What is the most difficult thing in cryptocurrency investment?

The most important thing in investing is choosing the right stocks in the crypto and stock markets, so judgment ability is very important. But the most important thing in investing is not the most difficult thing, and I hope everyone has a clear understanding of this.

So what is the most difficult thing in investing? Some people think it is financial analysis, but in fact, financial analysis is not complicated and may even be the easiest. Because financial analysis falls within the scope of knowledge, as long as you study diligently and focus, you can easily master financial analysis. If you have previously studied accounting courses, it will be even easier. Financial analysis itself does not involve much technical content; it is purely knowledge-based.

However, as a value investor, if you want to succeed in the crypto and stock markets, financial analysis is an essential skill. If you are unwilling to put effort into financial analysis, success in investing is impossible. I want to warn everyone not to have illusions; financial analysis is the first threshold to financial freedom.

Just like doing business, if you can’t even do basic addition, subtraction, multiplication, and division, how can you run a business? Therefore, financial analysis is a skill every investor should possess, and I hope everyone faces it as early as possible. In fact, financial analysis is not difficult; it may be simpler than any high school math, physics, or chemistry subject, and only requires half or a third of the effort you put into the college entrance exam.

To achieve financial freedom in the crypto and stock markets, passing the financial analysis threshold is necessary. Managing your finances well is more worthwhile than desperately trying to get into a good university because after four years of college, you still need to work hard for financial freedom. Using the right methods to do the right things to achieve financial freedom will give you more time to take care of your children and help your parents. This is a very worthwhile thing. If you still have any hesitation now, I hope this message can help you stop hesitating. You must cross this threshold of financial analysis; otherwise, you should not enter the crypto and stock markets.

Some people think that valuation is the most difficult in investing. But valuation is not that complicated. First, you need to understand financial analysis knowledge, then read more industry analysis and company research reports, study industry characteristics, company growth potential, and sustainability. You will then know how to value a company. Valuing a company does not need to be extremely precise; an approximate estimate is enough because valuation is not as rigid as financial analysis. So, valuation is not the most difficult part of investing.

Some believe that position management is the hardest in investing. Position management, calculation, stop-loss strategies, etc., are all technical issues with well-established theories. If interested, you can check out my programs on this topic.

Others think that choosing stocks in the crypto and stock markets is the hardest, but it’s not. The most important thing in choosing stocks is making the right judgment. By analyzing and researching the industry, understanding its characteristics, the company’s operational features, management, etc., and then studying the company’s competitiveness and moat through financial analysis, selecting high-quality companies is not difficult. Even if you don’t understand these, you can copy others’ work, learn from investors who have been profitable in the market for a long time, analyze their recommended stocks or holdings, and then do your own research. So, choosing stocks in the crypto and stock markets is not the hardest.

Then what is the hardest? It’s actually ourselves. The saying goes, “It’s easy to change the world, but hard to change one’s nature.” The world is the external environment, including the crypto and stock markets, others, and surroundings—all of these are not difficult. Changing one’s nature refers to human nature, which is the hardest to change. For example, the psychology of short-term trading, getting rich overnight, herd mentality, listening to rumors, etc. These are obstacles of human nature. Once you overcome them, your competitiveness will be stronger, and you will have your own moat. Others will be kept out, and you will succeed in the crypto and stock markets. The crypto and stock markets are essentially a game of strategy. Once you cross these barriers, you can share a bigger pie in the market.

Lacking patience can make things more difficult. For those who lack patience, it can be more challenging. In investing, we need patience to wait for the market to decline. Many times, when you see others’ stocks rising, you may rush to buy at high prices. Even if the company is good, without patience to wait for a better price, you may suffer losses. A good company is not necessarily a good investment—that’s the principle.

Patience in holding is also very important. After buying, you need to hold patiently. In reality, many people buy good coins but fail to hold because they lack patience. Such examples are countless in the crypto and stock markets.

The hardest part of human nature is to stick to your own circle of competence. The top wealthy people in the world have achieved great success by focusing on one or two companies. Buffett, in his over 60-year investment career, has only invested in dozens of companies and became the world’s richest person. Therefore, we should focus on building our own circle of competence, have a clear understanding of our capabilities, and stick to it.

I have also made these mistakes myself and still do today because we all have active brains, and it’s hard to control our minds. Sometimes I see companies I don’t know well and think their valuations are low, so I consider them good opportunities. Although some crypto stocks have made a lot of money, sometimes I also lose money. That’s why sticking to your circle of competence is crucial.

Buffett also makes such mistakes. His main circle of competence is in banking and consumer goods. In the 1980s, he made many mistakes in the airline sector, thinking airlines were very cheap, but he lost heavily. He also lost a lot in pharmaceuticals. You will find that his losses are mainly in areas he doesn’t understand. Even in the crypto and stock markets, occasional mistakes happen, which shows how difficult it is to stick to your circle of competence. Buffett’s main profits come from insurance, banking, and consumer goods. That’s why he emphasizes sticking to your circle of competence—that is his core competitive advantage.

Apart from human nature, everything else is about cognitive ability. The best way to overcome human obstacles is through one’s ability to correct mistakes, which is the most difficult. In the crypto and stock markets, the most important thing is how to conquer human nature, how to recognize your greed, how to overcome fear, and how to become more patient. We need to stay honest, think rationally, focus on doing what we should do, and do the right things. These are the true core competencies. The so-called core competitiveness must exclude most people. Like I previously used hurdle racing as a metaphor: if you cross the hurdle, it becomes your moat; at the same time, it becomes an obstacle for others. That is core competitiveness.

Overcoming human obstacles is not something everyone can do. In investing, human nature is the easiest factor to create distance between people. Although choosing stocks in the crypto and stock markets, financial analysis, and valuation are all important, they cannot help you stand out from others. Because these are all about cognition, and after a period of value investing in the market, these cognitive issues can be resolved. The most difficult part is actually changing ourselves. In the crypto and stock markets, the hardest part is human nature, and the most difficult aspect of human nature is to stick to your own circle of competence.

We come into this world to cultivate ourselves, to understand ourselves through the external world. The crypto and stock markets are a very good platform; they allow us to quickly discover ourselves. Conquering the crypto and stock markets is actually conquering ourselves. Through this platform, our souls can also be elevated.

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