[Investment Philosophy (10)] - Why is it so difficult to stick to long-term investments!

Our cognition of external things is entirely based on past experiences, and these experiences and images will continue to exist in our hearts. Whenever we see highly similar external things, although they are completely different from the past, we will indeed combine the external things that are completely different from the past with our inner cognition and regard them as the same. For example, a person who is extremely afraid of dogs will be afraid even if he sees the tamest dog in the world, because he will regard the external dog and the ferocious dog that once bit him as the same one.

Therefore, everyone's experience of losses in the stock market in the past has caused fear of the market, because no matter any opportunity in the market, investors will interpret it as the same market that caused their losses in the past, creating a great fear of it. This mentality can explain why many investors think of fear when they see the market. Although the market repeatedly presents opportunities, investors just can't see it, because in the investor's heart, the market is scary, just like a dog that has bitten him.

Therefore, the gap between external things and our perceptions is often very large, but due to lack of knowledge and experience, we cannot see the truth. Only if we are willing to believe that in addition to the world we know in our hearts, there is another world that we don't know about, can we create another opportunity.

In the market, many people have held stocks for a long time, but eventually exited the market with heavy losses ( This is due to wrong targets and lack of knowledge), so the inner understanding is that long-term holding will lose money, and they turn to short-term operations; but the strange thing is that when investors start to operate, they occasionally make money, so investors associate the operation with the opportunity to make money. Although they occasionally make profits and occasionally lose, investors in short-term operations are like gamblers, always waiting for the experience and feeling of making money last time. Continuing to operate in the stock market is like occasionally winning money in a casino, and they gamble repeatedly until they lose everything. The scary thing about gambling is that it occasionally allows you to win, and sometimes it's a big win, which we will never forget in our hearts, leading to the inner image of thinking that short-term operations (gambling) will win money, just like gamblers who think that gambling will make money and become rich.

When everyone has the experience of long-term investment losses, it becomes very difficult to change everyone's views on market investment, unless investors recognize the difference between losing money gambling and making money strategies, and admit that the inner world is not necessarily the real world, and the investment they know is not the only investment.

Only by changing your mentality and being willing to accept another fact, bravely remove the long-term investment that you know in your heart will make you lose money (that dog that bit you), and accept another long-term investment strategy that is completely different from the past. Because of the new understanding and learning, you can see more market opportunities, choose the right investment, avoid unnecessary operations, and wait until the final long-term profit exit point to see the new market. (The market has not changed. What has changed is our mentality. If the mentality changes, the market will change.)

Therefore, we should stably execute the buying index, hold it for a long time without operating, and after a reasonable period of time, let the market help us make money, and then we will have the image of another money-making market in our hearts, and the market we see will eventually transform into a money-making market. (I finally understand that most dogs in the world will not bite; long-term stable investment will make money.)

Date of writing: July 02, 2016