conclusions hastily without systematic learning, even using superficial 'common sense' to guide complex investment decisions. This behavior makes them vulnerable to misinformation or false advertising.
2. Blindly Following Trends
Retail investors tend to follow so-called 'hotspots' or 'trends.' Upon hearing that others are making money, they rush to imitate without analyzing the underlying logic. The end result is that they always buy at high points and sell at low points, repeatedly getting harvested by the market.
3. Lack of Patience
Retail investors generally do not have long-term thinking and always hope to obtain high returns in the short term. They are unwilling to wait for the market or asset value to manifest, frequently trading, chasing immediate 'profits,' while ignoring the benefits of long-term holding.
4. Greed and Fear
Greed and fear are the two core emotional drivers of retail investors. When prices rise, they fear missing out on the opportunity and frantically chase the highs; when prices drop, they become fearful to an unbearable extent and quickly sell off. This emotional trading leads them to repeatedly lose in the market.
5. Superstition in 'Insider Information'
Retail investors like to believe in so-called 'insider information,' fantasizing that they can gain asymmetric advantages through these messages. However, the vast majority of 'insider information' is either nonsense or traps set by others, leading them to blindly bet and ultimately get stuck.
6. Avoiding Responsibility
Retail investors tend to blame external factors for their investment failures, such as 'the market is bad,' 'the big players manipulated,' or 'someone led me into the pit.' They rarely reflect on their own issues and are even less likely to proactively learn and improve, ultimately forming a vicious cycle.
Investing is a game that requires wisdom, patience, and execution. Only by breaking free from retail investor thinking can one truly establish themselves in the market.
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