Why avoid crowded places when investing? - Cryptocurrency Exchange Platform

Why in investing,

should you avoid places with many people?

I’ve discussed this in other programs,

whether it’s about life strategies or career choices,

the principle remains:

try not to go where there are crowds.

The investment I’m talking about today

also follows this principle.

I plan to discuss it in two episodes,

because it’s a very important topic.

You should first decide where to operate,

then focus on doing well.

Choosing where,

your battlefield,

your scope,

are the most important things.

So,

why should you avoid places with many people? What’s the logic behind it? The underlying reason is competition.

High competition,

even if the offerings are good, ultimately,

if the price is driven up,

a price that’s too high loses its value.

Good things,

but not good investments,

that’s what I’m talking about.

Therefore,

first, you need to determine your identity.

Are you a buyer? If you are,

you don’t want many people.

Having a bunch of buyers is obviously good for sellers.

When many people talk about this place,

it means there are many competitors,

too many peers, which is not good.

If you are a buyer, you don’t want only one seller,

but many buyers.

Like an auction for antiques,

it’s a scenario that’s very unfair to buyers,

only beneficial to sellers.

I haven’t seen anyone make money from collecting antiques through auctions,

mostly those who get rich through real industry and do collecting out of interest.

Few people get rich from collecting,

but there are some,

Mr. Ma Weidu is one,

but he rarely buys antiques at auctions,

more often he goes treasure hunting.

He bought during a time when people didn’t value antiques,

when they used fine blue-and-white porcelain bowls as water jars or cooking bowls.

That era disrespected antiques,

meaning there were few buyers,

less competition,

but a large supply.

During the Cultural Revolution,

antiquities were seen as remnants of feudalism,

considered to have no value,

so I am the only one I’ve seen who made money from it.

Maybe some others,

but those who got rich then,

probably because the market was small,

buyers were few,

and they capitalized on that.

Investing isn’t necessarily about stocks,

it’s about common sense.

As a buyer,

you want to be in a place with few buyers.

Maybe at a street stall,

bargaining there might be better than in a mall,

bargaining at an antique shop might be more cost-effective than at an auction.

Of course, bargaining in a mall involves some risks,

but at least you won’t drive up the price.

The stock market,

to put it simply, is an auction market,

especially during IPOs,

it’s a scenario where a seller faces many buyers competing to buy the stock.

In a bull market,

that’s the peak of the auction,

more investors (more buyers),

competition among buyers intensifies,

and sellers can get good prices.

That’s why every business owner,

whether in China or the US,

strives to sell their stocks or assets on the stock market.

But this is not beneficial for buyers.

So I don’t recommend participating in IPOs.

But China has a special situation.

Buying new stocks as an investment,

you start at a disadvantage,

you lose at the starting line,

because you’re likely paying a high price.

Too many competitors,

so sellers can set very high prices,

which are often unjustified.

As a buyer in the stock market,

when is it advantageous for you?

In a bear market, many investors leave the market,

or get trapped,

so the number of buyers actively purchasing in a bear market is low,

and prices tend to be lower,

making it a good time to invest.

Therefore, as an investor,

you should buy during a bear market,

like planting seeds,

you should just plant them.

Only buy in a bear market,

and during a bull market, just hold or gradually start selling.

Be a qualified buyer or investor,

don’t buy during a bull market,

especially when everyone is overly enthusiastic,

everyone understands this logic clearly,

it’s straightforward.

For example, in China now,

due to the sluggish economy,

the pandemic, and so on,

many investment and startup companies faced significant funding gaps recently,

some even ran out of resources.

If you are a private equity investor,

this might be an opportunity,

because there are many sellers,

many can’t hold on anymore.

If you have funds at this time,

cash is king,

you can invest in good companies at good prices.

This isn’t just applicable in the stock market,

it’s common sense,

I hope everyone can establish this understanding.

There’s a very famous person in China called Tao Zhu Gong,

who bought ships during a drought,

because at that time, nobody needed them,

that’s the principle he was talking about.

The real estate market is the same.

China’s real estate market is very unique,

it has developed very well over the past 20 years.

But real estate also has cycles.

The easiest time to make money in real estate is when the market is very bad.

I have friends who do this,

buy distressed properties during downturns.

Because these properties are nearly completed,

banks don’t want those assets,

so they sell them very cheaply.

Once you acquire them,

you spend a few years renovating and finishing,

and when the market begins to recover,

since everything is cyclical,

you buy cheap,

and when you sell, you might even get a high price.

The biggest risk is when the real estate market is booming,

you buy at the peak,

then develop and build,

but suddenly the market turns,

and you suffer huge losses.

Many real estate companies go bankrupt because of cash flow issues,

borrowing large sums,

buying expensive land.

When land prices are at their peak,

everyone is bidding,

land in real estate is auctioned,

so buying then is not cost-effective.

If you are a savvy real estate developer,

you can negotiate with banks one by one about distressed properties,

banks are also struggling to sell,

and you are often the only buyer,

so you can buy very cheaply.

These are some investment principles.

That’s why “avoid places with many people”,

is the same logic.

If you are a seller,

you want to go where there are many buyers,

and few sellers.

If you are a buyer,

you want to go where there are few buyers,

and many sellers.

These are simple business and investment truths,

whether in physical markets,

investment markets,

or management — the same logic applies.

As a business owner,

when managing your business,

you also don’t want high competition in your industry,

everyone is fighting fiercely,

and in the end, you can’t make money,

and your investments may not be worthwhile.