# Investment Psychology Essential Course: Core Checklist

## I. Market Sentiment Cycle: From FOMO to Panic
**Core Manifestation:** Anxiety-driven chasing during upswings (FOMO), panic selling during downturns, trapped in "buying high, selling low" cycle
**Root Cause:** Linear thinking—mistaking short-term price action for long-term trends
**Key to Breaking Through:** Understand market cycles, practice Buffett's philosophy of "being greedy when others are fearful, and fearful when others are greedy"

1. **Loss Aversion**
* "As long as I don't sell, it's not a real loss" leads to holding losing positions
* Sunk cost fallacy: investing more to break even
* Pain of stop-loss far exceeds pleasure of taking profits

2. **Anchoring Bias**
* Anchored to historical highs, believing "it will always come back"
* Deceived by "original price vs. current price" comparisons
* Over-relying on past performance to predict future results

3. **Herd Mentality**
* Abandoning independent judgment, blindly following the crowd
* Becoming a "bag holder" at bull market peaks, a "panic seller" at bear market lows
* From tulip mania to cryptocurrency, history repeats itself

## III. Five-Step System for Building Rational Decision-Making

1. **Establish a Valuation Anchor**
* Use metrics like PE, PB to judge asset value
* Stay vigilant when valuations are high, deploy capital at valuation bottoms
* Blind price test: ignore historical prices, focus on intrinsic value

2. **Set Investment Discipline**
* Pre-set profit-taking and stop-loss levels, execute strictly
* Stop struggling with "should I sell?"—execute automatically by rules
* Beware of "transcendence illusion"—thinking you can beat the system

3. **Embrace Probabilistic Thinking**
* Every trade is a random event
* Evaluate your system over a cycle of 20-50 trades
* Stop obsessing over "predicting right," focus on "executing right"

4. **Reshape Post-Trade Review Thinking**
* From "mistake journal" to "success journal": process matters more than results
* Profits might come from luck; losses might be from low-probability events
* Treat every investment experience equally

5. **Cultivate Patience**
* Overcome the natural tendency toward impatience
* Data proves: longer holding periods yield higher probability of profit
* Extend your time horizon—peaks are just small waves in long-term trends

## IV. Core Principles
* **Markets never change because human nature is eternal**
* **Successful investing isn't about beating the market, it's about beating yourself**
* **Transform from a slave to emotion into a master of reason**
* **Sow seeds when no one is paying attention, harvest when crowds gather**

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