Learn to invest with Buffett

Chapter 84

Chapter 14 Section 4 Success and self-control are inseparable

We don't have to be smarter than others, but we must have more self-control than others.

--Warren Buffett
Once, Buffett took part in an outdoor golf game and scored zero holes-in-one in three days.So, Buffett's golf friends decided to make a bet with him: If he can't make a hole in one, he only needs to pay $10; if he does, he can get $20000.Everyone on the spot accepted the suggestion, but Buffett rejected it, saying, "If you don't learn to discipline yourself in small things, you won't discipline yourself in big things."

In his 40-year investment career, it is precisely because of his contempt and avoidance of many market temptations that Buffett was able to escape the "electronic wave" in the 20s and the "biological concept" and "junk bond" in the 60s. ", also escaped the "network farce" at the end of the 20th century.

When investing in the stock market, self-control is extremely important.Many investors make mistakes not because they do not understand the principles of investment, but because sometimes they understand the principles but fail to do so. The root cause is the lack of self-control.

Someone once did such an experiment:
Let a group of children walk into an empty hall alone, and put a piece of candy for each child in the most prominent position in the hall.The test teacher said to every child who was about to go in: "If you can persist until the teacher comes to tell you to go out and have not eaten this piece of candy, you will be rewarded with another piece of candy, that is, You'll get two candies; if you eat them before the teacher comes, you'll only get one."

The experiment began, and the children entered the hall one by one.It turns out that some children have no self-control ability, because the adults are not there, and they can’t stand the temptation of candy, so they eat the candy; some children think that as long as they can hold on for a while, they can get two pieces of candy, so try to eat as much as possible. Control yourself, divert your attention, don't look at the candy, and wait until the teacher arrives.And just like that, they were rewarded with a second candy.

Afterwards, the experts divided the children into two groups, and conducted a long-term follow-up survey on the children who could persist and get two pieces of candy and those who could not persist in getting only one piece of candy. On the road of life, children who get two candies are generally not successful.Because these children lack self-control ability, when they grow up, regardless of their IQ, they are often not easy to succeed because of lack of self-control; while those children with self-control are easy to achieve certain achievements in later life.

For individuals, investment is an investment behavior with a great degree of freedom. No one supervises, manages and restricts your operations. Many investment behaviors depend on your own decision-making and implementation.

In terms of operation, we must control our investment behavior based on objective reality, and not let investment behavior control our investment thinking in turn; in terms of emotions, we must eliminate the impact of stock market fluctuations and the interference of personal profits and losses, and control our emotions This is the foundation of success; in terms of thinking, you can think creatively, you can use reverse thinking, but you can’t follow others, you must maintain your own independent thinking; in terms of rhythm, you don’t need As busy as bees are, the stock market has unique seasons and fast and slow rhythms. Investors must know how to participate on time and take a break when they have a certain grasp of the overall trend; But stocks with extremely high risks should be avoided, such as stocks that are about to be delisted.Prudent investors should pay attention to "safety first" and not participate in hype beyond their ability to bear.

In addition, don't set a high profit target for yourself, because an excessively high profit target will bring a certain amount of psychological pressure, and a scientific investment target can help you maintain a happy mood and a positive and enterprising attitude.Whether it is buying low and selling high or buying high and selling higher, they must maintain independent thinking. It is extremely dangerous to do the opposite of the public in order to be different.They must have a rational explanation for why the public might be wrong and foresee the consequences of adopting contrary thinking.We've long been conditioned to "groupthink," but investing requires a different mindset.If most people are optimistic about a certain stock, they have entered the market according to their own ability, who else will buy stocks to make the stock market continue to rise higher?Conversely, if most stockholders are not optimistic about the stock market and they have already sold out, then the range for the stock market to continue to fall is not large.If you follow the crowd, you will often enter the market at high points and exit the market at low points, and you can only become a loser.But in real life, there are not many investors who can do this like Buffett, and many investors often do not have enough self-control in investment.

Investment motto:

To cultivate self-control, you must think more when investing. Only by thinking more about the country's macro and the region where the stock market is located can you have a clearer understanding of the stock market.To make big money by looking at the general trend, you can only see far if you stand tall, and you must have an overall strategic investment vision.

(End of this chapter)