Few months back, I made a post about the lure of quick money. I didn't expect it to happen so quickly, but I heard my friend lost
quite badly after one of the stock went strongly against his position.
I am not trying to gloat here, but it made me even more firm on my 脚踏实地，循序渐进 stance towards financial freedom.
I
am glad I picked up poker back then - many of its theories applies to
stocks, and I think I benefited immensely now that I started investing.
You need to put in lot of effort to learn the science and art of the
game. It's not simply a game of chance - everything is about
probability, psychology and bankroll management.
You
may have done your homework and foresee a high probability of success,
but you still can't dump all you have in a single stock. Even if you
hold AA, the best hand possible, would you bet your ENTIRE
life savings on a single hand? I hope not, because even the best hand
only wins 85% of the time.
I talked to him about it and
we both agree it was greed. (I guess he was influenced as well) It's
like a "越陷越深" thing. The more you win, the more you'll 'gamble' the next
time. Your 'luck' will run out one day.
It's even
worst in stocks because it isn't a level playing field like poker. No
matter how confident you are of a company upcoming earnings, remember
that you are but a small pawn in the market. Your 'opponent' are big
banks and hedge funds with billions and trillions of dollars under their
disposal. Do you really think you can beat these people? They can move
markets, we can't.
Sometimes we make the wrong decision
but got a good outcome (just like a suck out), or we make the right
decision and end up with a bad outcome (bad beat). We can't control over
the course of 1 hand, or 1 session. What we can do is to buy good
companies, and hold it for the long term. Like the saying goes, Time in
the market > Timing the market.
The path to financial freedom is filled with hard work and patience.
No comments:
Post a Comment