Yes, the bull market has arrived.
Investors are constantly excited, prices are on the rise, and getting rich seems just around the corner, but it does not mean everything goes smoothly; the process is always accompanied by countless short-term pullbacks, pressure, and anxiety.
Excessive optimism and the temptation of high returns are significant characteristics of a bull market. Avoiding certain traps and cultivating one's investment literacy become even more important.
1. What traps need to be avoided?
1. Trying to seize every opportunity
Trying to seize every opportunity and wanting to research too many coins, while having limited resources, will lead to frequent portfolio changes. Avoid frequent portfolio changes due to too many temptations and choices, which can confuse decision-making. Listen to the majority, reference a few opinions, and make your own decisions.
2. Constantly comparing your returns with others
Seeing others' coins rise while your own investments stagnate can lead to thoughts of changing your portfolio; moreover, lacking sufficient understanding of the coins you are about to buy, you may not know why you are investing in them, what their advantages are, how much potential they have, and what the logic behind the purchase is.
3. Do not sell strong coins to invest in weak ones
Remember, the strong remain strong. What you sell are strong assets, and what remains are weak ones or those that are stuck. Essentially, this reflects a refusal to acknowledge one's ignorance, to admit that one made the wrong choice, or to accept temporary failure; these are all signs of weakness.
4. Enjoying chasing highs and selling lows, especially chasing high prices; always selling a step behind others.
A bull market will not be smooth sailing; in the later stages of a bull market, most people frantically chase high prices, and a lot of positive news will flood the market, with stories of getting rich everywhere, and many assets will reach historical highs.
However, the later stage of a bull market is very short-lived. Most people become intoxicated by the magical numbers in their accounts, completely forgetting the tail end of the bull market, naively thinking it will double again, while forgetting to sell.
As the bull market ends, prices begin to decline, and after experiencing the peak of account numbers, they are reluctant to accept the drop, thinking the bull will return… waiting and waiting, turning profits into losses…
5. Extreme lack of patience and frequent short-term trading
It is very easy to be influenced by short-term fluctuations and trade frequently; frequent traders are destined to only make small profits, as making big money is difficult. Patience is one of the keys to investment success. Additionally, lacking sufficient market experience and failing to summarize lessons learned, they attempt to make money by blindly following trends.
2. What investment literacy should be cultivated?
1. The ultimate goal of a bull market is to understand satisfaction and learn to take profits.
At a party hosted by a billionaire on Shelter Island, Kurt Vonnegut told his friend Joseph Heller that the host—a hedge fund manager—made more money in a single day than Heller had made throughout the entire publication history of his popular novel "Catch-22." Heller smiled and replied, "Yes, but I have something he will never have: contentment."
Even if you buy at the lowest point and sell at the highest, you will still feel unsatisfied. This is the true state of most investors, as many constantly compare their returns with others.
2. Manage expectations and do not set them too high
Placeholder partner: One should not have overly high expectations during a bull market; preserving profits is key. As token prices rise, people's attention will increase, and this attention will later translate into purchasing power. Therefore, the more prices rise, the more attention people will pay to the potential for future returns. However, generally speaking, the later we enter the "attention cycle," the less favorable our position will be.
3. Do not rush to invest; wait for the next right opportunity
If the timing is wrong, efforts will be in vain, or even counterproductive. The timing of entry is crucial; if you enter at the tail end of a bull market, the price you pay is inflated, while entering at the tail end of a bear market means you are buying at a very low price.
What if you make a mistake?
Do not rush to invest; wait for the next right opportunity. Simplicity has great power. Do not complicate everything.
Recognize cycles, identify cycles, grasp cycles; compared to trends, cycles should attract more attention. Pay attention to economic cycles, the alternation of bulls and bears; just like the inevitable change of seasons from summer to autumn to winter.
In summary, if one wants to make big money, one must understand how to go with the flow, choosing the right timing is important, and in daily trading, reducing trading frequency while maintaining high levels of patience and discipline, along with effective risk control, is essential!
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