Random Walk Newsletter, Issue 23#
Observations & Insights#
Life is a Picture, But You Live in a Pixel
Recently, I read a NewsLetter by Wei Chen, which mentioned the phrase "Life is a Picture, But You Live in a Pixel." This reminded me of a similar expression in "The Courage to Be Disliked," where your life is not a straight line but a series of moments, each representing the present.
People often say they want a certain kind of life, and whether that wish comes true depends on what you are currently doing. In other words, if you have ideas and goals, go for them. We cannot determine the final outcome, but often everything falls into place.
Changing Perspectives
From James Clear's NewsLetter, I read two issues together:
"Simple mindset shifts:
- I'm not hurt, I'm healing.
- I'm not losing, I'm learning.
- I was not rejected, I was redirected.
Negative things happen. Negative mindsets make them harder."
The examples above encourage us to approach our experiences with a positive mindset, especially when facing negative situations. It is already difficult in itself, and adding negative thoughts will only make it more challenging.
Here's another example:
Once, a tourist passed by three craftsmen and casually asked what they were doing. The first craftsman said, "I'm laying bricks." The second craftsman said, "I'm building this wall." The third craftsman paused and proudly replied, "I'm renovating this temple."
It's all about perspective. Even if you are doing something seemingly insignificant, different ways of thinking will determine where we are headed and what achievements we will ultimately attain.
Motivation for Action
Also from Wei Chen's NewsLetter, this gave me some insights.
We all have underlying motivations for our actions, which we may sometimes find difficult to admit, so we look for other reasons to cover them up. But it usually boils down to two things: guilt and reputation.
We do things either because they make us feel prestigious or because of guilt, which leads us to do or not do certain things.
However, both of these are terrible reasons for action.
We often hear the phrase "never forget your original intention," which mostly refers to interests, hobbies, and non-utilitarian purposes. But reality often leads us in a different direction in the end.
Audiobooks & Books#
Patience as Capital
I have previously read many investment-related books, and some seasoned professionals advise ordinary people to reduce their trading frequency as it is the biggest obstacle to making money.
It sounds easy to hold on, but it is actually very difficult. This book provides some data to explain why.
There is a fund manager whose fund performance ranks relatively high in the industry. Over a 5-year period, the net asset value increased from 1 to over 4, more than doubling. However, according to his statistics, the majority of investors cannot wait that long. 37% of investors sell within less than 90 days, while only 0.4% of investors can hold his fund for more than 5 years.
Indeed, 5 years is a long time, and it is not easy to persevere. But if you expect to double your investment in just a few months, that would be even more unrealistic. What does this 0.4% mean? Just take a look at the following comparison.
In 2021, in Shandong Province, a major province for the college entrance examination in China, the proportion of students who were admitted to "985" universities was about 1.6% of all candidates that year. So, holding a fund for more than 5 years may be even more difficult than a student getting into a "985" university by several times.
Persistence, it seems, has no shortcuts. It simply means sticking to it. In my understanding, short-term returns are mostly influenced by luck. If you can achieve it once, be grateful. But long-term persistence can minimize the risks of fluctuations.
Therefore, Nassim Nicholas Taleb previously suggested that the proportion of high-risk investments should not exceed 20%. Those who can go far are the ones who have capital left on the table, so try to stay at the table for a long time.
That concludes the content of this issue of the Newsletter. If you have any questions, please feel free to email me. Thank you for reading.