Think rationally and be a long-lasting investor

Since last year, when institutional investors began to enter Bitcoin on a large scale, many traditional institutions’ public comments on Bitcoin have become more and more positive, and they have even begun to predict how many dollars Bitcoin can rise to in this round of bull market, such as Citibank has a report and optimistically estimates that Bitcoin may rise to a maximum of $300,000 in this round.

Recently, when Bitcoin started to pull back from more than 40,000 US dollars on January 10 to the current 30,000 US dollars and hovered for nearly two weeks, some institutions began to sing bad news again.

For example, Paul Donovan, chief economist at UBS, believes that the "fundamental flaw" inherent in digital currencies is that if demand falls, digital currencies cannot reduce supply. That means they cannot be considered currencies, he said. The main point of the economist is that Bitcoin does not give enough confidence as a currency.

JPMorgan Chase, another firm that has repeatedly commented on Bitcoin, its cross-asset strategy research department believes that Bitcoin is "the least reliable hedging tool in times of severe market stress" and warns that Bitcoin will not be as traditional as a hedge in the near future. Defensive assets work that way.

The statements of these two financial institutions are a mouthful to read, but the basic meaning is the same, that Bitcoin's future is very limited.

I believe that if this round of correction lasts longer, or in the next bull market, when a similar correction occurs again, more traditional institutions will join the ranks of bearish on Bitcoin.

Earlier, when Bitcoin was rising without looking back, I expressed my concern in the article. I thought that such a rising method would not only be detrimental to the development of the next bull market, but may even lead to a sudden collapse of the bull market, so I have been looking forward to a deep And a callback that lasts for a long time. I also wrote in the article that we should not be afraid of the callback in the bull market, but rejoice.

Now that the pullback has finally come, I have calmed down a lot from my previous worries, because this pullback is necessary for the healthy development of a bull market.

I believe that there are not a few investors who hold my view. But why do those traditional institutions have such a big change in their attitude towards Bitcoin because of the healthy correction?

On the one hand, it still shows that they do not fully recognize Bitcoin in their hearts. On the other hand, it is also the "herd effect" that institutional investors often show.

Whether they recognize Bitcoin or not, this time will slowly prove that the "herd effect" they show is a very good teaching material for our ordinary investors to carry out psychological training.

We always say that retail investors have a herd effect: when prices rise sharply, retail investors shout up in unison, chasing up in unison; when prices fall sharply, retail investors shout in unison, cutting in unison. In fact, institutional investors still have this phenomenon. I have repeatedly said in the article that "institutional investors are retail investors with large amounts of funds". In many cases, except that they have more funds and advanced tools than us, they are not so different psychologically from ordinary retail investors.

But what is interesting about investing in my opinion is that this field does not require such profound knowledge or advanced tools, but what is most needed is psychological endurance. Readers who have read my investment experience series articles can see that all the consultations I have obtained are public, and I don’t know any K-line charts, and I don’t have analysis tools for various technical indicators. My only experience is to invest in a bear market and to sell in a bull market; and when I see an asset plummeting, I analyze the ins and outs and historical trends of this asset to see if it is a good time to enter the market.

So in fact, in the field of investment, as long as our ordinary retail investors gradually become stronger and rational psychologically, we have no disadvantages compared with institutional investors.

When I went to the bank, an account manager would often recommend to me a certain fund of a certain famous investment manager, and would give me hype about the manager’s past excellent experience and outstanding investment returns. In fact, we look at the performance of all active funds in China. In the past nearly 20 years of investment experience, there are only a handful of them that can achieve an annualized return of more than 15%, and most of them have been successful for a few years. And then into obscurity.

Why? Because the vast majority of these fund managers follow the trend and follow the trend, and buy whichever is popular. The so-called investment research reports of many fund managers are just for display, and what really guides their investment behavior is market hotspots.

The group buying of funds in the A-share market during this period is a typical example of this "herd effect": fund managers buy in groups to keep warm, which is safe and reliable.

Let's see, is this different from retail investors? Not at all, but this so-called "safety" and "reliability" is not sustainable.

So when I invest in the stock market, I never buy active investment funds, only passive index funds. The performance of most fund managers cannot beat the index.

This is not only true of institutional investors in China, but also of institutional investors in the United States. Institutional investors who truly maintain independent thinking like Buffett are rare in the United States.

I suggest that everyone watch a movie "The Big Short" that reflects the 2008 financial crisis in the United States. This movie truly reproduces the wretchedness and unscrupulousness shown by the glamorous and well-known institutional investors in the United States during that crisis. To a certain extent, those institutions that went bankrupt are reaping the consequences of themselves. They are essentially the same as retail investors playing futures and using leverage to liquidate their positions regardless of risks.

In the field of digital currency investment, such things are happening. We just take this opportunity to pay attention to the arguments of these financial institutions, especially the diametrically opposite arguments they yell when the market conditions change, and use this as a mirror to reflect on ourselves.

(Thinking about blockchain, cryptocurrency, and investment. Welcome to exchange and discuss, author v: 730730)

(Thinking about blockchain, cryptocurrency, and investment. Welcome to exchange and discuss, author v: 730730)