无所得

What is investment really about? Is it merely frequent operations focused on price? Or is it a mechanical use of various indicators for buying and selling? It seems that none of these approaches truly get to the essence. For me, the result of years of contemplation is that the essence of investment is actually investing in profitable enterprises.

For example: each target actually represents a company; stocks are like this, and cryptocurrencies are no exception. Suppose a company is not making money or even losing money, then for such a company, is a market value of 10 billion expensive? Yes, it is very expensive! When the market value drops by 99%, leaving 1 billion, from a price perspective it looks very cheap, but in reality, is it still expensive? Yes, it is still very expensive!

Therefore, expensive and cheap do not just refer to price, but depend on how much money is spent to buy the company's profits.

Another example: if the cost of starting a company is 1 million, and the net profit for one year is 100,000, in the next ten years, if your business thrives and the net profit grows to 500,000, at this point if I offer the initial startup cost of 1 million to acquire your company, would you be willing? Definitely not! You might expect an offer of 5 million or even 6 million before you would consider it.

Conversely, if in the next ten years, due to particularly competitive conditions in the industry, the net profit shrinks to 50,000 or even becomes unprofitable, then if I want to acquire your company, I certainly wouldn't offer 1 million; I might offer 500,000 or even less, which would be negotiable.

Thus, the rise and fall of prices, over the long term, actually reflect the profitability of the enterprise.

Of course, there are very few people who can achieve excess returns through extremely short-term subjective operations, but patterns can be repeated, and individual cases cannot be replicated. For most ordinary people like you and me, simply buying profitable businesses at cheap prices can also allow wealth to compound and grow into a big snowball!

#价值投资

The image below shows the actual situation of one of my personal accounts.

Why do I always lose money and get liquidated?

The main reason is mostly frequent trading and leverage.

First, let's talk about frequent trading. For example, if a person has a 70% chance of doing something right, what is the chance of doing two things right at the same time? The answer is: 70% * 70% = 49%. What about three times? Then it is 49% * 70% = 34.3%. Not to mention making hundreds of decisions in a day, the probability of success becomes even more negligible.

So, the smart you can understand that the more investment decisions you make, the harder it is to invest, and the easier it is to lose money!

From the perspective of value investing, leverage should not be used. Why?

Value investing mainly means buying a good business that makes money. Think about it: when a profitable good business is undervalued significantly, should you buy it or sell it? You should buy it! When it is significantly overvalued, should you buy it or sell it? You should sell it!

However, when using leverage to go long and getting liquidated, it means selling when a good business is significantly undervalued. When using leverage to go short and getting liquidated, it means buying when a good business is significantly overvalued. This is the most typical case of chasing highs and selling lows.

It is important to clearly understand what not to do in investments; if you can avoid unnecessary risks, you have a chance to make big money.

#加密市场观察