Supply, Demand, Cost, Risk, Reward

wind_feng 的头像

To my future children:

Everything in this world can be derived from a few simple models. One of which is called the supply and demand.

When a lot of people is chasing the same thing, the cost (or the effort to put in) becomes higher, the reward becomes slimmer and the risk of failure becomes higher, vice versa.

A wise man must have the courage to stand against the herd, look for the intrinsic value, resist the psychological effect that makes you want to join, stays patient while others are losing their heads, do not envy, do not be greedy.

In the meantime, stay optimistic. There must be something the herd is not looking at. Find out the intrinsic value, buy it when the cost is low, value is high, reward is good, risk is small. You may not find a lot of these when the herd is at their most frenzy time. But you can get a lot of these when the herd is selling in sync.

Do not lower your standard when others are desperate.
Do not buy something just because the historical price is trending upwards.
Do not conclude you have a bargain buy just because one thing is cheaper than another.

Don't forget that not buying is also an option.

This applies to everything.
I see it in career path, I see it in investment, I see it in things, I see it in business.
I see it early in my life that makes me whom I became and the path I chose.

Lastly, do not believe or deny me just because that I can, or can't show you the rewards I gain from this belief.
You must run these in your head. Take your time to think of the reasons lying beneath.
It would only stick to your head and become part of you if you know the why's.

Have a good journey ahead.

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