How does the crypto community view missing out - Cryptocurrency exchange platform

In investing, investors often encounter a situation where the stocks they are optimistic about have already soared in price before they can buy them. At this moment, feelings of regret and hesitation will arise. Today, I want to talk about “missing the boat” in stock investing and strategies to deal with it.

I have mentioned in other programs that there are generally two types of risks in investing. The primary risk is the risk of principal loss, which is permanent. Once it occurs, it cannot be recovered. This type of risk is completely different from daily price fluctuations; daily fluctuations only reflect short-term dips in stock prices. For example, if a stock price drops from 100 yuan to 50 yuan and then rises back later, this does not constitute a loss of principal. A loss of principal means that after buying a stock at 100 yuan, the price continues to decline, and later the stock price can never recover to 100 yuan, resulting in an irreversible loss of capital.

The other type of risk is the risk of missing out, simply put, the investor fails to seize opportunities and loses potential profits. For example, an investor is watching a stock priced at 100 yuan, which later, due to market recognition, rises to 1000 yuan. During this period, the investor remains on the sidelines without taking any action. This means the investor missed a great investment opportunity, which is also considered a risk. However, the risk of missing out is fundamentally different from the risk of principal loss. From a risk management perspective, the risk of principal loss is more serious. Missing out is just an emotional response to lost opportunities.

Although missing out can feel very unpleasant, compared to losing principal, it is not that significant. Because missing out is merely losing a chance to profit, while losing principal is the actual disappearance of wealth. The secret to wealth is to achieve stable compound growth. Over time, the snowball will get bigger and bigger. What we pursue is this steady and continuous compound growth.

Missing out is essentially a fear-based emotion. When this emotion dominates, investors tend to adopt more aggressive investment strategies to make up for missed opportunities, thereby increasing investment risks. For example, when investors see a stock soaring, they regret missing the initial opportunity. As the stock continues to rise, market enthusiasm increases, and some unrealistic predictions may emerge. Even if the current price is already high, investors still worry about missing out again, leading them to buy at high prices, which results in a loss of principal. The main reason is that investors are only pursuing immediate gains, neglecting long-term stable investment principles, and falling into the trap of blindly chasing highs.

In investing, preserving the principal is crucial because the key to wealth growth is compound interest. During wealth accumulation, the most important premise is that the principal must not suffer permanent loss, which is very important. While pursuing returns, more attention should be paid to the safety of funds. Only in this way can one stand firm in the crypto and stock markets. Warren Buffett once said, “The first principle of investing is to preserve capital.” When asked about the second principle, he replied, “Remember the first.”

Let me give an example of the power of compound interest. Suppose there are two different investment strategies: the first uses a steady approach, achieving a 20% stable growth annually. Over three years, the investor’s capital will grow to 172%. The second strategy is high-risk and volatile, with a 50% profit in the first year, a 50% loss in the second, and another 50% profit in the third. After three years, the capital will grow to 110%. From this, we see that even a relatively low but steady return rate, if maintained annually, can far surpass high-risk, volatile strategies through long-term compound growth.

Mr. Lin Yuan once said many times: “We keep moving forward, we never retreat.” This means his capital growth curve has no major losses. In other words, he doesn’t aim for big leaps forward but must avoid big setbacks. If we study Buffett’s investment performance, we find that over his more than sixty years of investing, he has demonstrated extraordinary stability. Most years, he achieves profits, with only a few years of losses, and even then, the losses are kept very small. This is the secret of compound interest.

In investing, we should not take on greater risks for so-called benefits. When we see an opportunity with a high probability of risk, even if the potential profit is large, it’s best to avoid it. At least, don’t over-allocate your position, because most losses come from heavy holdings in a single stock. The underlying reason is often the investor’s fear of “missing a good opportunity.”

As investors, we must have a clear understanding of the consequences of our actions, knowing what to do and what not to do. Do not be arrogant, jealous, or dwell on missing opportunities. In fact, missing out is not that terrible; it’s just an emotion. When investors experience any psychological discomfort in the crypto or stock markets, it reflects human nature. At such times, we need to be cautious, as we may be facing a test of our human nature.

The rules and logic discussed above are about how to improve the stability of compound interest. Avoiding large-scale pullbacks is the prerequisite for stable asset growth. Unfortunately, human nature tends to overly chase profits and rarely considers potential risks. As long as risks and losses do not occur, people tend to be optimistic and wishful, believing that as long as they buy stocks, prices will rise. They rarely consider the consequences of stock declines. I advise investors that when buying stocks, they should first consider the worst-case scenario, have a clear understanding and preparation for it, and only then can they buy and hold rationally.

In fact, investing is very similar to playing chess. Some people rush to win, always trying to force the opponent into a corner quickly. However, this strategy often exposes fatal flaws. A good chess player should have both attack and defense skills, and should value defense even more than attack. Because only when you stand on an invincible foundation can you see the mistakes your opponent makes. This is similar to playing tennis: don’t try to win with a single shot; first, you should try to get the ball over the net. When the ball comes back, being able to return it is the most important. The principle in Sun Tzu’s “The Art of War” — “In victory, be invincible; in defeat, be adaptable” — reflects this idea.

The same applies to the crypto and stock markets: if you always focus on future profits and worry about missing out, you will overlook current risks. This mindset can easily lead to capital losses, preventing wealth from compounding and even causing significant shrinkage. To avoid this, you must control your inner desires, impulses, and greed. Don’t do what you don’t understand, and have a clear understanding of your own limits. Here, I remind all investors: stay rational in investing. While pursuing profits, do not ignore risks, and ensure your pursuits are within a controllable range for reasonable returns.

Investing is like cultivating oneself. Someone else’s stock rise is their own matter, their own ability or luck. Don’t be jealous, and don’t always think about trying yourself. Making money in the crypto and stock markets depends not on reckless speculation but on deep research in familiar fields. True value investors will miss most stocks because, in their view, only a very limited number of stocks are worth investing in. Just like Buffett, who has invested for decades and missed over 95% of the bull stocks, yet he still remains the world’s richest person. Therefore, sticking to your circle of competence is crucial. Sticking to your circle of competence inevitably means missing out on most stocks.

This is very similar to contrarian investing in value investing. Value investors adopt a strategy of buying more as prices fall — the more the price drops, the more they buy. In their view, falling stock prices are not risks but a process of risk being released. Because they have a psychological expectation from the start, they are willing to endure the discomfort of declining stock prices. The same applies to missing out: it’s a price that value investors must pay. It’s normal, imperfect, but the only way to profit in the crypto and stock markets.