Supply, Demand, Cost, Risk, Reward
To my future children:
Everything in this world can be derived from a few simple models. One of which is called the supply and demand.
When a lot of people is chasing the same thing, the cost (or the effort to put in) becomes higher, the reward becomes slimmer and the risk of failure becomes higher, vice versa.
A wise man must have the courage to stand against the herd, look for the intrinsic value, resist the psychological effect that makes you want to join, stays patient while others are losing their heads, do not envy, do not be greedy.
In the meantime, stay optimistic. There must be something the herd is not looking at. Find out the intrinsic value, buy it when the cost is low, value is high, reward is good, risk is small. You may not find a lot of these when the herd is at their most frenzy time. But you can get a lot of these when the herd is selling in sync.
Do not lower your standard when others are desperate.
Do not buy something just because the historical price is trending upwards.
Do not conclude you have a bargain buy just because one thing is cheaper than another.
Don't forget that not buying is also an option.
This applies to everything.
I see it in career path, I see it in investment, I see it in things, I see it in business.
I see it early in my life that makes me whom I became and the path I chose.
Lastly, do not believe or deny me just because that I can, or can't show you the rewards I gain from this belief.
You must run these in your head. Take your time to think of the reasons lying beneath.
It would only stick to your head and become part of you if you know the why's.
Have a good journey ahead.
Weeks ago, when MAS stock price plunges, there's this new guy comes into the Investlah forum and asks:
"Bro, may I know how to open a stock trading account? I want to buy MAS. RM 1000 enough?"
Of course, we all laugh right. It's ridiculous.
But here's the point, why do you think that it's funny?
Who knows right. Maybe by some twist and turn MAS may recover and start earning again.
Then the guy may be crowned the next Warren Buffett or something, but you know, you know it deeply, something is not right.
In investing, there's no true answer in every question.
When your stock price rises it doesn't mean that you are right, neither when your stock earns money proves that you're good.
In fact no one can prove that one is better than another.
This is one giant casino that even the real casino wants to list their company there to get people betting on them.
What we're really looking here is to improve our chance.
We want to be the players that have the better chance of winning money and less chance to lose money.
So back to the question, why are you laughing so hard at that guy?
You must have known the answer, because his odds of winning is so small and the downside risk is so big.
People like to bet on things like this.
This is where all of us need to learn to be a better investor.
Discipline yourself to bet only on a good odd and small downside risk. Let others bet on the opposite of you.
In long term, you win.
The mind game
Reading and studying is a slow and hard process. It's not rewarding in a way that nobody gives you an A and tell you that you did a good job.
So how do you know that you improve?
That's when you start to see through others mind and you know that you have been that stage thinking the same thing but now you have a different or you think is a better opinion.
Of course, you shouldn't feel happy at all because you never know that at the same time there's another person looking at you and know about what you're bitching in your mind.
That's the real game of civilized homo sapiens. You gotta train your mind.
脳卯潞贸脫脡脫脷脪禄脨漏录脹赂帽碌脛脪貌脣脴拢卢脦脪禄鹿掳脩脣眉禄脴脌麓碌脛脝卤脡媒录露脦陋Hi Flyer拢卢陆谩鹿没脣没脰禄禄鹿脕脣50脕茫录陋戮脥掳脩脛脟脮脜脗貌麓铆碌脛脝卤禄禄鲁脡禄脴脌麓碌脛脠脮脝脷拢卢禄鹿脤铆录脫20kg拢卢1F Hot Seat潞脥Priority Boarding拢卢录貌脰卤驴陋脨脛碌陆路颅脤矛隆拢