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Mind-set (心态)

We all know that market is often fluctuating, and can often go against your will. So, a correct and healthy mind-set is required to prevent us to do a rash decision and end up losing all the money. However, how can us maintain a good mind-set when, let say the market is slumping, and facing a bear market?

This is actually a combination of the writer’s previous articles, where you can prepare a list of stocks to buy, yet you are unable to buy in normal circumstances because they are too expensive. Hence, everything will be cheap when bear market hits, and you will be able to buy the stocks you have targeted for long. However, you are unable to do so without a healthy cash balance. A lot of people back in 2020 like to all-in, which means putting all their money into the stock market, where they have none left in the pocket. This is quite a dangerous act to be honest, as you have no option other than holding or cut loss if the market is in retracing mode.

Especially in this current situation where technology stocks are surging, it looks somewhat similar to the gloves sector back in 2020. If let say someone has the fear of missing out (FOMO), they will go and chase the stock despite most technology stocks are having the PE ratio of higher than 60. On the other hand, for people that have been holding for long, they will regret for not buying more in the past and will add more now, making their current cost much higher compared to their initial cost. This makes them more vulnerable to correction and may face potential loss if a bigger retracement occur as their cost is not low now.

On the other hand, props to you guys for holding technology stocks since, let say last year. This is because most technology stocks stay stagnant or only rose slightly in last year, at least not as crazy as now. People who have good confident and patience to wait for the surge do deserve some credit. Yes, you may still earn lesser compared to others who bought glove or some hot stocks, but you earn what you earned, and shall not be bothered by others’ profit. It was said that apprentice knows how to buy where master knows how to sell, but the patience to hold is another level of mind-set.

Having a good mind-set is very important, whether in investing or trading. A slight slip will really cost you. For example, the stock you planned to hold for longer term rise 10% in a week and you have decided to sell it and end up rising for another 100%. On the contrary, the stocks you planned to hold for short term, yet you still held it despite it already dropped for 15% and hoping for a rebound. In the end, your portfolio will be full of declining stocks, and sold all the good stocks, just because they rose a bit.

In short, you must have a good mind-set. Plan everything properly, manage your portfolio and cash carefully. Build your portfolio bit by bit, and step by step. Do not get annoyed for earning lesser than others, missing a chance will not make you lose money, but mistiming it will. Rome wasn’t built in a day, slow and steady is the way to success.







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