Investing is actually very counterintuitive, where is the counterintuitive place, and in the face of such a difficult situation, what principles should we ordinary investors abide by. I believe that after you master these principles, you will be more relaxed on the road of investment in the future.
Buffett has this saying: Investing is simple, but it is not easy. （investing is simple, but not easy.）
This sentence sounds a little strange at first, "simple" and "easy" are obviously the same meaning. But when it comes to investing, you'll find that the gap between the pair is huge.
So what's the difference? Let's take an example.
I believe that in the past ten years, every classmate has seen many people around them who have made money by buying a house and their assets have appreciated significantly; they have also seen many people who have failed to speculate in stocks. Have you ever wondered why there are so many more people who buy houses and get rich in China than people who buy stocks and get rich?
You might think of various reasons: the urbanization trend of Chinese, such as the four trillion yuan of government investment, or even the obsession with houses Chinese, and so on.
Of course, these reasons are all correct, but none of them answer a question: in fact, the stock market and the housing market, the overall rise in the past two decades, although the house is more than the stock, but the people who buy houses have made so much, most of the people who buy stocks are losing money, and the contrast is too obvious. Why?
In fact, the answer is not complicated. Because it is much easier to buy a house than to buy a stock, there are many more successful people.
This statement may be a bit counterintuitive, but let's talk about it slowly.
As everyone should know, stock selection is a difficult thing. Even if it is a public company, the vast majority will die, and those who survive may not necessarily outperform the index. Finding good stocks and companies that have performed well over the long term in the entire market is basically equivalent to finding a needle in a haystack.
But for the house there is no such problem. We all know a saying: the three most important things to buy a house are location, location, location. You think, for most people, judging where a city is a prime location and where the location is not very good is basically common sense without any difficulty, and everyone can master it. And to take a step back, even if your judgment does deviate, the worst result is that the price of the house you buy rises more slowly than others, and there is no possibility that someone else's house has tripled, and your house has fallen by 50%.
But in the rising stock market, when others make money, it is entirely possible to buy a company that has fallen or even gone bankrupt, and then lose a lot of money. This is determined by the natural properties of real estate and stocks, and they are very different. Therefore, investing in a house is much easier than investing in stocks.
This is also a very counterintuitive point of investing. Generally speaking, if one thing is more difficult and the other is easier, the rewards for doing that difficult thing will usually be greater. However, when it comes to investing, you have to challenge the problem, and often the results will be very poor. That's what it's about: the market is so ruthless that it doesn't reward you based on how easy it is to do things.
That being the case, as ordinary investors with limited resources and limited time and energy, should we choose something difficult to do, or should it be simple? The answer is obvious, of course, simple.
This principle sounds very direct, but in fact, it is very difficult to accept it, practice it, and insist on it.
For example, even if it is difficult to succeed in stock speculation, there will still be people who want to try; although they are constantly talking about paying attention to risk, there will be people who are excited about wealth management products under the banner of high yields.
Therefore, as with many things in the world, there are only a few principles of investment, but very few people can do it. For the vast majority of principles are useful because they are anti-human. Insisting on them is a threshold in itself.
That's what we say, investing is simple, but not easy.
Some people may want to ask: Since investment is not easy, adhering to principles requires strong self-discipline, what should we do in the future?
The answer is: it's much more important to stay away from temptation itself than to rely on your own self-discipline.
Let's look at an example.
Following the just mentioned buying a house to get rich and buying a stock loss, have you found that a considerable number of people who earn money by buying a house are actually "passive rich", and even I call them: forced to get rich.
The term "forced to get rich" sounds a little funny, but if you think about it, you'll understand.
Compared to other financial assets, the house is actually the most opaque and the least liquid thing. For example, stocks, every day its price information is very transparent and accurate, and real-time updates, if you want to buy or sell, in the mobile phone software casually click a key can be done. But the house, when you don't buy and sell, you don't know how much the house is worth, you can only feel a rough idea, the price data on the market is at most a reference; moreover, the process of buying and selling the house is also particularly slow, the stock can be done in a second, and the house is normal for half a year.
What are the consequences of this? In fact, this has helped us avoid many opportunities to make mistakes.
You recall that in the past two decades, China's housing prices have actually fluctuated repeatedly. For example, we should all have an impression of one word, that is, "room trouble". These people are because not long after buying the house, they found that the developer carried out price reduction promotions, felt that they had "lost" hundreds of thousands of yuan at once, and went to the sales office to pull a banner to "defend their rights".
Therefore, in fact, although China's house prices have been rising, they are not all the way, and the middle is also up and down. But it is precisely because the price of the house is not transparent and it is inconvenient to buy and sell, most people face this kind of fluctuation, anyway, can not do anything, so simply forget it.
For example, we may have heard that house prices are falling, but there is no software that allows us to open it and track the price of the house in real time, so we simply don't bother to look at it; similarly, we may have felt that the house price may fall when the policy is out, but we think that selling a house is so troublesome, the procedures are so complicated, and we simply wait and see. As a result, this laziness has allowed many people to hold it for a long time and eventually enjoy the substantial appreciation of the property.
To put it another way, suppose that all the commercial houses in all cities in China have a code for each suite, just like the stock code, and then the price of each suite can be viewed in real time on the mobile phone, one click can buy, and then one key can sell, do you guess how many people can earn money from the past real estate bull market?
So you see, this is a typical case of investing successfully because you are away from temptation. Because real estate is difficult to buy and sell quickly, and it is impossible to see real-time quotations, most people who have a house have not been tempted by various high-selling, low-sucking, chasing up and down, and maintaining a long-term state of holding, and finally ushered in a substantial appreciation of assets.
Of course, the avoidance of temptation here is more of an objective condition, that is, the characteristics of the real estate market itself, so can we subjectively stay away from temptation? The same is possible.
For example, two American scholars have concluded that the more frequent retail investors log into stock accounts, the lower the return, the average will be 1% to 2% lower than the market index, and they will make twice as much money in the long run. So reducing the frequency of logging into your stock account and staying away from the noise and temptations of all kinds of buying and selling will make your long-term earnings higher.
It's like Charlie Munger summing up Buffett's successes by saying, "We have an important secret that Buffett is very good at doing nothing when there's nothing to do." ”
Finally, let's talk about the five most important principles of personal investment:
1. It is difficult to predict which countries and types of assets will rise best in the coming period, so what we can do is to diversify our portfolios as much as possible, covering various investment markets and investment categories, and ensuring sufficient diversification.
2. It's hard for anyone, even a professional, to beat the market for a long time, especially when you find a good fund manager, and it's likely that his performance has begun to decline. So instead of handing over money to them or listening to the recommendations of so-called professionals, it is better to get an average return by investing in market indices, which is a better choice in the long run. At least passive investment can be the mainstay, with only a small amount of money for active investment.
3. The impact on the yield in investment is huge, and the easiest to grasp is the cost and cost of investment, even if it is only a little bit saved every year, the cumulative return on our investment has a great bonus. Therefore, when operating, we must try to reduce costs as much as possible.
4. It is difficult for anyone to predict the short-term market trend and movement law, it is impossible to make a lot of money quickly by predicting the market, we should think long-term and keep perseverance.
5. Because the investment market is very complex, most of the things in it are not able to understand. So ultimately our bottom line should be, don't invest in things you don't understand.
Therefore, these five points can be summed up as: diversified and decentralized, passive-oriented, reducing costs, maintaining perseverance, and not knowing how to do it. This is the core principle that we as ordinary investors can adhere to.
Of course, as mentioned earlier: the principle of investing is very simple, but it is not easy to do.
There are always a lot of mistakes, a lot of temptations, a lot of pitfalls in this world, trying to pull you out of this simplicity and make you do a lot of things that seem useful and seem advanced, but don't do good. As ordinary investors, we should accept our limitations, admit what we can't do, and also use our various advantages so that we can ultimately invest successfully and truly change our lives.