Looking back on my years of stock trading experience, although I haven’t made a lot of money, I haven’t lost too much either. The biggest problem lies in the unreasonable capital flow planning and unstable mindset. Currently, my main source of income is work, earning a fixed salary through daily labor, and my tolerance for financial fluctuations still remains at the level of bonds and bank deposits. However, people are greedy; if you buy too little, you won’t make money even when prices rise; if you buy too much, you’ll lose money when they fall. At this point, a stable mindset becomes particularly important, as it can help us steady our ship of wealth.

Writing an article: The issue of mentality in stock investment and wealth management

Historical Loss Cases

Besides dabbling in small-cap and newly listed stocks when I first started, the subsequent investments have mostly been in blue-chip large-cap stocks: Industrial Bank, China Unicom, Hengan Electronics, ZTE, and various large-cap index funds

They talk about matching bank three-year fixed deposits in terms of annualized returns, but in reality, it’s still greed for more, from rushing to increase holdings to eventually experiencing a cash flow shortage. Purchasing insurance, buying a house, and getting married are major drains on funds; the overall planning didn’t leave enough room for cash flow, leading to insufficient funds later on.

Buying blue-chip stocks is aligning yourself with “Old Money.”

• When Evergrande ran into problems, bank stocks plummeted, allowing for a successful grasp of the selling pressure. However, this demonstrates a flawed understanding of the broader economy; real estate’s share in the national economy is too large, involving too many things to allow for a hard landing. Subsequently, the stock market continued its decline, and dividend stocks like Industrial Bank rose steadily for about two years.
• At the initial stage of the trade war, ZTE suffered a major blow, with its stock price plummeting significantly, but it gradually recovered afterward
• Hang Seng Electronics used to be part of a larger group, and the stock price dropped significantly after Ant Financial spun off. However, this stock is controlled by market makers, and it can surge several times each year. With reasonable position control, losses will be minimal.

Greed: The “Monster” That Devours Reason

Greed is the most common problem in stock trading psychology. When stock prices rise steadily and investors’ paper profits continue to increase, greed quietly takes root. Many people, even when the price has already reached a high level, still fantasize about it continuing to rise, eager to obtain more gains, and are reluctant to take profits. They are blinded by greed, forgetting the laws of the market and the existence of risk. For example, in some speculative hype on popular themes, some investors see prices doubling or even multiplying several times in the short term and become deeply involved, continuously increasing their holdings, hoping to be the last winner. However, the market will not remain bullish forever; when the bubble bursts and prices plummet, these greed-driven investors often suffer heavy losses. Greed robs them of their ability to analyze and make decisions rationally, turning them into “gamblers” in the stock market rather than wise investors.

Fear: Shackles that bind your hands and feet

Fear is the opposite of greed. Fear is equally destructive in the stock market. When market conditions turn sharply downward and stock prices fall significantly, investors are easily caught up in panic. This fear causes them to lose confidence in the market, and even if they hold fundamentally sound stocks, they rush to sell at a loss out of fear of further losses. For example, during the global financial crisis, the share prices of many high-quality blue-chip stocks also fell sharply with the broader market. Some investors were overwhelmed by fear, failing to see the long-term value of these companies and selling their shares at extremely low prices, resulting in missed opportunities for substantial returns from subsequent market rebounds and company performance growth. Fear not only causes investors to suffer losses in the short term but can also leave them with a lasting psychological shadow, making them hesitant to re-enter the market and thus missing out on investment opportunities.

Blindly following trends: A “fog” that obscures direction

In stock trading and wealth management, blindly following the crowd is another psychological trap that investors easily fall into. In this era of information explosion, various investment suggestions, market rumors, and hot news abound. Many investors lack independent thinking and judgment skills, blindly following others’ actions. They see those around them making money by buying a certain stock and impulsively follow suit; they hear so-called “insider information” and invest all their savings. This blind following behavior ignores the research and analysis of the stocks themselves, leaving investors like ships lost in fog, losing their direction. For example, some concept stocks can indeed bring short-term gains to those who follow the trend at the beginning of market hype, but as the hype fades, the stock price plummets, and those who are uninformed and blindly following become “catchers” (those who buy after a decline). They fail to realize that each investor has different risk tolerance, investment goals, and investment horizons; an investment strategy suitable for others may not be suitable for themselves.

Overconfidence: A Hidden “Shoal”

Overconfidence is also a problem that cannot be ignored in the mindset of stock trading and wealth management. Some investors, after achieving several investment successes, begin to become inflated with pride, believing they have mastered the laws of the market and can accurately predict stock price movements. They ignore the complexity and uncertainty of the market, overtrade, blindly expand their investments, and even use high leverage for speculation. However, the market is unpredictable, and investors who are overly confident often suffer heavy losses in an unexpected market fluctuation. For example, some inexperienced but initially successful investors believe they have professional investment capabilities and begin to frequently buy and sell stocks, constantly increasing their investment amounts. When systemic risks appear or individual stocks experience sudden negative news, they fail to stop their losses in time due to overconfidence, leading to a significant reduction in capital. Overconfidence is like hidden reefs beneath the surface of the sea—seemingly calm and harmless, but capable of causing an investor’s ship of fortune to run aground and sink unexpectedly.

How to adjust your mindset and invest steadily

• Establish a correct investment philosophy: Investors should understand that stock trading and wealth management are for achieving long-term, stable asset appreciation, not getting rich quick. By learning about investment knowledge, understanding market rules, and establishing the principles of value investing and long-term investing, investors can avoid being swayed by short-term gains and market sentiment. For example, thoroughly research a company’s fundamentals, focusing on factors such as its profitability, industry position, and management team, to select stocks with long-term investment value rather than blindly chasing short-term trends.
• Develop a sound investment plan: Based on your financial situation, risk tolerance, and investment goals, formulate a scientific and reasonable investment plan. Clearly define key elements such as investment amount, investment horizon, expected return, and stop-loss point, and strictly adhere to the plan. This can help avoid impulsive decisions driven by emotional fluctuations during the investment process. For example, limit the investment proportion of each stock to a certain percentage of your total assets, take profits when the price rises to meet your expected return, and cut losses decisively when it reaches the stop-loss point.
• Control your emotions and stay calm: When facing market fluctuations, learn to control your emotions and remain calm and rational. You can relieve investment pressure through methods such as diverting attention, exercising, and communicating with others, avoiding negative emotional influences on investment decisions. When the market experiences significant volatility, first calmly analyze the reasons, combine your own investment strategy and stock fundamentals, and make a rational judgment instead of blindly following the trend or panicking to sell.
• Continuous learning and reflection: The stock market is constantly evolving, so investors need to continuously learn new investment knowledge and skills, pay attention to macroeconomic conditions, industry trends, and company information, and constantly improve their investment level. At the same time, they should regularly reflect on their own investment behavior, summarize experiences and lessons, identify problems in mindset and decision-making, and make timely adjustments and improvements. For example, after each investment, review the entire investment process, analyze the reasons for success and failure, and think about how to avoid similar mistakes in future investments.

Investing in stocks and managing finances is a long and challenging journey, where mindset plays a crucial role. Only by maintaining a rational, calm, humble, and independent thinking approach can investors navigate the ups and downs of the stock market steadily and achieve wealth preservation and appreciation. Investors should regard cultivating their mindset as a mandatory course in the investment process, using a positive attitude to steer their financial ship and ensure long-term success on the path of stock investing.