How to determine if you are greedy and arrogant in the crypto and stock markets?

How to judge if you are greedy and arrogant in the crypto, stock, and financial markets?

How to determine if you are in a state of greed or arrogance. The most important aspect of investing is stock selection, but what truly determines your success is human nature. Stock picking is just a technical skill; human nature is actually an internal psychological cultivation.

In the crypto and stock markets, what common human traits do we often see? Greed and arrogance. Some veteran investors believe they have already overcome these traits, thinking they are no longer greedy. Buffett once said, “When others are fearful, I am greedy; when others are greedy, I am fearful.” Some still hold this view, but in fact, greed and arrogance are deeply rooted flaws. Sometimes you think they are gone, but they still exist.

The crypto and stock markets are excellent places for self-cultivation. They act like a mirror, reflecting what kind of person you really are. You may deny your greed or arrogance, but during market operations, they will manifest. The markets will exploit any weakness in your human nature to prove what kind of person you are, punishing you like a strict father slapping your face until you correct yourself. The crypto and stock markets are essentially a mirror of life and also a very stern parent.

For example, some common greedy or arrogant traits among retail investors include a frequent mistake: heavily concentrating their holdings in a single stock, sometimes 60%, 70%, or even 100%. What does this heavy concentration mean? If you invest 100% of your funds in one stock, you should have 100% confidence in that company. Do you really understand this company? Do you understand its operational uncertainties, industry risks, and all potential vulnerabilities? Have you seen all these aspects?

As mentioned earlier, personal position size is closely related to your capability circle. I don’t know how long the average person has been in the crypto and stock markets or how much they understand about this industry. Buffett, for example, has invested for 60 years, experienced many opportunities, held numerous stocks. Although he emphasizes concentrated investing, he only invested 40% of his capital at one time; the remaining 60% was invested in other companies. Can you surpass Buffett?

A significant portion of retail investors like to heavily concentrate their holdings, and some even leverage. Your ability is not the main point; your capability circle is. The companies you understand are actually driven by your desires—because you hope to get rich overnight, to double your funds. That’s the essence and the core of most people’s mindset. You are greedy, hoping to quickly increase your wealth in a short period.

Furthermore, your greed is also reflected in the hope that your investments will multiply many times. This indicates a lack of ability and an unrealistic expectation of returns. Your greed shows you lack that capability; you are overestimating your own ability—an arrogance about your own skills.

All these are reasons for failure. Heavy positions are a typical example. You always want to bet quickly and accurately, and make money fast. Heavy positions and short-term trading are often closely related. This reflects greed for time and high expectations for price increases. Heavy positions also require large volume. This is the psychological trap of quick wealth that greed can cause. Someone once asked Buffett why he shared all his investment secrets, yet few people can follow his approach. Buffett said because everyone wants to make quick money. In essence, it’s greed. There’s also an attitude of arrogance—thinking you understand everything. Heavy positions are a combination of greed and arrogance; it’s just your manifestation. You think you know more than others, so you dare to hold large positions. Check yourself—are you holding large positions? Then you’ll know if you are in a greedy state.

The second issue is frequent stock switching. Some people switch stocks every few months, or even every week. Do you really understand each stock you buy? Have you truly read and understood each one? Why do you think you will make money just by switching stocks? Some people only study a few companies carefully and then make money. Many people frequently switch stocks, which indicates they lack confidence and ability. Their frequent switching shows they don’t understand the companies they previously invested in.

You may have only researched for a few days, weeks, or even a single day, or perhaps not at all. How can you be sure you will make money? Do you rely on luck? Do you truly understand the company? In other words, your greed and luck are driving you. You hope that good things will happen, that stocks will rise, and you worry less about risks. You always expect good news.

In short, luck is hoping for good things to happen. Therefore, luck is one of the manifestations of greed and arrogance. It also shows in frequent stock switching—buying one stock today, another tomorrow. You cannot stay within your capability circle. Everyone has this tendency; you should reflect on whether you are in this state. Does your heavy position match your ability? Do you frequently switch stocks? Why are you buying these new stocks? Are you driven by greed? This reflection acts like a mirror, helping us see ourselves. It can reduce mistakes and lower error frequency. The fewer mistakes you make, the higher your future returns.

The third issue is the behavior of constantly watching the market. If you are someone who constantly monitors stocks, it means you hope the stock price will rise as you expect. You want your stocks to go up, but at the same time, you worry about safety. Because whether you watch or not, the crypto and stock markets’ ups and downs are unaffected by you. They don’t care about your purchase price. Thousands of retail investors buy at different prices. You cannot rely solely on the trend charts or candlestick patterns you see, thinking that after observing them, the stock will move as you expect. I repeat, the effectiveness of technical analysis is questionable. Some believe that by looking at historical data and current prices, they can predict tomorrow’s trend. This kind of prediction is itself a form of greed because only a deity can truly predict the market; others cannot.

For example, my shadow—what is it? It’s the past, not the present. In fact, that shadow cannot predict the next moment’s trajectory, nor can it tell me where I will go next. The stock price chart is just that shadow. Therefore, you cannot know where the stock will go next based on that shadow, nor can you predict where others will go. Don’t have illusions about this. The crypto and stock markets often give people the illusion that they can be predicted. Many technical investors fall into this trap. I myself have crawled out of this pit after a long time.

I want to advise everyone not to be greedy or arrogant. You do not have that predictive ability. Don’t hold a greedy or arrogant mindset. Greed and arrogance in a person can cause serious consequences. Heavy positions, frequent switching, and constant monitoring are related—they are just different behaviors showing the same problem. I’ve shared psychological tips with you. Many say they don’t want to watch the market, but watching is just a behavior, not a cause. Usually, if you hold a heavy position, it’s hard not to watch because the pressure is immense. When you watch, your emotions are intertwined with the market. If you hold a large amount of money, even small fluctuations—one cent up or down—can affect your mood. To relieve anxiety or fear, or because you hope it will go up, you will keep watching this stock. You can’t hold back today and wait until tomorrow. It’s like smoking—you find it hard to quit.

In fact, watching the market can be even harder than quitting smoking because of the money involved. The outcome of watching influences your emotions, causing fluctuations. You watch every second or minute, calculating whether your profit is increasing or decreasing. This emotional fluctuation is something we have never encountered in our evolution. For a long time, this kind of emotional stress did not exist—whether we were farmers or hunters.

Hunting is a momentary activity, lasting seconds or hours. If you watch the market every day, every moment, it will create enormous pressure. Your body will produce hormones that are uncontrollable. Over time, as a self-protection measure, you will release these hormones—meaning you will dispel them by selling. Only then will your anxiety hormones disappear, and you will become calmer and happier.

Over-monitoring the market ultimately leads to what? Emotional and position pressures increase, making the stress worse. The more pressure, the more likely you are to keep watching, which further intensifies the stress. The final result is constant selling. Selling at panic lows, buying at even lower points—this results in shrinking principal, losing confidence in value investing. It’s not that value investing is flawed; it’s that your frequent holding and monitoring cause pressure, which pushes you to sell frequently. I believe the most important aspect of investing is not just competition but human nature. Once you watch the market, your true nature is exposed. Heavy positions are caused by greed and arrogance.

Heavy positions create pressure. Watching the market might lead you to stick to your value investing principles and choose the right stocks, but ultimately, you might lose again, even selling at a loss when the stock price is very low. Sometimes, a slight increase in stock price causes you to sell prematurely, missing out on a great stock. This constant pressure and monitoring can cause you to miss opportunities, waste time, and fail in value investing. All these behaviors are the root causes.

Therefore, in value investing, stock selection is not the most important. It’s a technical skill that’s not difficult. The key is to hold the right stocks once you’ve chosen them. During this holding period, first, you need patience. Second, you must not be greedy, hoping stocks will rise tomorrow, nor arrogant, nor frequently switch stocks. These two human traits—greed and arrogance—are the root problems. If you like heavy positions or short-term trading, your failure rate will increase. Also, heavy positions lead to monitoring, and once you monitor, it’s hard to hold your stocks.

I believe everyone with experience in stock trading understands this. We are all experienced; we know this. Because greed and arrogance in human nature make us prone to heavy positions. Once heavily invested, it’s hard to be at ease or let go, so we monitor. When monitoring, emotions fluctuate. Based on stock price movements, if prices fall, you might sell, losing more gains instead of making profits. You may have spent a lot of time choosing good stocks, but unfortunately, that great stock no longer belongs to you. The reason behind this is that your behavior—heavy positions, constant monitoring—are the root causes. You can use this mirror to reflect on yourself: Are you holding heavy positions? Are you switching stocks frequently? Are you watching the market all the time? If yes, then you are likely in a state of greed and arrogance. If so, correct yourself immediately.