There is no doubt that everyone agrees with this very much: in investment, mentality/emotional control is very important. A powerful investor must have a strong ability to control emotions. Just like what the old man said: I am afraid when others are greedy, and I am afraid of liquidation when others are afraid. Overcome your emotions, don't be influenced by the external environment, and make some operations that follow what others say.
It is such a truth, but unfortunately it is easier said than done.
Howard's strengths are as follows:
The first point is that he brought up the emotional cycle separately, thinking that it is because of this thing that caused the sharp rise and fall of asset prices.
Assuming that under normal circumstances, the reasonable valuation of assets is 100 yuan, but because of the guidance of positive/negative emotions, in the process of forming prices in the market, the market price rarely stays at 100, and usually either jumps to 200 or leaks. to 10 pieces. Therefore, the investment market is not an absolutely rational person's hypothetical market.
The truth is, markets often behave like pendulums.
In order to obtain excess returns, investors must not only have business analysis and insights, but also have insight into market sentiment and the ability to play games with market sentiment.
Has anyone ever learned to meditate? Those who have entered the door should know that the profound meaning of meditation is not to let you restrain yourself from thinking about it, but to let your thoughts go as they please without interfering or disturbing. Usually, the awareness is concentrated in a certain place, such as breathing or vipassana. If the thoughts drift away, don't be angry, don't rush, just pull them back.
The so-called "awareness", you may think I'm talking nonsense, but what I want to say is: the emotional management of investment is not about restraining one's emotions, nor is it fantasizing that one day, one will really not be greedy or fearful ;The emotional management of investment is to be aware of one's own situation, connect it with the price fluctuation of the investment target, position one's own situation, and then tell oneself which ones are real and which ones are the obscenities brought about by emotions...
Look at a picture -
First look at the red line, which is the fluctuation of the price, and then look at the little man icon, which is the fluctuation of your emotions. I don't know if you realize that your emotions follow the price completely. When it goes up, I am very happy and excited. I look at the market value every few minutes and count how much money I have made. At the same time, I regret that I bought less, and I am entangled in whether to increase my position. I imagine that this transaction can make a profit. How much. When it fell, I was very sad and anxious. I looked at the market value every few minutes and counted how much money I lost. At the same time, I regretted why I didn’t sell it earlier. The profit was gone. , and finally scolded myself, why did I lose so much again. This is a very normal psychology~
What should be abnormal?
When it is rising: I am very happy, very excited, look at the market value every few minutes-this is yy. On the one hand, I still regret that I have bought less, and I am entangled in whether to increase my position. I need to think about why I only buy so much. Is it because the position is not good, or because I am not sure, or because of position management problems. Just imagine how much money you can make from this transaction—this is YY, but you really have to think about it, what to do if there is a decline, and where to stop the profit if it continues to rise smoothly. At the same time, we need to look for information again to judge what is the driving force for this rise, whether the current rise is in line with expectations, and whether there are other variables...
Not to mention the decline... All in all, you have to feel your emotions through "awareness", then throw away those unrealistic fantasies as much as possible, use real data and evidence to support your judgment, and prepare for the next step. plan.
Only in this way can we not be surprised by favor or shame!
Finally, attach a Tao Te Ching: What does it mean to be flattered or humiliated? To be favored as the next person is to be astonished when one gets it, and to be astonished when one loses it.
best wishes~
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