Casual talk about a speculative method from back then: buying controversial crypto stocks - cryptocurrency exchanges

Today, I want to talk with everyone about a method I used in speculation back in the day.

My program is about investing enlightenment, guiding others and oneself,

In fact, the core of this program is “enlightenment,”

I hope to use investing as a tool to teach everyone how to think,

to understand the way of life,

This is the core of my program,

Investing in stocks is just a tool.

Everyone knows that my program mainly discusses value investing.

But I personally spent a considerable amount of time engaged in speculation.

Some say investing and speculation are similar,

I completely disagree with that.

Today, we won’t debate this topic itself,

I just want to chat with everyone about the method I used in my free time.

The main purpose is to explain why I used this method,

what is the logic behind it,

not to tell everyone how to use this method.

This method is buying controversial stocks,

the more controversial, the better.

It’s best if newspapers,

media are split—half like it,

half dislike it,

experts also argue endlessly about it.

Its disadvantages are obvious,

its advantages are also clear.

Just like the current US President Trump,

half of Americans especially like him,

the other half strongly dislike him,

very controversial.

Although he won the US presidential election this time,

his vote share wasn’t particularly dominant.

Companies are similar,

these highly controversial companies,

despite having a lot of negative information,

their stock prices can still slowly rise over half a year or a year,

mainly because the market’s buying power is stronger than the selling power,

there are buyers and sellers in stock trading,

this is essentially a game between buyers and sellers.

Except for those stocks that surge in a few days or weeks or small-cap companies,

which may be manipulated.

I hope everyone doesn’t believe that the market has a market maker,

if you still believe the market has a market maker or are interested in market makers,

you can check out my previous program where I specifically discussed whether the market has a market maker,

my discussion is based on the premise that there are no market makers in the market.

For example, Pinduoduo,

Pinduoduo was originally a very controversial company.

Many media outlets and forums were filled with negative information about Pinduoduo’s fake goods,

poor product quality, etc.,

but Pinduoduo’s stock price rose from a low of around twenty-something yuan to over eighty yuan now,

as mentioned earlier, the rise in stock price is driven by funds,

not by what people are saying.

The genuine buyers in the market keep buying stocks,

pushing the stock price up,

which indicates that these buyers’ ability,

knowledge, business judgment, and information they hold may be stronger than average,

people with large capital are also generally more capable.

As an individual investor,

try not to rely on media reports.

When media reports are all negative but the stock price keeps rising,

and a divergence appears,

it’s very likely that the media reports are wrong,

at this point, you should trust the stock price more.

This isn’t necessarily completely correct,

but at least it’s how I analyze it.

I’m talking about a speculative method I used before,

but I no longer use it now.

Why do these buyers keep buying despite a lot of negative information? There are only two reasons:

First, perhaps the negative news isn’t as bad as imagined,

negative information might be overestimated or simply doesn’t exist,

causing misunderstandings.

Second, positive news is hidden,

people don’t know about it,

but those genuine market buyers have access to this hidden information and buy in,

ultimately causing the stock price to keep rising.

I’m not recommending stocks here,

I never recommend stocks in my programs,

I’m just using Pinduoduo as an example,

so that listening to the program isn’t too dull.

Actually, I no longer hold a positive view of Pinduoduo,

especially since Huang Zheng is stepping down,

Pinduoduo might face some issues in the future.

I want to reiterate that I am not recommending stocks.

Pinduoduo is a very good example,

it has high controversy, such as poor product quality,

media filled with negative reports, etc.,

but its stock price has been rising,

which shows that buyers are smarter than sellers.

During the rise,

most spectators do not hold Pinduoduo stocks,

the biggest influence on spectators’ emotions isn’t the news itself,

but the stock price.

From a speculation perspective,

even if this company has a lot of negative information,

just three limit-up days,

most participants or potential participants holding this stock will feel optimistic about its future,

this is human nature.

Most people haven’t seriously studied the company itself,

they only believe in the stock price,

as long as the stock price rises,

all negative emotions turn positive.

Then more people will buy in.

And after hearing negative news repeatedly, people become numb,

just like during the pandemic,

initially everyone was very scared,

after a while, even though the pandemic continued,

people’s emotions lost their initial panic,

and gradually became numb.

At the same time, because the stock price kept rising,

people kept digging for information,

wanting to understand why the stock keeps rising,

finding various positive news or so-called theories to support the rise.

As negative news diminishes,

the stock price continues to climb,

those experts who release negative information to the market,

will be increasingly criticized,

their voices will become weaker,

and negative news in the market will decrease,

positive news will increase,

people’s emotions will become more positive.

Once a company becomes controversial, it will attract media attention,

media coverage and reports will draw more and more people to follow the company.

Even if most don’t hold the stock,

their attention makes them potential buyers,

controversy is like advertising,

drawing more and more people to focus on the company.

During the stock’s rise, it’s like an advertising campaign,

attracting more and more participants.

I believe everyone’s impression of Pinduoduo is completely different from two years ago.

A market survey will show,

more people are starting to use Pinduoduo and think it’s a good company,

they are willing to buy its stock,

they haven’t bought it now only because it’s expensive,

but in the past,

people thought Pinduoduo’s model wouldn’t work.

I believe in two or three years,

negative media reports about Pinduoduo will decrease further.

Alibaba was similar in the past,

initially, everyone thought Alibaba sold fake goods,

had delivery issues,

no guarantee for returns, etc.,

a bunch of negative information,

just like Pinduoduo.

Including Apple,

many people criticized Steve Jobs back then,

Steve Jobs was driven out of the company 30 years ago,

people thought he was a failure,

many believed Steve Jobs was a scammer.

I suggest everyone look through old newspapers and magazines,

don’t be a post-hoc genius,

that’s very foolish,

and very harmful to investing,

and to life as well.

Let’s return to the original topic,

during the stock price rise,

it’s also a process of advertising and promotion,

more and more people join in,

controversy diminishes.

As controversy diminishes,

the stock price rises faster.

Why are more people buying,

and fewer selling? Because during the continuous rise,

those who sold stocks before will regret it,

when they buy back again, they convince themselves not to sell anymore,

resist temptation,

hold long-term, etc.

Those who planned to buy but didn’t will also regret,

when regret accumulates to a certain point,

people will eliminate this regret,

even at high prices, they will buy.

As more people buy,

fewer sell,

the stock will rise faster and faster,

when everyone reaches a certain consensus,

the stock will surge,

experienced speculators should have some impression of this.

When everyone’s thoughts are aligned,

and everyone is buying,

it’s like the fuel in the tank is running out,

only selling remains.

Because everyone holds stocks,

a decline at this point is very normal.

It has nothing to do with whether the company is good or bad,

this is a process of stock market equilibrium.

The rise of stocks is a process of unified thinking,

from controversy to no controversy.

So, when the media has no controversy,

and the stock price is soaring,

I generally start selling in stages.

Tesla is a typical example,

Tesla’s price went from dozens of yuan to hundreds, then to over a thousand,

those experts criticizing Tesla now are silent,

because those who believe these experts haven’t bought Tesla stocks,

some even shorted Tesla and lost money.

What these experts say might be correct,

but the stock price kept rising,

ultimately proving they were wrong.

Those who have always said Tesla is good,

may not be very skilled,

it’s just because the stock price rose,

and they’ve been proven increasingly smart,

their voices grow louder,

and finally, media reports on Tesla become more positive.

And the US stock market allows short selling,

many people who disliked Tesla initially shorted it,

because Tesla’s continuous rise caused a “short squeeze,”

forcing them to buy back Tesla stocks in the market,

even if unwilling,

they had no choice,

since they borrowed stocks from others,

they bought aggressively,

Tesla’s stock soared partly because of this.

I won’t discuss Tesla,

Pinduoduo,

Apple itself here,

just want to share my original strategy of buying controversial stocks.

Through this program,

I mainly talk about the principles behind stocks,

the balance between buyers and sellers,

the role of media, etc.,

not to teach everyone how to speculate.

Many retail investors like to look at charts,

I’ve said before, any technical chart,

is actually a reflection of people’s psychology.

Charts are just the result,

not the cause,

I hope everyone doesn’t confuse the two,

the fundamental cause is people’s psychology,

buying and selling,

panic,

and ultimately, unified thinking, etc.

I strongly oppose using charts to trade stocks,

it’s like the relationship between a person and their shadow,

you can’t predict where a person will go next just by looking at their shadow,

the person is the true cause.