Recently, I have been watching "Old Uncle"; the episode about stamp trading should serve as a warning for friends who are interested in financial investments.

No matter what kind of goods and securities with free trading and investment attributes, it fundamentally revolves around the relationship of supply and demand, and is also about human nature.

I have experienced the kind of thinking where my uncle stubbornly holds onto positions, adds to losing trades, and tries to recover losses in the face of market trends in 2018 and 2020, and unfortunately, both times I left the market with huge losses.

It wasn't until I truly experienced pain that I understood the wisdom of Mao Zedong's thought, which is what my aunt said: "As long as there are people," meaning "If people remain, even if land is lost, both people and land will persist; if land remains but people are lost, both people and land will be lost."

In the world of trading and investing, it has never been about who earns more or how big one's "land" is. Earning a lot indeed attracts attention and shines bright, just like when looking at assets, people often anchor to the historical highest price. Many will anchor their identity IP to their life’s most glorious moments due to the anchoring effect. This leads to an inability to stop losses and reluctance to take losses, but the market can never be defeated, and you will eventually make mistakes. No matter how glorious it was before, once you make a mistake, it can all be wiped out to zero, which is meaningless; in the end, you can only lose everything. And this is the essence of the true investment and trading world: investing is a marathon, not a sprint. Unless you can sprint a hundred meters, break the record, and never leave the field again, but is that really possible? Investing is an infinite game. When AI replaces labor-intensive jobs in the future, it seems that what remains for humanity is only selling emotional value, companionship services, and investment trading. What truly determines the upper limit of life is ability, while what determines the lower limit is flaws and the ability to stop losses—this is both the longboard theory and the barrel theory.

So I often emphasize: "A correct position is also wrong, and what is right is also wrong; an incorrect stop loss is also right, and what is wrong is also right." The reasoning lies here.

Only by experiencing truly large losses and achieving great enlightenment can one break free from the cycle of [highlights - liquidation - highlights - liquidation···+∞]. The key to cutting this cycle is to stop the losses and defend well: let profits run at the right time, and cut positions without hesitation to save oneself when wrong.

The tragedy of the old uncle is the conventional life of an ordinary person who has high aspirations but low abilities. It all started when his daughter said she wanted to buy a Xia Li, which opened his Pandora's box. But as long as he manages risk well, controls drawdowns, does not get greedy or angry, takes profits in batches at high positions, and cuts off any possibility of drawdowns leading to liquidation.

Don't bet against Schrödinger's cat; as long as there is probability, an open complex giant system will inevitably let all tragedies happen. Your tragedy is precisely the comedy of those who go with the flow.

This is also Murphy's Law, and it is the way of heaven.