Random Walk Newsletter, Issue 23#
Observations & Insights#
Life is a Picture, But You Live in a Pixel
Recently, I read Chao Chen's NewsLetter, which mentioned a quote "Life is a Picture, But You Live in a Pixel." This quote reminded me of a similar expression in "The Courage to Be Disliked," where your life is not a straight line, but a series of moments, and each moment is your current life.
People often say that they want a certain kind of life, and whether this wish can be fulfilled depends on what you are doing now. In other words, if you have ideas and goals, go for it. We cannot determine the final outcome, but often everything falls into place.
Changing Perspectives
From James Clear's NewsLetter, I read two issues together and found some simple mindset shifts:
"Simple mindset shifts:
- I'm not hurt, I'm healing.
- I'm not losing, I'm learning.
- I was not rejected, I was redirected.
Negative things happen. Negative mindsets make them harder."
The examples above encourage us to approach our experiences with a positive mindset, especially when facing negative situations. It's already difficult, and if we add negative thoughts, it will only make our lives more challenging.
Here's another example:
Once upon a time, a tourist passed by three craftsmen and casually asked what they were doing. The first craftsman said, "I'm laying bricks." The second craftsman said, "I'm building this wall." The third craftsman paused and proudly replied, "I'm renovating this temple."
It's all about perspective. Even if we are doing something seemingly insignificant, our mindset will determine where we are heading and what achievements we will ultimately attain.
Motivation for Actions
Another insight from Chao Chen's NewsLetter.
We all have underlying motivations for our actions, which we may not always admit. So, we may find other reasons to cover them up. But there are two basic motivations: guilt and reputation.
We do things either because they make us feel prestigious or because of guilt, which leads us to do or not do certain things.
However, both of these motivations are not good reasons for our actions.
We often hear the phrase "never forget your original intention," which mostly refers to interests, hobbies, and non-utilitarian purposes. But reality often leads us in a different direction.
Audiobooks & Books#
Patience as Capital
I have listened to many investment-related books before, and some experienced professionals advise ordinary people to reduce their trading frequency. Frequent buying and selling are the biggest obstacles to making money.
It sounds easy to hold on, but it is actually very difficult. This book provides some data to explain why.
The returns of a certain fund managed by a fund manager ranked relatively high in the industry. The net asset value increased from 1 to over 4 during a 5-year statistical period, more than doubling. However, according to his statistics, the vast majority of investors cannot wait that long. 37% of investors sell within less than 90 days, while only 0.4% of investors can hold his fund for more than 5 years.
Indeed, 5 years is a long time, and it is not easy to persevere. But if you expect to double your investment in just a few months, that would be even more unrealistic. What does this 0.4% mean? You will understand by comparing it to the following example.
In 2021, in Shandong Province, a province with a high number of college entrance examination candidates in China, only about 1.6% of the candidates were admitted to "985" universities. Therefore, holding a fund for more than 5 years may be several times more difficult than a student being admitted to a "985" university.
Persistence is something that seems to have no shortcuts. It simply means sticking to it, without any other way. In my understanding, short-term gains are mostly due to luck. If you can achieve it once, be grateful. On the other hand, long-term persistence can minimize the risks of fluctuations.
Therefore, Nassim Nicholas Taleb previously suggested that the proportion of high-risk investments should not exceed 20%. Those who can go far are the ones who have the capital to stay at the table, so try to stay at the table for a long time.
That's all for this issue of the Newsletter. If you have any questions, please feel free to email me. Thank you for reading.