Most people believe that if they endure the bear market, a bull market will come, and they can recover the losses incurred during the bear market. However, in reality, very few can truly endure it, and each trading day during a bear market is a torment.
Why do many people fail to endure? First, it's a lack of confidence in the industry; they only want to make money. If they do not believe that the industry trend is improving, it is difficult to make profits. Nowadays, the market has more declines than rises, and the risk-reward ratio is low in the short term. Such individuals do not care about the essence of the industry and are advised to exit at a high point; otherwise, it is hard to endure against those who have 'faith', and they may end up cutting losses.
Second, they do not invest with spare money. Investing with spare money means using funds that do not affect living expenses, but many people want to invest more when they see opportunities and are also distracted by the 'temptations' of life. When facing fluctuations, they become fearful; they fear declines when prices rise and fear further declines when prices fall. Newcomers are more susceptible to panic due to media reports. To avoid panic, they need to better understand industry knowledge and can also improve the 'return-risk ratio' by choosing quality targets for long-term holding, enhancing off-market earning capabilities, and reducing holding costs.
Investment has a 'cost line'; crossing it allows for offensive and defensive strategies. However, many people cannot cross it due to the reasons mentioned above and linger between profit and loss. Investment is a decision mixed with human nature, and most people face three concerns: wanting to improve compound returns but finding it difficult and uncertain; time is fair, but human nature is unwilling to wait, making 'slowly becoming rich' difficult; not understanding Warren Buffett's advice to invest with appropriate money and not to leverage, only realizing during a bear market that the principal cannot withstand the test.
Therefore, if one cannot bear the losses, they should first ask if the investment principal is 'appropriate money.' Although amplifying the principal may seem to increase returns, it will magnify the test of human nature and lead to distorted investment decisions. The principal is the foundation of investment and should be reflected upon before and after investing.
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