Human nature is to follow the crowd, which is beyond doubt. In the securities market, under the drive of huge profits, people's psychology tends to be consistent. Most people in speculative markets are destined to fail, so to succeed, one must break away from the crowd's mindset.
Therefore, we must examine ourselves from a higher perspective. In other words, we need to carefully observe whether we have common trading habits. If you find that a certain habit you have is shared by the majority, you must correct it. Specifically, the approach is to never act independently in the exchange but to engage with many stock friends. When you find that most people have the same habits as you, or many people hold the same stocks as you, you must correct it. Smart people always learn lessons from others. Breaking away from the crowd's thinking is a step closer to success.
Buffett breaks down the Chinese stock market: If you have 100,000 in funds, is it a good idea to fully invest in one stock? A close examination.
Buffett began to be discussed by the investment novices on the streets from 1986 when he first entered the top 10 of the Forbes Rich List. Since then, Buffett's assets have grown steadily and rapidly, maintaining a position in the top ten for a long time.
In the past 40 years, the CAGR of his portfolio has reached 20%, making him a world-renowned stock god. Last year, the Berkshire Hathaway shareholder meeting attracted global investors' attention, and a look at the financial media revealed extensive coverage of the shareholder meeting and Warren Buffett's famous quotes!
Regarding the Chinese market, he mentioned a lot, but two sentences are very important:
1. The valuation of the Chinese market is lower than that of the United States, making stocks cheaper!
2. China is an emerging market, and many people will participate in the stock market, leading to more speculation.
If you have 100,000 in funds, is it a good idea to fully invest in one stock?
In 2022, a piece of data was released showing that there are approximately 190 million investors in A-shares, with 95% of them having a capital scale of less than 500,000. This means that 95% of investors are retail investors.
For a capital scale below 500,000, the optimal number of stocks to hold is 1-3, which can achieve the best state in terms of strategy optimization, capital allocation, and management.
Of course, declines can disperse risk, and rises can yield better benefits.
If the capital is below 20,000, it is more appropriate to hold one listed company and make more suitable arrangements in terms of strategy.
The 'top sky standing' bottom-fishing method based on trading volume:
'Top sky standing' is a short-term bottom-fishing method brought about by significant trading volume anomalies.
In the final stages of a downward trend and before the start of an upward trend, stocks trade at low levels, and trading volumes gradually shrink to the limit. Suddenly, on a certain day, the trading volume unexpectedly surges, and the stock closes with a massive bullish candle, the largest trading volume column in the last three months, exceeding the highest trading volume of the previous days by more than four times. Such a massive volume is referred to as 'top sky standing'.
This indicates that new funds are replenishing or accumulating at low levels, sweeping away the trapped chips thrown out by the main force during the panic sell-off at low levels. This is a precursor to a rising market, and we must always be prepared for bottom-fishing!
On the contrary, a massive volume at a relatively high position after a big rise is not what we call 'top sky standing', but rather an exit opportunity, usually indicating a stage top. Short-term positions should be sold promptly!
