Recently watching "Old Uncle", the episode about stamp trading should be a wake-up call for the friends who are into financial investments.

Regardless of any goods and securities that have the attributes of free trading and investment, they essentially play with the relationship of supply and demand, and are also human nature.

The mindset of averaging down, stopping losses, and replenishing positions that Uncle has, I also experienced in 2018 and 2020, and unfortunately, both times I left with huge losses.

It was not 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," that is, "If people exist, land is preserved; if land is lost, people are lost."

In the world of trading and investing, it has never been about who makes more money or how big one's "territory" is. Earning a lot certainly attracts attention and shines brightly, just like when looking at assets, people often anchor to the historical highest price. Many will also anchor their identity IP to their life's most glorious moments due to the anchoring effect. This leads to an inability to cut losses and an unwillingness to do so, but the market can never be defeated, and you will ultimately make mistakes. No matter how glorious the past was, once you make a mistake, everything can collapse to zero, which is meaningless, and you can only end up losing everything. This is the true essence of the investment and trading world; investing is a marathon, not a sprint. Unless you can achieve a record in a sprint and never step off the field again, but is that really possible? Investing is an infinite game. When AI eventually replaces labor-intensive jobs in the future, what will be left for humanity is likely just trading emotional value, companionship services, and investment trading. What truly determines the upper limit of life is ability, and what truly determines the lower limit is flaws and the ability to cut losses—this is both the long board theory and the barrel theory.

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

Only by experiencing significant losses and gaining profound insights can one break free from the cycle of [highlights - liquidation - highlights - liquidation ··· +∞]. The key to cutting off this cycle is to stop the losses and defend well: let profits run when correct, and decisively cut positions to save oneself when wrong.

The tragedy of the old uncle is the conventional life of an ordinary person with 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. However, as long as he manages risk well, controls drawdowns, avoids greed and anger, takes profits in batches at high positions, and cuts off any possibility of drawdown leading to liquidation.

Do not gamble with Schrödinger's cat; as long as there is probability, the open complex giant system will inevitably cause all tragedies to 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.