Market instability means that when the deviation between market participants' expectations and objective facts reaches an extreme state, the reaction makes the market self-propelled to a certain extent, which makes it difficult to maintain and correct itself, and makes the market imbalance develop to a considerable extent. At this time, the market is unstable.
The unbalanced market state stems from the strong contrast between the mainstream bias formed by market expectations and objective reality. Sober investors in the market began to reflect on this bias and challenge the mainstream bias, which made the original dominant factors in the market fragile, but the inertia of the market made the original trend crazy. One of the secrets of Soros's investment success is that he is good at discovering the unstable state of the market and seizing the opportunity of ups and downs.
For example, in a case that happened in the mid-1980s, the assets of the bidding company were re-evaluated, so the bank gave more loans to other bidders, which made their bids higher and higher. Finally, the bidding soared and the market became shaky because of overvaluation. According to Soros's theory, collapse will be inevitable. The possibility of ups and downs has greatly increased, and unstable market conditions have provided opportunities for investors.
There are also many ups and downs around us. When the US soybean market rises to 1 0,000, the market forecast will reach 1 0,400 and 1 0,600. When the price development of the later bull market exceeds people's expectations, the market psychology of the bull market will appear. At this time, soybean stocks are extremely underestimated and the imaginary part of soybean prices is greatly exaggerated. In the end, there was a phenomenon of ups and downs, soybean prices plummeted and domestic importers defaulted in succession. Oil companies reshuffled their cards because of high-priced imports of soybeans.
It is also very important to grasp the timing of ups and downs, because it is often when the mainstream of the market is strongly biased, and the lethality is relatively strong. Only by adopting appropriate investment strategies and opening positions in a planned way can we make full use of the investment opportunities brought by this unstable market state.
Break through the distorted concept
Soros is a master financial theorist. He is always calm and calm, neither laughing nor frowning. He has a unique way to participate in the investment game, a special style necessary to understand the financial market and a unique insight into the market. The first secret of his success is his philosophy.
In his early years, he wanted to be a philosopher and tried to solve the most basic proposition of human beings-existence. However, he quickly came to a dramatic conclusion that it is almost impossible to understand the mysterious field of life, because first of all, people must be able to look at themselves objectively, but the problem is that people can't do this.
So he came to the conclusion that people can't get rid of the fetters of their own opinions on the objects they consider, so it is impossible for people's thinking process to obtain independent opinions to provide judgment basis or understand existence. This conclusion had a far-reaching impact on his philosophy and his observation of financial markets.
As a result, people can't penetrate the fur of things and reach the truth impartially. In other words, the knowability of absolute perfection is quite doubtful. As Soros said, when a person tries to explore his environment, what he knows cannot be regarded as knowledge.
Soros deduced a logic, and the most practical thing he can do is to pay attention to the missing and distorted understanding of everything caused by the defects of human understanding-this logic later formed the core of his financial strategy.
It is normal that people are not gods and cannot understand the market trend. However, when most investors in the market reach a * * * understanding of the influence of fundamental factors and have the intention to continue speculation, this understanding is on the verge of danger. Why does The 5th Wave fail in the market and V-shaped reversal often appear after The 5th Wave continues? With Soros's philosophy, we can easily find the answer.
Here, we don't comment on Soros's philosophy for the time being, in order to discuss the first problem that a successful investor should solve, that is, his world outlook and methodology, which will enable him to stand at a higher angle, look at the market with a broader vision and dialectical thinking, always keep a clear head, be calm and calm, and finally succeed.
Other viewpoints
Investment strategy and theory: Based on the theory of "reflection" and "ups and downs", we can go in and out at the turning point of the market, and use the "herd effect" to actively manipulate the market against the market for market speculation. What matters is the market trend.
Herd effect means that people are often influenced by the majority and follow the thoughts or behaviors of the public, also known as "herd effect". People will follow what the public agrees with, and they will not think about the meaning of events. Herd effect is the basis of appealing to popular fallacy. Herd effect is often used in economics to describe the herd mentality of economic individuals. Sheep are a very messy organization, they usually run blindly together, but once one sheep moves, other sheep will plunge into it without thinking, regardless of the possibility of wolves ahead or better grass not far away. Therefore, the "herd effect" means that everyone has herd mentality, which easily leads to blind obedience, and blind obedience often leads to fraud or failure.
Theoretical exposition: Soros's core investment theory is "reflexivity", which simply refers to an interactive influence between investors and the market. The theoretical basis is that people can't correctly understand the world, investors enter the market with "prejudice", and "prejudice" is the key to understand the dynamics of financial markets. When "mass prejudice" belongs to only a few people, its influence is still very small, but the prejudice of different investors will produce group influence in the interaction and will evolve into a dominant concept. It is the "herd effect".
Specific measures: invest a huge amount of money in the market that will be "big" and induce investors to buy enthusiastically together, thus further pushing the market price up until the price is crazy. When the market is about to collapse, take the lead in shorting, because the market is at its peak and fragile, and any sign of trouble may cause panic selling, further aggravating the decline until it collapses. Go in and out at the turning point of ups and downs and earn speculative spreads.
Rules and Taboos: There are no strict principles or laws to follow, and only intuition and offensive strategies are used to implement the "forest law" to win in one fell swoop.
The forest law is: 1, wait patiently for the opportunity to appear; 2. One-on-one attack on the weak; 3. When attacking, you must be ruthless and you must go all out; If things are not satisfactory, saving your life is the first consideration.
Views on the relationship between the general trend and individual stocks: pay attention to the market atmosphere and value the general trend more than individual stocks. It is considered that the short-term market trend is only a kind of "herd effect", which has nothing to do with the quality of individual stocks.
Views on stock market prediction: no prediction. When the market opportunity approaches, take the initiative to attack and guide the market.
Views on investment tools: there is no specific investment style and it does not follow established principles. But pay attention to the changes in the rules of the game. "Hedge fund", a borrowing method of circulating mortgage, constantly magnifies the leverage effect. With this lever, as long as we find the fulcrum, we can even incite the entire international monetary system.
Famous sayings and concepts: "Stock trading is like the forest law of the animal world, specifically attacking the weak, which is often successful." "Everyone has weaknesses. Similarly, any economic system also has weaknesses, which is often the most irresistible point. " "Herd effect is the key to the success of every speculation. If this effect does not exist or is quite weak, it is almost certain that we will be difficult to succeed. "
Other achievements: 1930 was born in Hungary, Jewish, 1968 founded the "First Eagle Fund", 1993 topped the list of the richest people on Wall Street 100, 1992 made a net profit of $2 billion,/kloc-. Past experience tells people that we can neither listen to stock critics nor economists, but to see where the money of stock gods, investment masters and rich people has gone. Because, only they are operating with real money, not on paper. At the same time, N investment practices have proved that they are still the leaders of the next bull market. Soros said: Financial markets are inherently unstable, especially international financial markets. International capital flows are ups and downs, with cows and bears. Where the market is chaotic, money can be made. Identify chaos and you may become rich; The more chaotic the situation, the bolder and more cautious investors will be.
Whether Soros makes money or loses money, everything ends in honor or disgrace. Money is not so important in his life. Making money is his job, not his purpose. This accomplishment is worth every investor's efforts to cultivate and learn. 1 The market is always wrong.
What matters is not whether your judgment is right or wrong, but how to exert your strength when you are right!
I was born poor, but I can't die of poverty. "-hanging on the wall of the office.
If your business situation is not good, then the first step is to reduce the investment, but don't recover the funds. When you reinvest, start with a small amount.
Not knowing what will happen in the future is not terrible. The terrible thing is that if something happens, I don't know how to deal with it.
If you want to succeed, you must have enough free time.
7. In the stock market, look for mutations that others have not yet realized.
8. The stock market is usually unreliable. Therefore, if you follow the fashion with others in the Wall Street area, your stock management is doomed to be very bleak.
9. Being in the market, you must be prepared to endure the pain.
10, if your investment effect is good, then follow your feelings and put all your assets into it.
1 1. People think I can't make mistakes, which is a complete misunderstanding. Frankly speaking, I have made as many mistakes in everything as others. However, my superman is that I can recognize my mistakes. This is the secret of success. The key to my insight is to realize the inherent mistakes of human thought.
12, I don't want to spend too much time with people in the stock market. I think they hate it. Being with intellectuals is much more comfortable than being with businessmen.
13, I refuse to take it as my career for many years. This is a means to an end. I'm happy to accept it-in fact, it's my life's work.
14, I have become one with the company. It lives on me, I live with it, day and night ... is my lover. I am afraid of losing it, afraid of failure and trying to avoid mistakes. This is a miserable life.
15, I totally devoted myself to this job, but it was really a very painful experience. On the one hand, whenever I make a wrong decision in the market, I have to endure great mental torture. On the other hand, I really don't want to make money as a necessary means of success. In order to find out the rules that govern my financial decision, I deny that I have succeeded.
16, world economic history is a series based on illusions and lies. The way to get wealth is to recognize its illusion, throw yourself into it, and then quit the game before the illusion is known to the public.
17, I don't think I am a businessman. I invest in other people's business, so I am a veritable critic. To some extent, you can call me the highest-paid critic in the world.
18, people's understanding of things is incomplete, which affects the integrity of things themselves and draws a view contrary to popular views. Popular prejudice and the dominant trend reinforce each other until the distance between them is large enough to cause a disaster. This is what you should pay special attention to, and it is at this time that there is likely to be a sharp rise and fall.
19, I must change people's views on me, because I don't want to be just a rich man, I have something to say, and I want the government to hear my voice.
20. The financial sector is turbulent, chaotic and disorderly. Only by distinguishing things can we be in an invincible position. If every move in the financial market is regarded as part of a certain mathematical formula, it will not work. Mathematics can't control the financial market, but psychological factors are the key to control the market. More precisely, only by grasping the instinct of the public can we control the market, that is, we must know when and how the public will gather around a stock, currency or commodity, and investors can succeed.