Why don't you try to seize all opportunities when investing?
1. Cognitive limitations: The human brain is not a supercomputer
Information overload: Countless "opportunities" emerge in the market every day (new coins are launched, hot spots rotate, and gossip), but the decision-making bandwidth of the human brain is limited, and frequent switching of strategies will lead to decision fatigue.
Case: In 2021, retail investors who chased DeFi, NFT, and Metaverse at the same time ultimately underperformed investors who simply held BTC.
2. Opportunity cost: Every transaction has a hidden cost
Transaction fee loss: Frequent transactions may eat up profits (such as 10 transactions per month, annualized transaction fee loss exceeds 15%).
Psychological cost: The pain of missing a skyrocketing coin often leads to subsequent irrational operations (such as FOMO chasing highs).
3. Probability game: high winning rate > high-frequency trading
Buffett used a metaphor: "Investing is like playing baseball, waiting for the most suitable ball (opportunity) before swinging."
Junk ball (low-quality opportunity) → Hold on
Strike zone (high-certainty opportunity) → Go all out
Data: 90% of Berkshire's 60-year earnings came from the top 10 best investments.
4. Risk superposition: multi-line operations = disaster formula
Mathematical truth:
Seizing 5 "opportunities" at the same time, if each has a success rate of 60%, the probability of all being correct is only 7.8% (0.6^5).
Focusing on 2 high-probability opportunities (80%), the probability of being correct is 64% (0.8^2).
Realistic lesson: When LUNA collapsed in 2022, most people who tried to "bottom-fish LUNA while shorting UST" had their positions blown up on both ends.
5. Market Nature: 80% of "Opportunities" are Traps
Market Maker Logic: The market creates false opportunities to lure retail investors (such as pulling the market to lure more, false breakthroughs).
Old Leek Creed:
"When you see a 'great opportunity', ask first: Why is it me and not the market maker who makes this money?"
6. Solution: Munger's Three Iron Laws
Strictly define the circle of competence:
Don't understand AI chips? Just give up Nvidia and focus on the consumer stocks you are familiar with.
Set opportunity filters:
Must meet the following conditions at the same time: low valuation + strong cash flow + moat before taking action.
Ultimate summary:
Investment is not a "fishing competition" - the wider the net is cast, the more you gain, but a "sniper game":
Mediocre opportunities: give up 99% to avoid wasting ammunition (funds + energy)
Top opportunities: stare closely with a telescope and go all in when they appear (such as Buffett's bet on Goldman Sachs in 2008).
