(This article is compiled by the official account Yuesheng Wealth (YSLC168888), for reference only and does not constitute operational advice. If you operate by yourself, pay attention to position control and risk at your own risk.)
Mr. Cao started from HK$5,000 and experienced two crushing defeats, but still hit a 40,000 investment return in 40 years. His experience is not only a legend in the investment world, but also has profound implications for retail investors. Huashang Taoism|Huashang Hall of Fame will share his stories and thoughts with you today.
I’ve been hungry for money all my life
“I’ve been hungry for money all my life” is a famous saying by Cao Renchao .
is so eager for money because he was really scared of poverty. Mr. Cao, who was a big businessman, came to Hong Kong at the age of 3 and lost his father at the age of 13. He relied on his mother who worked in the factory to support the three brothers. After deducting rent, tuition and other necessary expenses, the family's monthly living expenses are only 65 yuan.
Mr. Cao recalled that apart from white rice, the family could only eat three dishes and one soup for 2 yuan a day for five consecutive years: "Cook the soup with duck blood, soybean sprouts and tofu, and then cook these three foods separately."
Poverty made Cao Renchao's childhood full of worry and even fear. "Worried that he had no money to pay rent, he had to look at the face of the late mother of the 'lander', or he had no money to pay tuition and did not dare to return to school." Even a neighbor disappeared when he disappeared gold jewelry, and immediately suspected that he stole it and wanted to search for him. In the end, he was proven to be innocent, but the other party not only did not apologize but also said that he was poor and it would be a matter of time before he could steal.
Cao Renchao recalled that the sentence hurt him so much, making him vow to "make good luck" and make a lot of money. After graduating from high school, the teacher asked the students to talk about their life goals. Many students talked about this and that, but Cao Renchao replied: Make a lot of money. Later, when I met my girlfriend, his promise was also: my dream is to be rich and let you live a comfortable life.
Lost his father at the age of twelve, and he relied on his mother to raise him and his younger siblings. His mother passed away in ○3.
"I am always hungry and greedy for money." As a billionaire and wealth is enough for family members to live without worries for several generations, Cao Renchao said that he still has this mentality.
Because "young poor" Mr. Cao, who is hungry for money, not only dreams of making big money, but also advocates that everyone should make money with confidence.
He hates the so-called word "developed" and "making money" and other words that many people think are full of money. He said: "Chinese people have always advocated 'saving poverty and enjoying the word', but 'greed' is the driving force for economic development." He also gave an example to prove that when he made his first 1 million yuan in 1980, his wife had already asked him to retire. If he had not continued to desire money, he might have been worse than those who rely on government assistance.
Cao Renchao also said clearly that Chinese people are a bit fake and noble, which is unnecessary. This situation is caused by public opinion is often controlled by the writers, and few Chinese writers are well-developed, so they comfort themselves by saying that too much money is because they are troubled.
"Without money, it is difficult for us to feel happy, so everyone must have a certain amount of wealth to be happy. However, after money reaches a certain level, more wealth cannot bring greater happiness, which is the fact." Cao Chaoren emphasized.
However, Cao Renchao, who loves money, also emphasized that a gentleman loves money, must take it with his own principles and be "greedy" to get what he wants. Stock trading is his "Tao" and his "So"
[Secret 1] The trend is friends
Don't go against the trend. The way to make real big money is to determine the main trend and then follow the trend. If the market trend is not good for you, then it is time to leave. When you are in a bear market and the main trend is falling, you should wait for a rebound and short instead of trying to choose its bottom. In a big bear market, you may miss the bottom several times during its decline and lose everything. The same principle applies to bull markets, always follow the ups and downs of the tide - never move against it.
[Secret 2] Pay attention to the market's reaction to prices
The secret is complementary to "don't go against the market". When you always short the market with lower pricing and make profits, those markets are also public favorites, and there has been huge buying pressure in it.When soybean prices reached $6 per bushel in 1973, public stocks were shorting their contracts, but that price was a record high. And it had already entered the resistance zone at that time. Who would have guessed that the $6 price hasn't even reached half of the later unprecedented high ($13)? Always remember that prices are not very important, but the market's response to prices is very important.
[Secret 3] The best trading is often the hardest
You must have the courage, you must trade boldly when entering. When the market trend is wrong, stop loss quickly. As soon as the relevant news is released, it always sounds most bullish at the top and most bearish at the top. This is why the technological atmosphere in the market is so important. If the news is favorable but the market stops rising, you have to ask yourself why and listen carefully to the market. The bottom is often the most difficult to understand. At the stage when those who master the inside story are accumulating positions , there may be some marks, such as reactions, opposite trends, stock market fluctuations, and false reversals. After the bottom construction is completed, many traders look for the next breakthrough to be a buyer. After all, the market has weakened for a long time, and at least the chance of an upward breakthrough has become even greater, right? But it will never appear. Those who have the inside story won't let it appear. Their goal after building the bottom is to push the market to another lower point. Perhaps the best time to buy is this most uncomfortable moment.
[Secret 4] Make a plan first, then execute
If you have made a plan and strictly abide by it, you can avoid emotional acts, which is the biggest enemy of all transactions. You need to stay calm and focused during the crazy trading hours. In order to do this, you must be fully prepared before the bell of watching the market rings. You have tasks every day, and if you decide to accept it, you have to make a profit every day, or if you don’t accept it, at least don’t let yourself lose too much. Next, you must limit trading losses that are not as your plan as you plan! This requires willpower, and it is also a quality that is equally indispensable as having a large amount of money.
In fact, what is more important is having a lot of funds. Funds are not used to hold them tightly in the market, but to achieve value-added and doubled. If you have to take a lot of risks, don't make such a transaction. Wait for the opportunity, and wait until you can set up a more compact stop loss opportunity to appear. When your risk point is touched during the trading period, if you do not have enough willpower to bear the loss, you must use a stop loss delegation. The simple method is to set a stop loss point while you start trading.
[Tip 5] Don't regret
When you clear a transaction based on reliable reasoning, never regret your decision. Continue to follow the schedule, if quitting at that time is a mistake, everything you can do is learn from it. We all make mistakes, don't let these mistakes knock you down. Otherwise, you will lose the right perspective and become timid in future transactions. How can
do this without emotion at all? Try not to think about the price you entered the market, because that is irrelevant. If you feel something is wrong with the market, don't try to be able to launch it at a break-even price after deducting commissions. If you always want to keep your profits and break even, it will cost you a greater price.
[Secret 6] Fund management is the key
You have to think about how to manage funds every day. You don't necessarily need a higher profit-to-loss ratio, but if you want to succeed, your average profit must be higher than your average loss. To do this, there must be a "big victory". You have to maximize profits on certain transactions. You need these big profits to offset the inevitable multiple losses (and these losses can be small losses). You will find that as long as you can stop the loss as soon as possible, even if the losses of each transaction are slightly accumulated, you can greatly improve the bottom line profit. This requires decisiveness, so if the trend is not conducive to you, you must have the determination to "cut off your arm". In addition, canceling or extending a stop loss entrustment is not a single number practice. You must never do this. You must know that canceling a stop loss of 99% is a wrong decision.
[Secret 7] Specializing in a certain field is often easier to succeed
Every market often has its own characteristics. Some usually build their top or bottom at the fastest speed. Some form round tops or low round shapes, some form double tops or double bottoms , and some form tops and bottoms after long-term consolidation. If you are familiar with the characteristics of the market, you can better understand the market. To be familiar with the market, you need to concentrate and rich experience. If a certain market does not match your personality, find another one and learn to stay away from those that are not suitable for you.
[Secret 8] Decisively trading
Some traders are too reckless, and as a result they overtrade, while others dare not pull the trigger, and this weakness must be corrected. You must train yourself to trade in a way that is neither expecting nor fearful. When you enter or exit a position, trade decisively without any emotion. This is often particularly important after experiencing a serious stop loss.
[Secret 9] Time-sensitive
In other words, you need to know how long it takes for each market to reach the target price. The longer the market fluctuates in one direction, the faster the buy or sell the right in the last passive stage. In most cases, an important part of a big market occurs within its last two days. Everyone undoubtedly hopes that they are still in the market.
Although we say we should be time-sensitive, we should also pay close attention to the trading volume after a long-term fluctuation in the market. Trading volumes are often larger than normal when the volatility is about to end, because this is a "distribution area" where people with insider information are unloading their positions to the public who are panicked by the news release. In fact, it is important to realize what stage the market is at. The various stages of the market often move in a similar way. Most of the time, the market at the bottom will rebound with smaller trading volume. This shows that the actual volume sold is not large, and even the previous bulls have begun to become cautious and will further deteriorate before the situation becomes better. This is when you keep an eye on moving averages, if they flash a buy signal, then immediately close the short position and turn to buy. The top is the opposite of the bottom. Few people will notice that the market is saturated, but the market may stop rising. On the first break from the top, there will be a "failure of the high point test" with small trading volume most of the time. When the market fails to break through the new high and is at a lower high, if you don't exit, this may be your last chance to liquidate.
[Secret 10] Pay attention to the market's reaction to "news"
It is very important: news itself is not important, but the market's reaction to news is very important. Undoubtedly, news can adapt to public perception, but you must be alert to the differences between news and market trends. It involves expectations and reality. It is about the difference between what is happening and what people should have about these things. If the big market comes, ordinary people will always stand in the wrong direction. Consider using the following methods to analyze the market's response to news. 1. If unfavorable news is released and the market starts to sell at a large volume, it is likely that the market will fall.
2. If the market does not respond too much to the good news, the good news may have been discounted.
3. Importance always tends to start before the news is released. When the market has started, the fundamentals begin to slowly emerge. Instead of a sharp rebound or decline in the news, it is always bullish or bearish.
4. Buying after a large number of long news releases, or selling after a short report by Christ is not a good practice. Because whether it is good or bad news, it is usually discounted in the price.
If you like the above article or want to know more about stock market investment experience and skills, you can follow the official account Yuesheng Wealth (YSLC168888), full of practical information!
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