Not every path leads to Rome. There are many things in life and investment that cannot be compromised. Sometimes you can only advance and not retreat, or only retreat and not advance. This is what is called a "deadlock."
Taking investment as an example, I recently heard a news story about a private equity fund manager who shorted the junk stocks in the U.S. stock market. Unexpectedly, the junk stocks performed very strongly, causing him significant losses. The main responsibility for this incident lies with the private equity fund manager. He was too eager to win this investment, and did not promptly adopt the stop-loss suggestions from researchers and risk control officers, resulting in heavy losses.
The essence of this matter is that he did not follow the trading plan and did not stop the loss in time, causing himself to fall into a "deadlock" where he could only win and not lose, and could afford to win but not afford to lose. There are many such deadlocks in life and investment. We must have two understandings of the deadlock:
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1. The concept of "deadlock" can help us formulate the best strategy in the game.
When we recognize that the development of a thing has entered the "deadlock" stage, it may indicate that we have a higher understanding of this thing. Only then can we formulate the best life and investment strategy.
For example, is it better to hold or be empty in the current A-share market?
A few days ago, my son asked me a question: "Why not wait until the fund falls to the lowest price before buying?"
I answered him with an example of looking for the largest apple in an apple orchard. I said: "When we go to a fruit orchard, our goal is to pick the largest apple, but we are not allowed to go back during the search, and the abandoned apples are not allowed to be picked again. Under such rules, we can only determine a relatively large apple based on the size of some apples in the orchard. Then, in the later search, we take it as the "largest apple" to pick.
Obviously, this does not guarantee that we will pick the largest apple, but it can guarantee that we will pick a "relatively large apple." Stock investment is also the same. We can only choose a relatively low position to buy based on past data and experience. We will never have the ability to choose the largest apple, and there is no way to find the lowest price, because the future is unpredictable.
This involves a deadlock - because the future is unpredictable, we can only choose a relatively low position to buy at the moment. Although doing so is very likely to be trapped, we have no other better choices.The current A-share market is no exception. We do not have the ability to find the lowest point of the market trend; what we can do now is to buy at a relatively low historical position. Most of the stocks in the current A-share market are at a relatively low historical position, which already meets our condition for choosing an apple. Stock investment is not about finding the biggest apple, but finding a relatively large one.
2 How to Break Deadlocks
The reason why a "deadlock" can be called a deadlock is that it cannot be broken at present. What can be broken is not a deadlock. Therefore, the solution to a deadlock can only be hoped to jump out of the current time and space, and to be broken in another time and space or a broader time and space level.
For example, the idiom "besieging Wei to save Zhao" solved the problem of Zhao's capital Handan being besieged in a space outside Handan.
Not long ago, my son and my brother had an argument, and I didn't immediately let them distinguish right from wrong on this matter. Because this is a deadlock. I seized the opportunity of my mother's medical treatment and let my son call his uncle for help. Through this matter, the contradiction between them was effectively eased. This is to break the deadlock from another time and space.
Currently, our investment in A-shares is very likely to be trapped. But we are not completely without a way to break it. I can break it on a larger time and space level. For example, by holding for a long time of three to five years or more to solve the current situation that may be trapped. By choosing excellent company stocks to resist the current market fluctuations. By diversifying the current investment risks through stock investment portfolios and asset allocation. By having a stable source of income to replenish the positions that may be trapped, etc. This is to break the deadlock through time and space factors outside the current market.
From the perspective of entering the game and making the game, stock investment is nothing more than recognizing the deadlock and breaking the deadlock.
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