One of the most interesting and important moments in the investment market is the “moment when the last resistor surrenders”. This moment is a unique phenomenon observable in both bull and bear markets, clearly demonstrating how investor psychology and behavior influence the market. Let’s delve into this intriguing phenomenon and share the important lessons we can learn from it.
Why is the moment of surrender important?
Surrender is a common phenomenon in the investment market. Particularly in the first stage of the market, most investors do not follow the actions of a few brave investors. This is because they lack the special insights or the courage to be a contrarian investor who goes against the crowd.
I, too, experienced multiple failures when I first ventured into investing. However, if there’s one thing I’ve learned from my failures, it’s the importance of having the courage not to follow the trend. Without this courage, we always follow the path most people take, which can sometimes lead to significant losses.
The Bitcoin Market in 2020
Let’s take the Bitcoin market in 2020 as an example. Many people doubted the rising trend of Bitcoin and did not invest. However, as Bitcoin continued to rise, many eventually jumped in late, which again led to a price increase. But, after reaching a peak, Bitcoin experienced a sharp decline. Those who invested late ended up with significant losses.
Psychological Factors of the Last Resistor’s Surrender
Charles Kindleberger said, “There is nothing more disruptive to happiness and judgment than seeing a friend become rich.” This clearly shows how emotionally shaken we can be when investing. When friends make money, we also want to achieve the same gains, but this often leads to poor judgment.
How to Avoid Being Swayed by Emotions
To succeed in investing, it’s important not to be swayed by emotions. This is not an easy task. However, our goal is to predict market movements and make cold, calculated judgments based on them. Here are some strategies to help achieve this:
- Set clear investment goals: Establish long-term goals that are not swayed by emotions.
- Regular market analysis: Analyze the market regularly and make investment decisions based on this analysis.
- Diversify investments: Do not focus on a single asset; diversify across various assets.
- Set loss limits: Set a limit for losses you can tolerate beforehand.
- Continuous learning: Continuously acquire knowledge related to investments and apply it in practice.
Conclusion
I hope this article helps investors understand the emotional factors at play in the market and how to overcome them. Investing is more than just numbers and data; our emotions and psychology play a significant role. I sincerely wish you success as an investor!
References: Howard Marks, “The Laws of Investing and Market Cycles”