I have heard such a sharing before, that ordinary people need three bull and bear cycles to accumulate wealth
🚀First cycle
Ordinary people lack information, resources, background, and guidance, so they only pay attention to the market when the media reports it extensively.
When you first enter the market, you have no idea what fear and cruelty are. Although your position is not large, you are ambitious and want to make a killing. You have never felt that making money is so easy. After tasting the sweetness, various myths of getting rich quickly gradually appear in the market. You start to regret why you didn't go all in and missed the opportunity. You start to increase your position and even add leverage.
You make money faster, and you sigh, why would you work if you knew it was so easy to make money? So when you want to do something big, you get done.
As everyone knows, the time when you go all-in is the tail of the bull market. It is the easiest time to make money, but it is also the time when the bubble is the biggest and the risk is the highest. At this time, if you only have ambition but no patience, the end result is basically a big loss. As long as you are an ordinary person, everyone behaves about the same.
🚀Second cycle
Most people can’t survive the first bear market. After experiencing the bull market, you quit your job. You have already denied the value of labor in your heart. What is worse than losing the off-market cash flow is that you are in debt after leveraging and have to pay back the principal and interest every month. Time has become your enemy.
In a bear market, all kinds of extremely narrow fluctuations + false breakthroughs + rapid declines slowly make people despair. You find it is too difficult to make money in the market at this time.
Hot spots appear frequently, but they only last for a few days until your ambitions are worn down. Once you "chase the rise", you will lose money. Once you stop being greedy and do "swing trading", you can occasionally make money. The market has been punishing those who "boldly chase the rise" and rewarding those who "swing trading". The long bear market has made everyone form the "inertial thinking" of doing swing trading. The bull market is no longer applicable.
The biggest blow to you is not losing money and being in debt, but that you suddenly find yourself "useless". It turns out that you made money by luck, but now you lose it by your own strength in the bear market, which is in sharp contrast to your high-spirited self in the bull market. You are desperate, and suddenly you feel that the ordinary days at work before were also pretty good.$BTC
You saw that the coins dropped by 90% and then 90% again, and you thought they were all scams. At this time, the rich people have no courage, and the courageous people have no money. You uninstalled the market software and returned to real life.
Gradually, the bear market stopped fluctuating, and no one in the group talked anymore. The market quietly went up three steps and back one step, until one day it suddenly reached a new high. You saw that the coins you had invested in for several years finally paid off. At this time, no one in the group talked, only someone occasionally asked: Is the bull market coming? As an old investor, you have experienced a round of bear market beatings, and finally made it through. You breathed a sigh of relief and sold all your money out of habit. After recovering the cost, you never paid much attention to the market again. You don't believe that the bull market is coming. Without incremental funds, how can the bull market come so easily? Do you think the market will 100% fall back?
Unexpectedly, after you sell, the market becomes more and more violent. When it falls sharply, you are very happy, but it rises again after a few days, setting new highs. The hot spots continue and ferment. People outside the circle begin to enter the market, and occasionally there will be news that a few newcomers have made a lot of money.
More and more old friends in the group are asking: Is the bull market really coming? You find that many old investors who entered the market at the same time as you have either disappeared or stopped talking. Some of them have lost all their money and have been eliminated by the market; some have suffered a lot in the bear market and are afraid of losing. Most of the old investors are like the old man who quit gambling. After charging the money from his part-time job into the platform, they even tremble when they place a bet to light a cigarette. After becoming a frightened bird, they are afraid of losing, and their confidence and spirit are gone, and their ambitions are naturally gone. This kind of people are basically useless even if they stay in the market.$ETH
Chase the rise? At this time, most old investors have lost their courage and dare not participate in the hot spots. You are very disdainful and unconvinced, thinking that this is a bubble and it will collapse sooner or later. You think it is a scam. But you can’t just watch the market rise. You can only buy the old targets that you are familiar with in the previous round for safety.
It was not until the market continued to reach new highs and the second half of the bull market began that the old investors in the group began to become active. The bull market really came, and the old investors began to participate in the new narrative to make some money.
At this time, the old stocks in your hands start to rise. You know that the market is about to end, because you went all-in at this point in time in the last round. Although you didn’t make much money in three years, the three years of the bear market taught you what risk and cruelty are, so you quietly liquidated your positions.$SOL
After four or five years of ups and downs in the market, you didn’t gain wealth, but you gained experience. This round is still frustrating, but you start to face yourself.
So although you won’t lose money in the second cycle, you still won’t make a lot of money if you have no ambition and only patience left.
🚀The third cycle
Only those with endurance and good understanding can get here. Going through a bear market + a complete bull-bear cycle is like a 5-year-old child who has experienced two springs, summers, autumns and winters.
You begin to know that the capital market actually has four seasons. In summer, everyone will be so hot that they can’t resist the temptation to go swimming naked in the sea. But in winter, those who don’t go ashore or put on 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 will never escape the cycle of seasons.
You slowly discover the certainty of the market: seasons come and go, but human nature never changes
The rules are surprisingly consistent. There is nothing new in the capital market.
At this time, only a few people have stayed in the market. Those who can be honest with themselves and are good at reviewing are rare. They will summarize an investment system that suits them. At the very least, they have some experience of the market sentiment.
Munger once said:
“Successful people in the capital market often need a rare combination of contradictory attributes: ambition and patience.”
At this time, you have achieved a balance between ambition and patience, and you have experience + self-determination. Therefore, in the third round of bull market, you can basically grasp the rhythm and make a lot of money.
