This week's book recommendation: Recently, while on a business trip, I finished reading "The Truth of Focus" by Li Xiaolai on the plane. Here’s a brief reading note on how focus can aid investment success. I am a student of Li Xiaolai's early writing course, and he is also the mentor who encouraged me to firmly invest in #BTC for the long term. Although I lost quite a bit of money in EOS due to my beliefs, he has indeed helped many people in the crypto enlightenment movement!
1️⃣ Focus is the most valuable resource for investors
In an era of information explosion, market information is overwhelming. As investors, we are surrounded by various news, research reports, and market analyses every day. If we are not careful, we can fall into the trap of "information overload." Li Xiaolai's "The Truth of Focus" made me deeply realize that attention is a more important ultimate resource than money and time, and the strength of focus determines the quality of an investor's decisions and their final returns.
In the book, Li Xiaolai reveals the systematic erosion of focus in modern society through brain science, behavioral psychology, and information environment analysis, and provides a series of methods to enhance focus. For investors, mastering these methods can not only improve cognitive abilities but also help us remain calm in the market and make investment decisions with long-term value.
2️⃣ The 7 layers of truth about focus: An investor's perspective
- Attention Battlefield — The market's information is complex, and true freedom is the freedom of attention
• The modern capital market is a highly information-dense battlefield, with various news, social media, short videos, and analysis reports competing for investors' attention.
• Smart investors must learn to "filter" information to avoid being disturbed by market noise, truly achieving "freedom of attention" by focusing on long-term value investments rather than short-term fluctuations.
- Attention Crisis — Market volatility systematically undermines investors' focus
• Frequently checking stock or cryptocurrency prices, market news, and social media actually reduces focus, making investors anxious and impulsive.
• Short-term market fluctuations amplify investors' fears and greed, weakening patience and logical judgment, ultimately leading to blind chasing of highs and selling of lows, deviating from rational investment principles.
- Attention Resource — Managing attention is more important than managing funds
• Traditional views hold that managing funds and time are the most important abilities for investors, but "The Truth of Focus" emphasizes that what truly determines investment success or failure is how to manage one's attention.
• Investors with strong focus can delve into fundamentals rather than being swayed by short-term market emotions; those with weak focus are easily influenced by noise and ultimately fall into the trap of chasing highs and selling lows.
- Attention Muscle — Focus can be trained and optimized
• The book emphasizes that focus is not a talent but a "cognitive muscle" that can be trained.
• Investors can improve their focus through deliberate training, such as reducing the intake of fragmented information, scheduling fixed research times each day, and avoiding multitasking. These methods can make our investment decisions more rational and efficient.
- Attention Slave — How do algorithms influence investment decisions?
• Short videos, social media, and market analysis push notifications all use algorithms to "capture" investors' attention, leading them to become addicted to short-term fluctuations and even make wrong decisions driven by market emotions.
• Investors need to be wary of the information bubble created by algorithm recommendations, avoiding exposure only to information that reinforces their biases, and actively cultivate independent thinking skills, adhering to long-term value investing.
- Attention Habit — The core ability of long-term investing
• Focus habits determine investment habits.
• Excellent investors have strong focus habits, such as Warren Buffett, who spends a lot of time reading annual reports rather than focusing on daily market fluctuations.
• Establishing good attention management habits, such as conducting regular in-depth research, reducing immediate information distractions, and concentrating time on thinking about long-term investment strategies, can help investors go further in the market.
- Attention Environment — Creating a focus-friendly investment environment
• The modern social environment is very unfriendly to focus. If investors do not actively optimize their attention environment, they will be led by market emotions.
• Methods to create a focused environment:
• Stay away from high-stimulation information sources like social media and short videos
• Set fixed times for market analysis to avoid fragmented reading
• Conduct in-depth research in a quiet, distraction-free environment
• Communicate with like-minded investors to avoid market noise interference
3️⃣ Dopamine and Investment Decisions: How to Avoid Impulsive Trading?
The book delves into how the dopamine system affects human behavior, especially how it influences investment decisions.
• The role of dopamine: It makes people "want" more information and stimulation, but true satisfaction does not come from dopamine; it comes from long-term accumulation and deep thinking.
• How do market fluctuations affect dopamine secretion? When the stock market rises, investors' dopamine spikes, leading to excessive optimism and blind buying; when the stock market falls, dopamine decreases, causing panic selling.
• How to avoid the dopamine trap?
Set long-term investment goals to avoid short-term market fluctuations affecting emotions
Establish a calm investment decision-making process, such as waiting 24 hours before trading to avoid emotional decisions
Focus on fundamentals rather than market noise
4️⃣ How to Train Focus and Improve Investment Returns?
The book provides some focus training methods that I believe are especially helpful for investors, including:
Reduce information distractions: Check market information at set times rather than constantly scrolling through phones or social media.
Avoid multitasking: When researching investments, focus on one thing and avoid handling multiple information sources simultaneously.
Establish a deep thinking habit: Set aside time each day for investment thinking without external distractions.
Write investment notes: Record your investment logic and thought processes to strengthen focus.
5️⃣ Focus Determines Investment Success or Failure
The logic and points of thought I learned from "The Truth of Focus": Investing is not about who has more information, but about who can concentrate their attention better and manage their cognitive resources more effectively.
In future investment practices, increase research on unchanging factors and focus on long-term value:
• Reduce information distractions and only pay attention to truly important information
• Deepen fundamental research rather than being influenced by short-term fluctuations in decision-making
• Establish an investment value system that is not swayed by market emotions
In an era of information overload, focus is the most scarce resource for investors. True investment experts are those who can maintain focus and think calmly amid market noise. May we all be able to control our attention and walk steadily and far on the investment path! Let's encourage each other!
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