Why can't retail investors control themselves and prefer to trade frequently? The life-saving rules left by our ancestors

Because being poor makes you try to seize every trading opportunity. This is not a bad trait, but a necessity.

The first lesson in finance is about the time value of money, and the first lesson in economics is about effects. Both tell you that having ten million at 30 and ten million at 70 are not the same. The picture painted by value investing is that you rely on compound interest to earn ten million in thirty or forty years. But the problem is, when you’re 70, what do you need ten million for?

Once you enter this market, everyone’s initial goal is to make quick money. Ask yourself honestly, how many people didn’t dream of defying the odds when they first entered this market?

And for retail investors, value investing is too slow. Slow to the point that if they truly use their tens of thousands or hundreds of thousands of principal for long-term trading, even with a stable annual return of 10-15% like Buffett, it would take 5-7 years to double. After twenty years, your 500,000 would turn into two or three million, and then what?

Moreover, how many people don’t even have 50,000 in principal?

Taking a step back, even if you do, can you wait? How many 5-7 year periods do you have in your lifetime?

Therefore, retail investors are not qualified to talk about win rates; they should only consider odds. And high odds always mean low win rates. To turn things around, frequent trading is inevitable. Just like playing Texas Hold’em, short-stack players can’t support the balanced strategies that many deep-stack players use. To turn things around, you must expand your range to seek a slim chance of survival. There are only two paths: either be continuously exploited and die slowly, or increase your entry rate to gamble, but at the cost of bearing high losses. These require you to have solid post-flop skills to compensate.

Frequent trading by retail investors is not shameful; being inexperienced is.

Actually, Munger and Duan Yongping both said similar things. Munger said Chinese people are very shrewd in other matters but very foolish in stock trading—they love gambling too much. Duan Yongping said stocks are not gambling, then retail investors say they are gambling. Ah Duan, you have money, so you don’t gamble; we don’t have money, so we must gamble. Then Duan Yongping said, no wonder you have no money. (The original words are not exactly like this, but the meaning is similar.)

Because retail investors have too little money and overly high return expectations.

Suppose you have hundreds of billions or even trillions of cash in your account, you would naturally become a globalist, a citizen of the world. You would allocate assets worldwide. In China, the only companies you might pay attention to are a very small number like Moutai, Tencent, Shenhua, etc. Would you buy concepts like the fruit chain or Nvidia? No, you would directly buy Apple and Nvidia.

Suppose you have no money at all, or even are in debt, your mindset might be: “When flowers bloom, a hundred flowers die; dare to laugh at Huang Chao for not being a man. Season 3, Puda drops a big one…”

The less money you have, the more gambling tendencies you develop. Large funds can achieve a stable 10-20% return and dominate the world. But if your funds are small, earning 20% a year on 100,000 yuan is of little use. Your expectations can easily turn into doubling or even tripling your money.

The poorer you are, the more you love to gamble; the more you gamble, the poorer you become.

**$RIVER **$SENT **$ZRO **