Actually, both Munger and Duan Yongping have said similar things. Munger said that Chinese people are very shrewd in other matters, but they are foolish in stock trading; they love to gamble too much. Duan Yongping said that stocks are not gambling, while retail investors say it is gambling. Duan, you don’t gamble because you have money; we have to gamble because we don’t have money. Then Duan Yongping said, no wonder you don’t have money. (The original words are not exactly like this, but the meaning is.)
Assuming you have cash exceeding hundreds of millions or even billions, you will naturally become a globalist, a world citizen. You will allocate assets worldwide, and domestically, the few companies you might consider are probably only a few, such as Moutai, Tencent, and Shenhua. Would you buy concept stocks of fruit chains or Nvidia? No, you would buy Apple and Nvidia directly.
Assuming you have tens of millions or even billions in your account, you are likely to allocate some positions to high-dividend stocks and then track some industry opportunities, holding some growth stocks with a plan.
Assuming you have a few million in your account, you might pick up penny stocks, gamble on some restructuring opportunities, or bet on high-valuation, high-growth industries.
Assuming you have 50,000 or a few hundred thousand in your account, your idea is likely to turn into a gamble to turn a bicycle into a motorcycle. Seeking the dragon and finding the leader, the limit-up team. Yesterday it was chips, today AI, tomorrow humanoid robots.
Assuming you have nothing, or even live in debt, your idea might be to kill the flowers after they bloom, daring to laugh at Huang Chao for not being a man. Season S3, Pu Dada still has a big one.
The less money you have, the more you tend to gamble. Large funds can achieve a stable return of around 10-20%, which can be enough to dominate the market. But if your capital is small, making 20% on 100,000 a year is pointless; your expectations can easily turn into doubling or even several times that.
The poorer you are, the more you love to gamble; the more you gamble, the poorer you become.
In the cryptocurrency market, the basis will eventually converge, and options will inevitably expire. The price volatility in the cryptocurrency market is severe, and the basis may deviate significantly in a short period. However, over time, market forces will push the basis closer to a reasonable range; and once the option reaches the agreed expiration time, its value will be determined based on the market situation at that time and will not last indefinitely.
The implied volatility in the cryptocurrency market is not the actual volatility; it more reflects the price of liquidity. Implied volatility is influenced by market sentiment, capital inflows and outflows, and various other factors. When market liquidity is tight, implied volatility often surges, and conversely, it may decline. It is a reflection of the market's supply and demand for liquidity.
The law of large numbers and the central limit theorem do not apply in the secondary market of the cryptocurrency space. The market size in the cryptocurrency space is relatively small and is easily impacted by large holders, policy changes, and other sudden factors. Price trends often exhibit non-normal distributions, making it difficult to accurately describe and predict them using these two theorems.
The cryptocurrency market cannot avoid volatility because liquidity is limited. The trading depth and breadth of the cryptocurrency market are relatively shallow compared to traditional financial markets, and a relatively large trade order can trigger significant price fluctuations. Limited liquidity makes price stability almost a luxury.
In cryptocurrency trading, what matters is not how often you predict the market correctly, but the cost of being wrong. The price volatility in the cryptocurrency market is enormous; if you misjudge the market and do not manage risk properly, it can lead to significant losses. Therefore, controlling the extent of losses when wrong is more crucial than simply pursuing the number of correct predictions.
In cryptocurrency trading, most of the time is spent waiting. Waiting for what? Waiting for the law of large numbers to take effect, allowing all possible market scenarios to have a chance to appear, thus demonstrating the effectiveness of one’s trading strategy in the long term; waiting for positive expectation to converge, meaning that with more trades, the expectation of profits can gradually be realized; waiting for the moment of liquidity exhaustion, as extreme price movements often occur when liquidity is severely lacking, which may contain trading opportunities.
Trading cryptocurrencies is about repeating simple things over and over, persistently using one method for a long time until you master it. Trading cryptocurrencies can be like other industries; practice makes perfect, allowing you to make decisions quickly and effortlessly.
If you currently feel helpless and confused in trading and want to learn more about the cryptocurrency space and get the latest information, follow: Awen. When you can see the market clearly, you will have the confidence to operate. Consistently making profits is much more realistic than fantasizing about getting rich.
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