For investors, the year 2022 is suddenly like a night of gloom, and the market is filled with an atmosphere of fear.
Buffett said that greed and fear are the two ends of investment. If investment is related to “the way of investment” and “the art of investment”, greed and fear are the most basic psychological construction in the way of investment, which is very important. How to deal with this fear? Recently, Gu ailing, who “swiped the screen overnight”, may give us some enlightenment.
how to overcome fear?
At the Beijing Winter Olympics on February 8, Gu ailing, an 18-year-old talented girl, successfully won the champion of Freestyle Skiing women’s platform event with earth shaking and difficult movements.
On the same day of winning the championship, Gu ailing wrote an article in the American media. In this article entitled “I admit that I am in love with fear”, she talked about her mental journey of skiing: how to deal with fear, how to achieve success, and how to enjoy the fun brought by sports.
For people on earth, no matter what industry they are engaged in, as long as they can reach the top of the world, the truth behind them is basically the same. For investors, losers have their own misfortunes, but for those who make money, most of the principles they follow are similar.
For extreme athletes, fear is the first hurdle to face. In Gu Ailing’s view, “fear” is the general name of three different feelings: excitement, uncertainty and pressure. As an athlete, we should go against our biological intuition and put ourselves at risk. “Although we will make every effort to be physically prepared, no amount of safety net simulation training can be equivalent to the snow slope we will face when we take off from a steep slope, throw our body into the air and are about to land. It will not be humane.”
For investment, the market is ever-changing, and no matter how detailed the preparatory work is, it can not fully cope with all sudden changes. What investors can do is to deeply understand the risk, understand the fear itself, and evaluate the potential risk.
“We should go against our biological intuition and put ourselves at risk”, which is also the personal perception of many investors. When the market continues to fall irrationally and most people are scared silly, it may be the time to go against the trend.
At a forum held by Wells Fargo fund at the end of 2018, Chen Ge, general manager of Wells Fargo fund, said bluntly in his speech: “when the market continues to fall, everyone is panic, and I am also afraid, but at that time, we still have to buy. After the event, the most frightening time is always the most profitable time.”
Those who achieve great things do not seek the public, and those who make big money are always a few.
how to overcome fear?
Birds dare to stand on tall branches, not because they believe that the branches will not break, but because they believe in their wings. Whether it’s competitive sports or investment, it’s not enough to have the courage of a fierce tiger. We also need to have a way to deal with it.
Gu ailing wrote: “Instead of ignoring fear, we need to develop a deep sense of self and conduct a thoughtful risk assessment to establish a unique relationship with fear. Every freestyle skier aims to identify the nuances between excitement and uncertainty in order to maximize his ability and minimize the risk of injury.”
What about investment? For professional investors, their core competitiveness is reflected in the accurate assessment of risks and the next countermeasures. Even if unexpected emergencies occur, the risks should be reduced to a controllable range.
After having a deep understanding of fear, the construction of psychological level comes to an end, and then the operation of technical level. Gu ailing explained her coping strategies, from deep breathing to how to turn around, from pressure to confidence, and finally enjoy the happiness brought by sports.
“Greed and fear are the two poles of the stock market”. Although many people are familiar with this famous saying, not everyone can fully perceive it, because only by being there can we deeply understand its essence. Even highly gifted people should face the fear of investment when facing uncertainty. Feng Liu, a well-known investor, said when recalling his resignation to speculate in stocks that year, he often felt doomed. He often woke up at night to ponder over his stock and looked at those familiar contents that he didn’t need to see again, just for psychological comfort.
When fear is inevitable, how should we deal with it? During the global depression in 1933, facing the unprecedented state of extreme panic, Roosevelt said that “the only thing we have to fear is fear itself”, which can be said to break the true meaning of fear.
Many investors often worry about market fluctuations and will try their best to cut them out after meeting risks. But for professional investors, when they buy stocks, risks arise, because risks are everywhere, both visible and invisible. When the market falls and people flee, the panic will often be further amplified.
Gu ailing talked about the specific methods to overcome fear, including how to visualize, how to try new skills and actions, and the precautions in completing the actions. For investment, this involves the level of “investment technique”. We need to fear common sense, summarize experience and correctly predict.
how to love fear?
When fear is inevitable, the best way to deal with it may be to “fall in love with fear”. The title of Gu Ailing’s article is “I admit that I am in love with fear”, which may also remind us that when we are afraid of fear, falling in love with fear is the peak.
Dealing with dangerous situations requires perfect preparation. Gu ailing said that danger signals will stimulate the instinct of evolution, and pressure can become a positive force to meet challenges. This is “a feeling buried in the bottom of my heart and eager to ‘prove myself”. This is not only the source of stimulating strength in my heart, but also the magic of enjoying happy sports.
The same is true for investment. When fear is inevitable, brave response is the best choice. As Feng Liu said, in the field of investment, talent and quality cannot go far. It must rely on scientific training, systematic learning and independent thinking to finally form appropriate right and wrong standards and codes of conduct. For investors, they need to be optimistic and have the courage to entrust themselves to fate, faith and mechanism.
In the US TV series “billions”, Bobby, a hedge fund tycoon, said a classic saying: for many people, they will be anxious about market fluctuations. After meeting risks, they will try every means to cut them out from their side, which will make them feel comfortable. However, we don’t do that. Instead, we should be accompanied by risks and enjoy the fun brought by risks.
As Gu ailing said at the end of the article, “although my personal and world perspectives will always evolve over time, one thing will not change: no matter how long time passes, I will be an incurable romantic in front of fear.”
Pessimists are wise, optimists are profitable.
