Everything about stock market in 6 questions!
1. Is it possible to make a living in stock market?
Yes, when you have financial freedom and 10 years' concrete stock trading experience.
No, when you don't have enough money to support yourself or you are a newbie in stock market.
Short answer: If you don't need money, you get more money. If you need money, you lose more money.
2. How to make money in stock market?
Be fearful when others are greedy and greedy when others are fearful.
Then how can I overcome greed and fear?
You will never overcome greed and fear by yourself.
The only reason that you can do opposite is that you have financial security, so you can be calm when others are fearful.
3. Do I have a personality to make money in stock market?
If you are sensitive, you will sell a stock once it is up or down just a little. You won't lose much money, but you won't earn much money either.
If you are not sensitive, you can sit tight, but you are not able to know the right time to sell. Maybe you have a huge paper profit, but very possibly you will sell it at wrong time when the stock is depressed.
No matter you are sensitive or not, you don't have the right mindset to make profit. The fundamental factor is financial security, so that you will never fail.
4. Why I always lose money?
Most people in stock market have above average wage. They are competitive workforce in job market.
If you think about this, you will know how hard to make money by speculation rather than long term investment since all the competitors are clever.
The brain of human beings is built to buy high and sell low by default.This is the reason why the people who are not that clever always win in stock market by holding index funds only.
They are not competing with other people in speculation, but only ride on the growth of economy.
5. How can I discipline myself in stock market?
Self discipline is ridiculously weaker than the impulse of baisic instinct.
Don't trust yourself about the ability to think wise, but create a way that you can invest without too much discipline.
Great investors have financial freedom, which is 99% reason why they are well disciplined.
6. What is psychology of trading?
Below are good examples.
Everything about life in 6 questions!
1. Why I am not happy?
It is not success that determines the happiness. Mental condition plays the most important role.
In USA, most people can afford decent living condition, but they are not happy at all.
Capitalism means push labor to maximum for productivity: if you are happy, it means the push is not maximum.
2. What is financial freedom?
There are 2 kinds of riches: 1. Buy luxury car and status items and pretend to be rich. 2. Have a passive cash flow that covers everyday spending, but have no interest in luxury things.
Most people believe the first kind of people have financial freedom, but in reality they are poor.
Most people believe second kind of people are poor, but they are the ones who have financial freedom.
3. Is life fair?
It is not fairness, but fitness. The adaptation of every single person is negligible if compared with the selection of environment.
It is fair if you fit, it is not fair if you don't fit.
Focus on long term fairness if you fit.
Focus on unconditional worth if you don't fit since the life is unfair.
The crisis for a fit person is called challenge. The crisis for a not fit person is called disaster.
4. How can I gain wisdom?
I would call it in another way: useful knowledge, especially those can lead to higher income.
It is hard to get useful knowledge since the one who knows it will be busy using it to earn more money and won't waste time to write a book.
The one who doesn't have useful knowledge will usually publish numrous books to sell for profit.
Only 1% books have useful knowledge, 99% books copy each other and have no useful knowledge. Only the super clever people can filter out useful knowledge from books.
You usually have to gain useful knowledge by figuring it out yourself through painful experience because useful knowledge cannot pass among people efficiently. If it can pass among people efficiently, it has no use.
5. Is life dissappointing since there are significant people who are dishonest and play scam?
That is fun part of life.
Honest people build something, dishonest people distroy it, honest people find meaning to build it again, dishonest peple find meaning to distroy it again.
If there are no dishonest people, is there any meaning for honest people? The heros in the past knew how to use both because build and distroy are all needed to balance the world.
In some sense, honest people are entertained by how the scam is played, developed and doomed. That is the long term fairness for.
Honest and Dishonest are not the right words, they should be called observer that doesn't manipulate and manipulator that doesn't observe.
6. Should I become a honest and nice person?
Don't worry about it too much. When you think about this, you are already a honest person.
There is something called destiny.
It is none of your business.
Successful people can play in honest way and dishonest way naturally though they all claim they are honest. Unsuccessful people can only play mainly in honest way or mainly in dishonest way, but cannot shift gear naturally. Scientist calls it game theory.
Everything about money in 6 questions!
1. What is the general rule of money?
The rich become richer, the poor become poorer.
Tax is used to slow this trend.
Tax is not the money from rich to feed poor. It is the compromise between rich and poor to keep the current economic system and avoid violence.
2. What are differences between rich and poor?
Rich people focus on long term and make bold decisions.
Poor people focus on short term and take minimum risks.
It is not just a pure mindset, it is a more natural way: when you become rich, you naturally shift gear from short term to long term, and have the possibility to make risky decisions.
3. What is the investing strategy for middle class?
Buy mutual fund in IRA or 401K.
Don't trade stocks in broker account, you will definitely lose. That is because of human being's nature.
Any savings more than 6 month emergency fund should be used to pay down mortgage principal.
Middle class usually do three ways to lose money: 1. trade stocks 2. buy luxury cars 3. take fancy vacation.
After you pay off all the debt and have a stable cash from job or other sources, it is time for you to do real investment either in stock or real estate.
4. How can I estimate the net worth of any family?
The simple calculation is his savings plus investment gain.
Let's say a family with after tax monthly income of $8000, husband(working), wife(working) and 2 kids in Los Angeles
He normally can save $8000-$1500/person*4=$2000 per month. $2,4000/year or $240,000 for 10 years.
His house initially valued at $500,000 and will grow $250000 in value after 10 years with 4.5% rate/Year.
This family will have half million after 10 years if they live frugally.
The rule of thumb is higher income, less kids and frugal life style.
If you find they are driving a luxury car and renting a large house, then they are dumb in finance and probably have a net worth less than 50K.
You can put the real data for any one to estimate that family's net worth.
5. What if I don't have much money?
To be rich is the success by conventional measure.
Human beings are too limited to understand the bigger picture beyond us, it is just like one second vs infinity.
The sum of everything is zero. Any gain is the loss from the same source.
I am not clever enough to explain it clearly.
6. What if I have a lot of money?
Be grateful to destiny.
Educate your kids if it is not too late. Make the list of your loss, total is same as your gain.
The journey to rich is the mission that you carry, don't think that you deserve it independently.
No matter how rich a person is, from a higher level, every one is equal because the sum of everything is zero.