The poor are poor, the rich are rich

Chapter 103 6 Practice investment "mind" when living in peace

Chapter 216 Cultivate the "Mentality" of Investment in a Safe Time

The reason why they are rich is inseparable from their good investment habits.They always exercise their own qualities and cultivate a successful investment mentality when they are at ease.And the people whose investment planning is messed up by crises and risks are mostly people who do not have a successful investment mentality.Investment masters, whether they invest in companies or stocks, have solid internal skills and are good at swimming against the current.If you want to calmly face all kinds of crises and hidden dangers in the investment process, then you should practice more investment "mental methods" when you are at home, and get rid of the following distracting thoughts.

One of the minds: don't follow the crowd
Psychologists believe that everyone has a certain degree of herd mentality, and investment is no exception. The trading atmosphere in the trading market often has a certain impact on investors' decision-making.Investors who go to the sales department of a securities company to engage in transactions on the spot probably have the experience of being influenced by the trading atmosphere, and finally buy or sell involuntarily following the atmosphere, because investors generally do not take their hard-earned money to buy or sell. adventure.This phenomenon that the herd mentality of investors determines the investment atmosphere, and the investment atmosphere affects the behavior of investors, is called the "herd effect". The "herd effect" often makes investors make decisions against their original wishes. If this herd mentality cannot be treated rationally, it will often lead to investment failure and loss of interests.Some investors could have made profits by continuing to hold shares, but due to the influence of the market atmosphere, they finally missed the opportunity; As a result, he followed others to buy, and was finally locked up.

Tip [-]: Don’t act impulsively
Whether it is with the trend or against the trend, we must control the impulse to make money.Don't just rush in if you hear that a certain stock is good or bad, and don't care about the weakness of the market, just thinking about making money.Even if you don't buy it and the stock price goes up, you don't have to regret it. The main consideration is probability and risk control.The desire to make money must be restrained by the reins of reason. It cannot be absent, but it cannot be flooded.

On the contrary, investors can take advantage of this weakness of human nature. When the general public is prone to the urge to make money, investors consider reducing their positions or exiting appropriately-every time the market reaches a stage top, it is the time when the public is the craziest; When the public is panic-selling, investors can come to pick up a little bit of bargains-every time the market reaches a phased bottom, it is precisely the time when big buyers make their moves.

The third method of mind: not self-righteous
Overconfident investors not only make stupid investment decisions, but also indirectly affect the entire stock market.

Many investors are always very confident, thinking that they are smarter than others, that they can pick stocks that can make money, can produce golden eggs, and can pick stocks that will be profitable in the future-or, worst, they can also pick stocks that are more profitable. Smart money managers, these managers outperform the market.They have a tendency to overestimate their skills and knowledge.They only think about the information that is readily available around them, instead of collecting deeper and more subtle information that is rarely obtained or difficult to obtain; they are keen on market gossip, and these gossip often lure them to step into the market with confidence. stock market.In addition, they tend to evaluate information that is available to everyone, rather than discovering information that few people know.

It is precisely because of overconfidence that many money managers have made wrong decisions.They are overconfident in the information they gather and always think their own is more correct than others'.If everyone in the stock market thinks their information is correct, and they know something that others don't, there will be a lot of transactions as a result.

In short, overconfident investors always think that their investment behavior is very low risk, which is not the case.

Tip Four: Don’t Overreact
The extreme of overconfidence is overreaction.If the overreaction of investors forms a combined force, it will cause a sharp shock to the entire stock market.Regarding the overreaction, the foreign unified theory model explained it.The unified theory model assumes that the market is composed of two types of bounded rational investors, namely "news observers" and "trend traders". News observers make predictions based on the information they have, rather than based on price information. .Trend traders are just the opposite, they only base their forecasts on recent price changes and they don't care about other information.The model assumes that private information gradually diffuses among information observers, and then trend traders intervene to cause the price to peak, and then the price reverses, which is an overreaction.

To sum up, only when you can sit back and relax, pay more attention to the accumulation of investment literacy.Only in this way can we deal with the crisis calmly, turn the crisis into peace, seize the business opportunities in the disaster, and create more wealth.

(End of this chapter)