Teaching You to Trade Stocks 96: The Ubiquitous Gambler's Mentality

2008/1/23 16:18:38

In the market, one of the greatest enemies is the gambler's mentality, the gambler's thinking. Gambling has only one ultimate outcome. If you participate in the market with a gambler's mentality, your ending is already predetermined — even if you're not yet in the pot, you're just being fattened up for cooking. There's no difference.

The gambler's mentality is everywhere. Beyond the endless doubling-down discussed in the last lesson, there are other manifestations that even the person themselves may not notice.

For example, someone loses money and then thinks: "When it rebounds to such-and-such level, I'll definitely get out and never play again." This seems very un-gambler-like, but it's actually still the gambler's mentality.

One of the biggest characteristics of the gambler's mentality is presetting a virtual target, an imagined goal, completely ignoring the market itself.

Another characteristic is the fear of missing out — the fear of missing a chance to make big money. For instance: "What if I'm wrong — what then? What if it keeps going up — won't I lose out?" And so on.

Note: survival in the market has never been achieved through a single windfall. This ID has seen plenty of people who struck it rich once only to lose everything afterward.

True market success is always accomplished through rigorous operations. What's the big deal about an operational mistake? Market opportunities keep emerging endlessly. A rigorous operational procedure is sufficient to guarantee your long-term success.

A very common behavior of the gambler's mentality is cutting losses then chasing, chasing then cutting — completely driven by an unconscious karmic force, heading straight into that ghost's lair. This so-called "bloodshot-eyed gambling" is precisely how one gets slaughtered.

An even more common behavior of the gambler's mentality is not daring to act. You see an opportunity arriving but you're just scared. Once the opportunity truly takes off, you regret it, then you chase — wouldn't buy at 5 yuan, but a while later you dare to buy at 50 yuan. Result? Slaughtered again.

Yet another variety of the gambler's mentality is all too common: chasing tips, seeking shortcuts, believing some pie in the sky is guaranteed to fall on them. Is that even possible? Even if you manage to snatch a morsel, can that be a reliable long-term meal ticket?

And there's probably the most common variety of the gambler's mentality: "I need to make money to buy a house, a car." "I invested to recoup the renovation costs." How pathetic. You think the market is a charity? It's a killing field!

Life is simple — three meals a day: grains for nourishment, fruits for assistance, meats for supplementation, vegetables for filling — not those bizarre exotic concoctions. The market is equally simple, just like life: profits grow within a certain rhythm. Only that rhythm, that ordinary yet sustainable profit model, can enable you to defeat the market.

You don't need to be anxious all day like a gambler, alternating between anticipation and dread, tossing and turning endlessly. You just need to calmly, according to your own rhythm and the market's revelations, strengthen yourself day by day. Missed something? So what — there are countless opportunities waiting ahead.

You don't need to design yourself as a superhuman. Superhumans don't need to be designed — they're forged through action. If you can defeat the market consistently over the long term, you are the market's superhuman. Because the market's principle is this: only the smallest minority can defeat the market over the long term. If you're not the superhuman, who is?

You will, of course, face different crises from time to time. Crises can't be dodged — resolve them with the fastest, clearest, most head-on approach. As long as you still have wings, the sky is yours.

Earlier I said you should invest with zero cost. Of course, in practice there's no need to be that strict. You can take out money that absolutely won't affect your life, tell yourself this is your only capital with no backup, and then use it to create your own legend. Of course, if you lose it all, you can give yourself one more chance — but before giving yourself that chance, you must dissect yourself completely, dig out all the root causes of your failure, then tell yourself: this is your last attempt.

If you lose it all again, then withdraw. Not everyone is suited for the market. Not everyone needs to climb to the market's summit. Sometimes the most objective fact we must face is: I'm not cut out for this.

Then give yourself N years — to study, to train. After N years, when you feel you have enough confidence to return to the market, give yourself one more chance. If that still doesn't work, then for this lifetime, bid the market farewell forever. Buy mutual funds, buy government bonds, whatever — but don't personally come to the market anymore.

The market is just one part of life, nothing more.