The Self-Cultivation of Leeks (3)
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翻译：John Gordan （王渊源，微信公共账号：清晨朗读会）
2. Where the fate of “leeks” begins…
“Leeks” are “leeks” mostly due to the one common reason:
As soon as they enter the market the “buy, buy, buy”!
In early March of 2011, when I saw the word Bitcoin on Twitter for the first time, I was shocked by it nearly every day… When I saw the first news headline, it said that in February its price had just exceed 1 USD! Then, after just a few days, the price was already 1.50… By the time I had my account set up and started to take action in April, it was already over 4 dollars… Then I started to buy, buy, buy, and by the time I completed the purchase of my first 2,100 coins, the average price had reached 6 USD… and it was still rising! Then, by the beginning of June, it reached a peak of 32 USD! I’d only had it in my hands for that long! Just a little more than a month, and I had more than 5x returns!
So, just like this, I became one of the “leeks” that people so often talk about. Why? It took more than 20 months for those “leeks” who “bought the peak”, including myself, to finally “cut our losses”. In the meantime, there was a vicious downturn, and at the lowest point the price of Bitcoin even dropped below 1 USD, which for those “leeks” who bought bitcoin at the peak was a drop of 97%!
Yes! I was an individual investor. I bought, bought, bought as soon as I entered the market, and then my assets were continually dropping, so I was a “leek”.
The market has some exasperating laws, such as:
As soon as you need to use cash, the market will fall!
It seems like there is no logic to support this, so you don’t have to believe it, but you will definitely experience the magic of this law.
For all novices, this law never changes:
- As soon as you buy, the price will fall;
- As soon as you sell, the price will rise…
It’s simply infuriating!
So why does this “bizarre” situation occur? Because the fundamental reason for the end to a certain set of market conditions is “new capital drying up”. In other words, when middle-aged women who sell tea eggs on the street start talking about stocks, the stock market’s “new capital” is on the verge of drying up… Think about it! “When even you, who is not related in any way, know about it and want to rush in and make money”, then the market conditions have probably reached their end, right?
So, in May of 2013, when Li Xiaolai, who was an outsider not related in any way, learned about Bitcoin from the news and started to continuously buy, that set of bitcoin market conditions had reached its end. Reached! Its! End! So, just one month later, it entered a long bear market.
So, for novices, there are two sentences that are very important. The first sentence is a statement that is always correct. The second sentence is a suggestion that all veterans wish someone had given them way back then (if only someone had taught it to me back then!):
- If even you start to enter the market, the bull market is about to end…
- You should first observe, and buy nothing… Once the bear market arrives, wait until everyone starts calling each other names, and then start to buy, buy, buy!
Actually, making mistakes as soon as you start is not a rare occurrence. To the contrary, it’s very common! Think about it, even our lives aren’t very serious… Cui Jian made fun of this in a song:
(Suddenly an opportunity arose, empty without a purpose) — Just like when the girl gave birth to us, we didn’t say we agreed…
Our lives are full of absurdity, so clearly recognizing that we live in an absurd world is extremely practical and helpful for our healthy development.