Investmentw88 online casino, is full of unforeseen events, no one can be foolproof, and good decisions sometimes have no good results. The original decision may not be wrong, but times may change. Even the smartest and most experienced managers,InvestorErrors in judgment are inevitable. Why not stop the loss in time?
This column talked about it last timeSunk costand the concept of sunk cost trap and two famous experiments.
The reason why people fall into the trap of sunk costs and continue to invest and work in the direction of their original efforts (which has been proven to be incorrect) is because investing in a new direction is risky and they have no confidence in whether they can succeed. Take queuing as an example, someone is inAThe queue has been waiting for a long time, and it may take a long time. There are nowBTeam out, goBThis person has no idea whether the team can succeed, so he doesn’t dare to go. Therefore, the sunk cost trap is not only universal, but also robust and very stubborn.
w88 online casino investment is a major decision for an individual, and major decisions often involve a series of decisions. Therefore, investors are more susceptible to the sunk cost trap when investing in stocks. Some people often like to stare at the trapped w88 online casino, blindly every day regardless of the situationCover up positionTrying to spread costs. From a rational operational perspective, this is not the optimal choice. If a w88 online casino has been trapped, whether it should cover its position, cut its losses, or stay put depends on whether it can rise. Strict operational disciplines are required to cover positions: if the w88 online casino falls because it was mistakenly sold, or its value is underestimated, or it encounters special circumstances and the market plummets and it is not sold in time, only if it is determined that there is a high probability that it will rise in the future, then the position can be covered. If it cannot rise or is in a downward channel, why should we cover our position? Why not stop the loss and get out? Even in a bull market, we should look for other stocks that are more likely to rise than the trapped w88 online casino, rather than just focusing on this trapped w88 online casino. Of course, people may be very familiar with this w88 online casino, but is it too imprudent to dare to enter the w88 online casino market just because they are familiar with this w88 online casino?
Why do people often blindly cover their positions after being locked up? First, I want to spread the cost. However, w88 online casino investment is for profit rather than amortization of costs. If it is not profitable, what is the point of lowering the cost? Second, prove the correctness of the purchase decision. Assume that investor A’s principal2010,000, in w88 online casino price10Bought half a position in Yuanshi110,000 sharesA,Now due to market conditions and other reasons (of course there are also reasons for wrong judgment), the w88 online casino price has fallen to one share7Yuan. Now there are1010,000 principal can be used to buy other stocks. Investor A’s first thought is often to cover his position regardless of whether the w88 online casino rises5000shares, holding cost from per share10Down to9yuan, as long as the w88 online casino can rise to9If it’s more than 14542_14562|yuan, you’re out of trouble. Seems like this justifies buying thenAis correct. According to these people's estimates, if the position is not covered, the cost of this w88 online casino is very high and will rise to10You can get rid of the trap only if you make more than 1 yuan, but it will take longer to prove that this choice is correct. In fact, this is self-deception. If there are other stocksBThe rising trend is better, cover your position5000share this3.510,000 principal can be purchasedBIn order to make as much profit as possible.
w88 online casino commentators often give this advice when trapped investors ask for advice on how to get out of the trap:“Wait for the stocks held to fall to cover the position to spread the cost”, this takes advantage of the characteristics of investors who are susceptible to the sunk cost trap. The key is, so what if the cost is reduced? If the w88 online casino price trend is downward, the result of cost amortization can only be greater losses.
What is similar to blindly covering positions is blind additional investment. Some investors originally decided to invest only in the w88 online casino market30millions of capital, but once they lose money and the market situation is unclear, they will eagerly invest more in order to strive for profits. Their psychology is firmly locked in sunk costs.
In w88 online casino investment practice, there is indeed an investment strategy called buying in batches. When you are optimistic about a certain w88 online casino, first buy one-tenth of the position, and every time the w88 online casino falls10%, cover position10%, until it bottoms out, when the cost of holding shares is very low, waiting for a rebound. But this is exactly a huge operational misunderstanding. For example, an investor has1010,000 principal, after being optimistic about a certain w88 online casino, first use10Trial purchase at yuan price1000w88 online casino, fell9yuan cover position1000w88 online casino, fell8Yuan (not10%, but for the convenience of calculation, integers are used, the same below) to cover positions1000Stocks, and so on, fall to1Yuanshi, then cover the position1000share, at this time, the cost is5.510,000,Total110,000 shares, cost price per share5.5. But you have to calculate it carefully, the w88 online casino will start from1Yuan will rise to5.5yuan, it is too difficult, ignore it and it will only increase every time10%’s daily limit limit, needs to increase4.5times, while in the w88 online casino market, stocks rose4It’s too difficult to do more than twice. Additionally, if initially ending with10Buy at yuan price1000shares, cost1Ten thousand yuan, assuming this1000The w88 online casino did not stop the loss in time, when the w88 online casino price fell1Yuanshi, if you don’t cover your position, you will lose money at best9000Yuan. If we follow the practice of covering positions in batches during the decline, the cost is5.5Ten thousand, but the market value is only1Ten thousand yuan, isn’t that a loss4.5Ten thousand? It can be seen that under the influence of the sunk cost trap, blindly covering positions in batches will not only cause greater losses, but also cause irreparable losses. It should be noted that buying in batches to cover positions is conditional: the w88 online casino has been consolidating at the bottom for a long time and has shown signs of starting.
Investing in stocks is full of unforeseen events, and even the smartest and most experienced managers and investors are bound to make errors in judgment. No one can be foolproof. Therefore, investors need to work hard to ignore any sunk costs, whether psychological or financial, and cut off losses promptly. Otherwise, it will disrupt the judgment of the market and the selection of new investment targets. Go to people who had nothing to do with the original decision and therefore cannot be held responsible for it, and listen to their opinions.
Why do you feel uncomfortable admitting your original mistakes? Will admitting a mistake hurt your self-esteem? But if you blindly cover your position and lose more money, won't your self-esteem be hurt even more? Even if the original decision was good, it may not be good now. The original decision may not be wrong, but times have changed and you have to give up.
Listen to WoLun·What Buffett said:“When you find yourself in a hole, the best thing you can do is stop digging.”
(The author is a professor at the w88 casino of Business, w88 casino, Beijing)
Original link:
http://money.163.com/16/1024/04/C448KGO2002580S6.html
