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When it comes to investing, only by getting yourself settled first can you have any hope of success.

As the investment guru Graham repeatedly advised: "Dear investors, the problem is not our destiny, nor has it to do with our stocks, but with ourselves...". Qiu Guogen, founder and chief investment officer of Chongyang Investment, once said: "Investment is a game against humanity."

The way of thinking and mental cultivation of investors are very different from ordinary people. If you cannot master the same investment cognitive system, then even if you have a lot of knowledge, you are just a "knowledgeable novice". It is inevitable to become a "leek". If you want to successfully accumulate wealth through investing, you first need to correct your misconceptions.

"Wealth is the realization of cognition" can help you understand yourself correctly. Before learning how to make money, you must first learn how to lose less money.

The following is the author's autobiography.

21 Reading

To a large extent, this is a "collision" work. Before joining Chongyang Investment, I had 10 years of experience in the front-line media industry and considered myself a "somewhat knowledgeable person." However, after coming to the investment world, I received a considerable impact, which mainly came from the "thinking" and "cognition" levels. I found that the way investors think and the mental cultivation behind them are obviously different from ordinary people. At the same time, I finally understood the reason why I always got stuck investing in stocks before. In general, whether you are a knowledgeable connoisseur or an expert in a certain field, you cannot ensure successful investment, because knowledge is knowledge, investment knowledge is investment knowledge, and the two cannot be directly equated. Investment has its own set of cognitive systems. If you do not master this system, then you are a "knowledgeable novice" and you will inevitably become a "leek".

Mr. Qiu Guogen, founder and chief investment officer of Chongyang Investment, said: "Investment is a game against human nature." If you want to successfully accumulate wealth through investment, you must transform yourself, and the core one is transformation. own cognition.

Fortunately, on a top professional platform like Chongyang Investment, I was able to re-examine and construct my own understanding of investment. This aspect is through reading a large number of classic works by investment masters. I still remember the first time I read Charlie Munger's "Poor Charlie's Almanac" in 2014. It was a rare enlightening reading experience, which made me realize that I can look at problems from such different angles. Therefore, the writing of this book can be said to be inspired by Charlie Munger to a large extent. Later I read Warren Buffett, Howard Marks, Peter Lynch, John Templeton, Anthony Burton, George Soros, Nassim Nicholas Taleb, Jesse Livermore The books or articles written by Er, Burton Malkiel and others have all further deepened my curiosity and inquiring mind about investment cognition.

A more important source of my creative inspiration is that in Chongyang Investment, I can verify the theories of investment masters by personally observing and participating in the investment practice of the team, so as to understand what they say and what they say. It is not just words on paper, but valuable wisdom that is truly beneficial to wealth creation and life. In fact, Mr. Qiu Guogen is an outstanding investor with obvious contrarian thinking characteristics. He never blindly follows the crowd and always maintains independent thinking, so he is able to achieve rare investment results in the industry.

The creation of this book also benefited from my cross-border experience. I found that no matter ancient or modern, Chinese or foreign, top wisdom is connected. For example, the wisdom of Warren Buffett and Charlie Munger have many similarities with the thoughts of Lao Tzu, the originator of Chinese Taoism, so I created a series of columns. "Laozi Dialogues with Buffett", this virtual dialogue across time and space has been loved by many readers in the investment circle.

On this basis, I analyzed some of the core cognitive principles related to investment cognition, and gradually formed a cognitive system with some cross-border characteristics. I have benefited a lot from this process of sorting out, and it has allowed me to gradually move from a "knowledgeable novice" to a professional. Then, I also hope to share this cognitive system with more friends who are interested in investment and financial management. This is the origin of this book.

01 Investment is a game against humanity

So what is the core idea of ??this book? Let me give a brief introduction first.

Investment is a combination of science and art. The science of investment refers to aspects that can be "calculated" such as macroeconomic analysis and judgment, industry and corporate fundamental research and valuation, while the art of investment is about cognition. And character. These two aspects are equally important, but in investment practice, many people pay more attention to the scientific aspect and ignore the artistic aspect, resulting in some tragedies that should not happen.

Searching investment history, we can easily see that successful investors are often masters of cognition and mentality, such as Warren Buffett, Charlie Munger, John Templeton, etc. Investors who were once brilliant but later failed were often defeated not by science, but by cognition, such as the famous Wall Street stock operator Jesse Livermore and Long-term Capital Management, which is composed of multiple Nobel Prize winners. company. Even scientific giants like Newton suffered huge losses in stock investments, and finally uttered the famous sigh: "I can calculate the trajectory of celestial bodies, but it is difficult to predict the madness of human nature!"

We Everyone has cognitive and mental flaws, which are determined by the process of our genetic evolution. The first law of evolution is the transmission of genes. In order to accomplish this purpose, evolution has created many "reward" mechanisms for humans, which are embodied in various sensory pleasures. In layman's terms, they are the so-called "seven emotions and six desires". These sensual happiness are very short-lived. Precisely because happiness is fleeting, we are never satisfied. Once excessive greed becomes "greed".

These "seven emotions and six desires" are not only short-lived, but also very likely to be "false". Scientific experiments have found that both monkeys and humans feel more pleasure when they anticipate eating their favorite food than when they actually eat it. This expectation is in a sense an "illusion." In fact, anxiety, despair, hatred, greed... these emotions all have the element of "illusion", and even the "self" we think about may be an "illusion". These “illusions” can be understood as some kind of cognitive loopholes created by natural selection in humans in order to achieve genetic security and productivity. However, this does not mean that the "seven emotions and six desires" should be abandoned. "Why should we live in this world without being ruthless?" Appropriate emotions and controlled desires can make the process of life more colorful. It's just that in a field that requires a high degree of rationality like investment, we need to take a deeper look at emotions and desires.

Before Watt invented the steam engine, human civilization evolved very slowly, which led to the solidification of our genetic structure and the very slow iteration of our cognition. However, since entering modern times, human civilization has experienced explosive growth at the level of science and artifacts, and this change is far ahead of the evolution of our genes.

At the same time, natural selection is not the only path for human evolution. In addition to natural selection, there is also social selection. Today, with highly developed civilization, we have long since gotten rid of the dilemma of survival and reproduction that our ancestors faced, and the weight of social choices is getting higher and higher. Social choice requires us to transcend our animal nature as a tool for gene transmission, and become less selfish, narrow-minded, short-sighted, and less greedy for short-term pleasure, but more willing to cooperate, rational, tolerant, and more willing to pursue long-term happiness, that is, Become more "human", and some people can even transcend human nature and show some kind of "divineness".

Our cognition formed in the process of natural selection is obviously seriously mismatched with the modern environment in which we live. In a sense, it can be said that although our bodies are already in the 21st century, our brains Still stuck in a jungle society, this undoubtedly greatly hinders us in modern times from achieving real success and achieving long-term happiness.

The stock market is an amplifier of human nature. Whether it is greed or fear, various cognitive defects are fully displayed in it. This is undoubtedly the enemy of successful investment.

Charlie Munger once said: "Even if you hold the sharpest knife in the world, if your own character is flawed, it will become a tool of self-harm... If you have the most calculating If you still can't overcome the entanglement of desire, you will be doomed to pieces under the weight of huge wealth."

Munger is good at reverse thinking. His philosophy is that if people want to invest. To succeed, the first thing to think about is how to avoid investment failure. Clearly recognizing the inherent flaws of cognition and then establishing scientifically correct cognition is the prerequisite for avoiding investment failure.

Therefore, wealth is the realization of cognition, and losing money is the fall of the mind.

02 Absorb the wisdom of success and get through the fog of cognition

The 12 chapters in this book are actually the common mental journeys of those who fail in stock trading. Many non-professional investor friends may have experienced such five stages of stock trading.

In this process, investors lost both money and time, but they didn’t know why. In fact, in this process, it is one cognitive misunderstanding after another that makes you fall into the trap.

In the first stage, overconfidence, greed and jealousy, and eagerness for success force you to constantly chase higher prices; in the second stage, the endowment effect and anchoring effect prevent you from being flexible; in the third stage , the fourth stage, loss aversion, deprivation super reaction and inaction syndrome force you to be trapped and trapped step by step; in the fifth stage, excessive pessimism becomes the straw that breaks the camel's back, forcing you to sell out.

Throughout the entire process, linear thinking, blind following, and story thinking add fuel to the fire, fueling your greed and fear, and binding you in a vicious cycle of chasing ups and downs. Not only that, the stock market is also a world where "black swans" are flying all over the sky, and you may step on a thunderstorm if you are not careful.

Finally, trading procedures and life procedures are actually closely related. Even if you achieve wealth freedom through investment, you may still suffer from it if your wealth is not matched.

Therefore, buying and selling a stock may seem simple, but there are so many misunderstandings waiting for you. These cognitive misunderstandings are not complicated to say, but they have very deep evolutionary roots behind them, so it is not easy to change them. As the saying goes, "A country is easy to change, but a person's nature is hard to change."

This book hopes to summarize the lessons of failure in the history of investment and business, and to draw successful wisdom from successful investors, so as to lead investors through the fog of cognition. To deal with the 12 cognitive misunderstandings, this book gives 12 solutions:

Borrowing the concepts of Professor Zhu Ning, an expert in behavioral finance and deputy dean of Shanghai Advanced Institute of Finance, Shanghai Jiao Tong University, the 12 cognitive misunderstandings are as follows: Know that misunderstandings are "investors' enemies", and 12 solutions to solve them are "investors' friends".

Of course, these 12 cognitive secrets are far from all investment wisdom, but they may be helpful in solving some of the most common misunderstandings. I hope this book’s popularization of common sense about investment can help friends avoid making some of the most elementary mistakes on the road to wealth accumulation.

03 Investment Question: Laozi Dialogues with Buffett

I interspersed the 12 contents of "Laozi Dialogues with Buffett" between the main texts to form a supplementary line and communicate with him in a relaxed way. 12 kinds of cognition form a kind of response.

It is a wonderful experience to read Laozi and Buffett at the same time. It makes people feel that the top wisdom is so similar.

Although there is an age difference of about 2,500 years between Lao Tzu, Buffett, and Munger, and they work in completely different fields - librarians and investors, the principles they preach are highly similar, and there is no barrier of time and space.

If you don’t believe it, let’s make a list first.