Learn to invest with Buffett

Chapter 4

Chapter 1, Section 3 If you control your emotions, your investment will be half successful

Anyone wondering about the soundness of Berkshire's balance sheet in 1964 got the same answer as that given by the notorious Hollywood tycoon: "Don't worry, all liabilities are real!"

--Warren Buffett
Even if investors have the financial and accounting skills necessary to invest in the stock market, if they cannot control their emotional changes in a volatile market, it will be difficult to make profits from investment.

If investors want to establish a correct attitude towards the stock market, they must be fully prepared psychologically and financially, because the market will inevitably fluctuate up and down. Investors must not only have a good psychological quality when the stock price rises, but also Face the stock price drop, sometimes even violent drop, with a calm mood.If you have that kind of psychological quality, then it can be said that you already have 99% of the psychological quality ahead of other investors.He said: "Real investors will never be forced by the market situation to easily sell the stocks they are optimistic about, and they will not care about short-term price trends."

A good psychological quality is very important for investors to choose to buy stocks.However, in the incompletely market-oriented stock market in China, irrational speculation of listening to news and speculating in stocks with dealers is the most common investment mode.Many people do not conduct even the simplest basic analysis of listed companies at all, and buy or sell frantically as soon as they hear news.This situation often happens in the stock market.

In the stock market, some stockholders have repeatedly fought and failed repeatedly.They often do not find the cause of failure from the subjective mentality, but instead curse the experts for being too vicious, blame the stock critics for making mistakes in forecasting, even complain about the sudden bad news from the government, and get angry at the poor performance of listed companies.However, they have never seriously thought about why some people still make a lot of money under the same market conditions?
The stock market is full of various temptations every day. How to resist these temptations and how to follow your established investment path for a long time depends on your own strong self-control and self-confidence.Human weaknesses such as greed, fear, fantasy, and extravagant hope drive batch after batch of stock market players to the sea, but few of them finally swim to the other side of the ocean.Many retail investors are obsessed with various complicated charts all the time, and often have to endure being overturned by the potential stocks they have selected.

People often say: the country is easy to change, but the nature is hard to change.Buffett believes that challenging the demons of the stock market is indeed extremely difficult.He said: "It's no use just wanting to be different."

Investment motto:

The stock market is like a real knife and a real gun. On a bloody battlefield, the prerequisite for defeating your opponent is to defeat yourself first.But in reality, many investors do not first defeat and control themselves, but are on the illusory road of no return to study how to defeat the market and the banker. Don't they know that the market is always invincible, and the banker is just a It is a process of digesting others at a low position and being digested by others at a high position. They can be said to be illusory, but they can also be said to exist in reality.

Always trying to get rich in the short term, in the end, it is often nothing.Once you are here, once you are blinded by greed, the stock market has quietly become a slaughterhouse for "high IQ" people.The research results of behavioral finance tell us that in the stock market, we must defeat ourselves before defeating the market, don't be overly superstitious about ourselves, try to avoid common stupid mistakes, maintain self-control, and maintain a rational investment attitude.

(End of this chapter)