1. In-depth analysis

Many investors have simplified these four words. Two of them left a deep impression on me, one is Buffett and the other is Duan Yongping. They have expressed it from different perspectives, such as "Don't invest if you don't understand it." In fact, it is not easy to do these four words, especially in the cryptocurrency circle. We often see some projects that we don't understand or know, but they just keep rising. We can't help but ask people why it has risen? Can I still buy it? In fact, these are all signs that you haven't started investing yet.

Buffett missed out on early Apple and Google, and even Bitcoin (he and his old partner Charlie Munger hate Bitcoin). People often laugh at Buffett's investment career, but Buffett's many misses did not affect his becoming the final winner. Duan Yongping said that he never invests in things he does not understand.

At the same time, he also emphasized a very simple logic: if you can't explain the goodness of a project in three sentences, either you don't understand it or it's not worth investing in. In other words, this "understanding" actually needs to be concise and easy to understand, so that it can be understood at once, and only in this way can there be a wide consensus and dissemination.

For example: When Bitcoin was first being promoted, there were some concepts including limited total amount, digital gold, and anti-inflation, etc. Some of these concepts may not be so accurate, but they have been deeply rooted in people's minds.

Ask yourself: Can you explain in three sentences what you think of a coin you want to invest in, and gain widespread recognition now or in the future?

2. Independent thinking

When it comes to investing, you should always start from practice and not blindly believe in anyone or any theory, including Buffett. When it comes to in-depth analysis, it is worth emphasizing one thing: independent thinking.

Buffett doesn't understand Bitcoin, but we have to consider that he is already a centenarian and cannot even operate a computer proficiently, so his views on Bitcoin are not worth referring to. For example, he thinks Bitcoin is a bubble and speculation, which are all wrong.

In the eyes of traditional investors, they may arbitrarily define all cryptocurrency investments as speculation; within the cryptocurrency circle, there are also various prejudices, such as believing that those who buy and hold BTC for a long time are investors, while those who chase new coins are speculators, and so on.

In fact, these are terrible and stupid prejudices.

To be a smart investor, you should keep an open mind, recognize the limits of technology, and more importantly, recognize the limitations of human beings. It is normal for strong investors like Buffett and Munger not to understand Apple at first, and then to not understand the cryptocurrency world.

How to distinguish between investment and speculation?

On the one hand, we must strictly follow the principle of "based on in-depth analysis, ensuring the safety of the principal and obtaining appropriate returns";

On the one hand, we must "maintain an open mind, insist on independent thinking, and continue to learn new knowledge."

For example: Don’t simply buy BTC as an investment and buy new coins as speculation.

3. Beware of speculation

It is important to distinguish between investment and speculation, because speculation will inevitably result in heavy losses, and when one does not clearly distinguish this point, even in the face of losses, they will not reflect and grow, and they will continue to engage in many dangerous speculative behaviors in the financial field.

However, it is undeniable that most of the time, the investment products we buy have some speculative attributes. Speculation is not a moral issue, but it may bring greater losses. Recognizing this, we must be financially and psychologically prepared for both short-term and long-term risks.

Beware of three types of hidden speculation:

One is that you think you are investing, but in fact you are speculating.

Is there in-depth analysis? Is the principal safe? Is there a chance to get a decent return?

As the saying goes, "If you don't understand, don't invest." Buffett is an investor. He doesn't understand Bitcoin, so he doesn't invest. This is the practice of his life philosophy. Similarly, you understand Bitcoin and are optimistic about the future of blockchain, but if you don't do a thorough research on a coin you invest in, and only decide to enter the market based on some so-called favorable factors, then the final result will be the same as all speculative results: you will suffer heavy losses in the end.

Second, they do not have sufficient knowledge and level to treat speculation as a serious matter rather than a pastime.

From a conservative perspective, all leveraged transactions are speculation, and most people who rush into hot new projects are also speculators. There are many fun things in this kind of thing, including using a certain message in contract trading to "easily" make tens of thousands of dollars with a 10x leverage, so that some people jokingly say that making money is as easy as breathing; including a surge of dozens of times in a new coin in one day, etc.

But as a smart investor, please remember at all times that if you participate in these activities, you must treat them as an entertainment, a pastime, control your positions, and participate with a zero-risk mentality.

Please remember one thing: never increase your investment just because of a rising market or a surge in profits. You should leave or at least withdraw the principal to your investment account.

The third is to invest heavily and work hard, and once a loss occurs, you will not be able to bear it.

As mentioned before, any investment behavior may inevitably contain more or less speculative factors and may result in losses. Even Buffett has a lot of losses in his life. If he loses a lot of money in any loss, he may never be able to recover.

Readers are advised to be especially vigilant. The cryptocurrency market has experienced huge ups and downs, and myths of getting rich overnight are everywhere. We need to stay alert and never invest heavily at any time. The more opportunities there are, the more traps there are.