“This time it is different” (“这次会不一样”)
History is often similar, that they keep repeating. There are people who are willing to buy a stock that is extremely overvalued and still think they are reasonable, because they are having a mind-set of “this time it is different”.
Back in 2000, every single investor thinks that technology and internet related companies will be the next big thing in the near future. Hence, investors put mostly their money into internet related counters, which even included various fund manager too. At first, their returns are immense, every single investor earned two-fold or three-fold of their initial investment. By that time, everyone has become greedy, they could care less about valuation, actual profit and so, but with only one aim, which is to buy more internet related companies.
However, if a more rational investor digs more into these companies, they will find out that these companies has yet to make money, and all these hype just push their share price to the sky level. When everyone is greedy now, we should take a step back and see the entire picture, and try to prevent ourselves from it. Little do they know, the dotcom bubble burst and companies’ value evaporated as much as 95% within a year or so. Everyone that are greedy and chase for the internet related companies indeed, lost almost all their investment.
Back to reality, DJI and NASDAQ has recently just broken their historical level, TAIEX in Taiwan also hit their historical high while NIKKEI in Japan is at their highest point since 1991. Considering the global pandemic that we are currently facing that affected the economic severely, yet the market that often reflects the actual economic is constantly rising, is mental. Every investor in US keeps buying TESLA because they think that electric car will be the next big thing, and missing this chance to buy will miss a golden opportunity to earn more in the future. Today, the price of TESLA is USD880, which is USD4400 before split, and the writer do not know whether history will be different this time, but for sure buying now is extremely risky.
In short, history is often repeating, and people often let greed overtakes them and believes that this time will be different. Yes, it may be true but we never know and will never sure about that. Hence, making yourself less vulnerable and keeping a comfortable amount of cash shall be a wiser choice. Remember, missing a chance does not make you lose money, but mistime a chance will.
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