Investing in Rational Investors

What is the most important thing about investment? There are different opinions, some of which are about the grasp of price trends, some are about mentality, and some are about value. It seems that these are all right at times, but there is no systematic point of view to elaborate on what is most important for investment.

In my opinion, the most important thing to invest is a person's rational ability, of course, the acquisition of a person's rational ability is the need for a certain amount of knowledge reserves and rational thinking framework. When we are facing the market, when we are facing the fluctuation of the market, we always feel helpless and helpless. When we know little about the operation rules of the market, and make investment decisions based on one-sided limited knowledge and information, we are very vulnerable to the influence of market information and emotions, rather than dealing with the uncertainty caused by market fluctuations under the guidance of a systematic framework of thinking in line with the operation rules of the market. When your perception of the market is objective and systematic enough, when you are rational enough in the market, you can enter a cruise state when facing the market, and avoid being affected by market fluctuations.

People have a rational basis, but it does not mean that each of us is willing to work hard for the rational state of the market, the biggest obstacle is ourselves, the enemy to success in investment is ourselves.

The acquisition of rationality requires respect for objective facts, but for the market, objective facts are not so easy to find and grasp, and we are unwilling to make efforts to become rational investors. Animal nature and subjective knowledge inherent in human nature often hinder us from becoming rational people.

Assuming that all of us are rational in economics, many models have been established to analyze the economic and financial problems in reality. The view of absolutely rational people in financial markets is untenable. Behavioral finance has been deeply discussed, and I think at least it has taken a big step towards an objective understanding of ourselves. It is much more objective and rational to admit our irrationality than to proudly claim that we are rational.