Someone asked: In "Fan Hua," those who lost in stock trading to the point of bankruptcy, jumping off buildings, and jumping into the sea all ended badly. What mistakes did they make?

These people all made a common mistake - borrowing money to trade stocks. Borrowing money, or using leverage to trade stocks, made their trading methods very fragile, only able to make money, not able to lose money. Once they lose money, they will be forced to liquidate, leading to a tragic ending.

Not only are individual investors like this, but institutions and the social economy are also the same. For example, some problems that have emerged in our country's real estate industry in recent years are essentially due to companies not having enough of their own funds, adding leverage everywhere, and ultimately leading to a collapse due to capital chain rupture.

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The essence of the subprime mortgage crisis in the United States a few years ago was also a "leverage crisis." It can be said that "leverage" is the biggest risk in finance, without a doubt. Some stock investors fell before dawn before the festival, and their capital was liquidated, just because they used leverage.

My latest investment cognition in the past two years is "even at the bottom of the market, do not use leverage. The risk of leverage is everywhere, and never think that you can finance in large proportions at will at the bottom of the market."

I am currently bullish and actively trading in the A-share market. But I never use leverage. As long as we do not use leverage and hold excellent companies and promising industries, we can easily overcome all market fluctuations and ultimately welcome substantial investment returns.

A fan friend asked: "Teacher Meng, which direction in the stock market has more opportunities this year?"

I replied: "I don't know. I don't have the ability to predict short-term and medium-term hot spots."

The fan said: "The teacher is a long-term thinker."I replied: "I truly do not have this ability. Those who possess such abilities are gods, not humans."

Many fans and friends watch stock reviews and listen to some institutional researchers or securities analysts saying what hot spots the market will have this year, and which direction is most likely to have a market trend, etc. I honestly tell my fans and friends—it's all clichés, all dialogue routines they have pre-arranged with the host.

When being interviewed, one must say something, right? At least say a few words that retail investors want to hear, right? You can't be completely ignorant when asked, can you? After all, the program is just a program, and its essence is to perform for the audience and listeners. Never take the words in financial programs too seriously. If these experts really knew that there would definitely be some hot spots this year, they would have long resigned and gone home to leverage 100 times to bet on these hot spots. What are they still grinding their teeth with the host for?

Financial programs are designed to cater to the psychology of small and medium retail investors, discussing topics they care about. No one in this world knows how the market will go tomorrow. What everyone has is just speculation! However, on the whole, most financial figures invited as program guests are already the elites of their industry. At least in terms of eloquence, they are not comparable to ordinary financial professionals.

Stock investment is very simple, but it is very difficult to do well. Why is it that many people can't do well in very simple things? Most simple things are very boring, tasteless, and require a long time to see a return. Many things in the world, such as weight loss, calligraphy practice, fitness, etc., are like this. This kind of return is particularly slow, and the process is very monotonous and boring, which is extremely against human nature, making many people unable to persist.

A few days ago, a fan friend asked me: "Teacher Meng, now with a floating loss of more than 60 percentage points, can I get back my investment in bank stocks in the next few years?"

It immediately stumped me. Because he is equivalent to asking me: "Can bank stocks rise two or three times in the next few years?" Because only if bank stocks rise two or three times in the next few years can he possibly get back his investment. How could I possibly know?! If I had this ability, I would have long lived on the moon. Because the earth can no longer accommodate me.

Stock investment not only requires a long time to make a lot of money, but the process is also full of uncertainty. It is manifested in the uncertainty of the time used to obtain investment returns and the uncertainty of the size of the returns. That is, bank stocks may take more than ten years to get you back your investment, or they may get you back your investment in two or three years, which is something that cannot be known in advance. It is completely different from us going to work and receiving a salary. And in the end, how much money we can earn, we also cannot predict.

The returns of the stock market mainly come from two aspects:

One is the return of corporate profits. The future performance of most companies is difficult to predict, and this return is difficult to calculate. The other is the return brought by market fluctuations. The market gains brought by concept speculation, topic speculation, bull market conditions, etc., are even more unpredictable.So, stock investment is actually something that requires a long-term wait, and the size of the return cannot be determined. The "five years to double" or "ten years to double" that I usually say is just a theoretical calculation based on historical data.

When the stock god Buffett bought BYD, he didn't know how much money BYD could make for him in the future, let alone when he could make money. He only knew that this was an investment with relatively low risk and potentially high returns. BYD once fell into a predicament in production and operation, and at this time, Buffett even had the possibility of losing money. Such a stock that doesn't know when the return will come, and may even lose money, Buffett held for 13 years before he started to sell. This is the difference between the stock god and ordinary people.

I have a friend who wants to open an account to trade stocks. Before opening the account, he asked me, "How many years does it take to double the return on buying stocks?" I hesitated for a long time and said, "At least it will take three to five years." After hearing my words, he immediately gave up the idea of opening an account to trade stocks.

There are many important things in this world, in fact, they are very simple, but they are difficult to do well. For example, getting married is simple, right? How can you get married if you don't love each other? It should be that the divorce rate should be very low, right? But the data shows that in recent years, the divorce rate of people is close to 50%!

This indicates that the current people who fall in love and get married have about half the probability of getting divorced in the future. That is, our seemingly very careful choice of marriage, the final result is actually as random as flipping a coin! This is just a "long-term love" condition that makes many people unable to persist.

I think people who can do simple things well for a long time are no longer ordinary people. For example, running is simple, right? It's something that can be done with legs, but how many people can stick to running day after day for ten years? Stock investment is simple, but most people are doomed to fail. What makes us fail is not the market, but our innate human nature. Stock investment holding time is too long, and the size and time of return are uncertain. It does not conform to the ordinary people's idea of taking shortcuts, wanting to make quick money, and obtaining expected stable returns.