First of all, we should start with the big picture (as shown above). Generally speaking, I divide the wealth that investors can manage into three categories:
1. Basic category: self-occupied house, second house, cash enough to meet the following needs: necessities such as food, clothing, housing and transportation;
2. Gong Yu class: This configuration can also be called "fool class". In the current financial environment, a large number of cheap ETFs can be used. In this configuration, investors should pursue: low cost and low maintenance.
3. Wisdom: all kinds of hedge funds, Public Offering of Fund, private equity funds, angel investment, foreign exchange trading, P2P lending, etc. All fall into this category. Its characteristics are short-term and speculative, and it may make a big profit or a big loss.
Why do you want to divide it like this? Listen to me slowly.
(1) bronze grade: stock selection.
For most people, the first lesson of investment begins with stock trading in intellectual allocation. The average novice will be attracted by the following characteristics of the stock market:
1. There are thousands of stocks to choose from, and each stock has a unique story behind it, even some legends. Some stocks have soared a hundredfold, just like gold mines in the sand. If they are dug up, they will be developed.
2. There are many analytical methods to help investors choose stocks, such as fundamental analysis, technical analysis, quantitative strategy, event-driven strategy and so on. Stock selection, like beauty pageant, itself is a matter full of intellectual challenges and fun;
3. At the same time of stock selection, investors also need timing. This requires investors to always pay attention to the macroeconomic situation, such as China's GDP growth rate, the Federal Reserve's monetary policy, the financial situation of European governments and so on.
But gradually, many people will find that they are not the material for stock trading. There are many reasons for this, such as:
1) I read stocks in my spare time, and I am busy with other things when I am busy (such as children going to school at home, the elderly seeing a doctor, family traveling, busy work, etc.). ), and I don't have the energy and self-discipline to formulate an effective stock selection strategy;
2) Buffett once said: If you can't find that stupid X on the table 15 minutes after you start playing cards, then you are that stupid X. There is a problem of market effectiveness behind this, so I won't repeat it here. There are many explanations about the effectiveness of the market: what knowledge about investment and financial management can be mastered as soon as possible? -Wu Zhijian's answer
3) In fact, a lot of research shows that most investors have poor timing ability. For example, as can be seen from the above figure, most studies (research papers published in top journals) show that investors' timing behavior creates negative value for their investment returns.
Many investors have experienced many setbacks at this stage. After eating some losses, they gradually realized that there is no free lunch in this world. In the end, to get high returns, the most reliable thing is to rely on yourself.