Use common sense and a calm mindset for investing - Cryptocurrency exchange platform

Relying on common sense and a calm mind in investing, I have mentioned multiple times in other programs: “Invest like life, life like investing.” This phrase aims to convey exactly this principle. When a person masters basic financial analysis skills, the ultimate success rate in market investments largely depends on what kind of person you are.

If you are a good person, honest with yourself, without complaints, blaming the market makers, the crypto or stock market prices, or the national situation, and if you can maintain a calm mind, avoid greed, and not pursue things you shouldn’t have, then your chances of success in the crypto and stock markets will be much higher. Conversely, if you always think about getting rich overnight, you will definitely suffer losses in the crypto and stock markets. Therefore, this program mainly aims to understand the way of life through investment and help everyone cultivate themselves.

If we are not good people, we can use investment as a tool for cultivation to become a good person. In the end, our investments can also succeed. Therefore, successful investing is a natural outcome. When we become good people, investing will succeed. At the same time, investing will make us better individuals. Thus, life and investment are mutually reinforcing and promote each other. If you are naturally a good person, patient, rational, and honest in investing, without selfish desires, your chances of success will be much higher than others. If you lack in this area, you can continuously improve yourself through investing, ultimately becoming a better person, and your chances of success will also increase.

Everyone, after reaching a certain age, possesses some basic life knowledge. However, many people lack common sense in the crypto and stock markets, and some even lose money in these markets well past their 50s or 60s. The reason for this is that we have never changed ourselves. Overly pursuing material possessions and letting desires surpass reality makes us prone to chasing overnight riches and seeking limit-up stocks, while neglecting serious research into companies. When we lose rationality and common sense, it becomes very easy to be deceived. I once made a program specifically discussing this issue: people are easily deceived not because they lack intelligence, but because they have lost rationality. Greed makes people stupid; losing rationality makes them foolish, and ultimately, they are easily tricked.

If you are an investor, investing in crypto and stock tickets is like investing in a business. I want to share an example from Mr. Ma Zhe’s book about a Sichuan restaurant. If you invest in a Sichuan restaurant, it’s considered a private enterprise. Suppose you buy this restaurant, which earns 100,000 yuan a year, and you recover your investment in ten years; then, the restaurant is worth about 1 million yuan (not considering discounting). That is, investing 1 million yuan now, earning 100,000 yuan annually, aside from inflation, you will earn 1 million yuan in ten years. If you sell this restaurant, you can get 1 million yuan, making the valuation quite reasonable. If we truly view this investment with a business mindset, most people can calculate that the value of this Sichuan restaurant is indeed 1 million yuan.

However, once this restaurant, originally worth only 1 million yuan, goes public. For example, suppose there are 1 million crypto and stock tickets, and the normal price per ticket should be 1 yuan. But once listed, everyone rushes to buy this crypto and stock ticket, even if they have never visited the restaurant or tasted its dishes, they think 1 yuan is cheap. As a result, the price of this crypto and stock ticket may rise to 10 yuan in a few years.

Many retail investors only focus on the crypto and stock ticket price, ignoring the actual operation and annual profits of the restaurant. Their attention is on the ticket price, which is influenced by various news and star endorsements, but these do not necessarily relate to the restaurant’s actual business. For example, some news reports or celebrity endorsements may temporarily boost sales, but such methods are unsustainable. Customers choose to dine at the restaurant based on value for money, taste, environment, and service quality—these are the real factors affecting the restaurant’s operation.

However, when people see stars endorsing a product, the crypto and stock ticket price might increase by 20% or 30% on the same day. Some think the macro economy will improve in the future, so they believe this restaurant’s business will be good. The macro economy might indeed be good, but it might also be bad. Even if the macro economy improves, more people opening restaurants or consumption upgrades could lead to fewer customers for your restaurant.

The impact of macroeconomic factors on your restaurant business involves many logical chains, each requiring correctness, and these links are complex. That’s why I believe macroeconomic analysis is of little use. Yet, people often take macroeconomic good news as a positive signal, causing the crypto and stock ticket prices to rise. For example, if someone says the city has built a subway or an airport, the crypto and stock ticket might rise again. These factors give people an illusion of growth, but in reality, they have little effect on the restaurant’s operation—unless the subway happens to be right next to your restaurant.

People always like to chase concepts and hot topics, mainly because of their desire to get rich overnight. For example, if the actual value of the restaurant is only 1 million, the ticket price should be 1 yuan per ticket. But due to hot topics, the ticket price might rise from 1 yuan to 10 yuan, making the restaurant’s market value suddenly jump to 10 million. This valuation is completely disconnected from the actual operation. The restaurant earns 100,000 yuan a year, and over ten years, it only earns 1 million. If you buy the restaurant at 10 million, you would need to hold it for 100 years to recover your investment. Most people would not choose to invest in this restaurant, especially considering potential operational issues.

Interestingly, when people participate in the crypto and stock markets, fluctuations in ticket prices can change their behavior. Due to illusions, a market cap of 10 million yuan might still seem acceptable. When the ticket price drops from 10 yuan to 2 yuan, many will try to buy the dip. In reality, the true value of the restaurant is only 100,000 yuan. Even if the market cap drops from 10 million to 2 million, many see it as a buying opportunity. These buyers think it has fallen so much and hope for a quick limit-up. But even if the ticket price drops to 2 yuan, it is still overvalued because its real value is only 1 yuan.

Star endorsements, subway construction, national policies—these hot topics and macroeconomic factors are not really related to the entity itself. They just sound related and create illusions, leading to inflated crypto and stock ticket prices. When prices fall, another wave of people rush in to chase the market. This is the main reason why most Chinese crypto investors suffer losses.

If a crypto and stock ticket rises from 1 yuan to 2 yuan, then from 2 yuan to 5 yuan, it will attract even more buyers. People suddenly believe there is a lot of information they don’t know, so they rush to buy in. When the ticket price reaches 10 yuan, some fantasize it will continue to rise to 20 yuan, and even when it falls, others buy the dip. But the ticket price has not reached a safe margin. If it falls below 1 yuan, it still has investment value; but if it remains above 1 yuan, it is not worth that much. This is why most people lose money in the crypto and stock markets.

In summary, the reason for losses is driven by human greed, focusing on the crypto and stock ticket prices rather than the company itself. As Warren Buffett said, investing is essentially buying a company. If you keep focusing on the ticket price, you will lose rationality. People like to watch the ticket price because they hope it will hit the limit-up tomorrow, dreaming of getting rich overnight. Once greed takes over, people become foolish. Maintaining rationality is very important; greed makes people stupid. Even poor companies’ crypto and stock tickets can seem attractive in the eyes of lovers. Both romantic pursuits and the crypto and stock markets tend to make people lose rationality. When you lose your mind, being deceived and losing money are just consequences that will happen sooner or later.

If you happen to make some money, it’s even worse, because it fosters a habit of speculation. As a result, you stop researching the company itself and only look at ticket prices and so-called news, using macroeconomic reasons to make yourself foolish. Even if you luck out and make money, the final result will still be a loss. Once a bad habit is formed, it’s like running a red light—once you taste the thrill, your chances of crashing increase significantly. Therefore, cultivating good habits and establishing correct investment concepts are very important.

I want to share an example from Mr. Ma Zhe about this Sichuan restaurant. If this restaurant has not gone public (no crypto and stock ticket price), people tend to be more rational and better understand its value. Once it goes public and has a crypto and stock ticket price, even though it’s still just an ordinary 300-square-meter restaurant, it triggers endless imagination and causes fluctuations in the crypto and stock ticket price. People chase the rise, and when it falls, they buy the dip, ultimately losing a lot of money.

This is human nature. Everyone sees themselves in it; we have all made similar mistakes. We should try to avoid these traps, thereby reducing the chance of errors and invisibly increasing the probability of success in the crypto and stock markets. Through these lessons, we reject temptation and illusions, becoming better individuals. We do honest work, study the company itself, and stop daydreaming about tomorrow’s limit-up.

**$ELIZAOS **$PIXEL **$SAPIEN **