Investment Philosophy revealed by a psychological test

My two-year MBA experience makes my life unforgettable. A small psychological test I participated in one day reminds me of the investment practices in the next few years.

In a class, the professor asked each of the students in the class to select a number from 0 to 100, then the professor summarized and took the average. Whoever chooses the number is close to 1/2 of the average in the class, who will be the winner and receive a small reward from the individual professors.

Generally, a number of numbers are randomly selected from 0 to 1/2, and the average value is close to 50, so is 25. Therefore, the average user chooses 25. If everyone thinks this way, that is, if everyone chooses 25, the average number of the class is 25, and 1/2 is 12 or 13. Therefore, the smart student union chooses 12 or 13. Even more intelligent students think that these guys are not stupid enough to mix up here. if most people think of the above logic and choose 12 or 13, if you select 6 or 7, you will have a big win. Of course, there are even smarter people, such as our Jennifer. According to the above logical reasoning, she thought that everyone would choose 0. Her final answer is 0. Who are the winners?

The answer is revealed. Professor believes that Jennifer is the smartest person in the class, But the winner is not her. Most of the students in the class chose 12 or 13, so a few of them chose 6 or 7 to win. The final winner is the one who thinks more than most of the groups, while Jennifer does not win because she thinks more than others.

In fact, this is not the case in the stock market. Most investors know the industry and stocks at the same level. This kind of understanding is biased most of the time, so there is a wrong pricing in the market. If you think more than most investors, then after making investment decisions, the public will start to wake up and take actions, so that you can make a profit quickly. If an investor is much earlier and farther away than most people think, because most investors do not realize what you understand and are delayed in action, wrong pricing may take a long time, as a smart investor, you have to endure time and take on the opportunity costs. For example, today, China's banking stocks have been sought after by investors both at home and abroad, and their share prices are also doing well. The potential of China's banking industry has become a consensus in the market today. As early as a few years ago, a fund manager made a heavy investment in bank shares. Unfortunately, at that time, banking stocks were not recognized by investors, and the decline in their share prices had a huge negative impact on the net worth of the Fund. In a market that excessively concerned about short-term investment performance, even the personal career of the fund manager is damaged to some extent.

This so-called suffering is closely related to the effectiveness of the market. The more effective the market is, the less time it takes for smart investors to wait. For some markets, such as the foreign exchange and fixed income markets, the waiting time is so short that any investor cannot have time to think about Step 2. Therefore, computer automatic trading is prevalent in overseas markets. Traders use large computers to capture market pricing errors at all times. Once discovered, computers place orders in a centralized manner. Errors usually disappear in seconds. The effectiveness of the stock market is still low. However, I have observed that the stock markets around the world have become more and more effective, while the-share market in China has improved more rapidly. For example, the above-mentioned recognition of the value of the Bank of China in the industry may take several years for the market to reach a consensus. Now, this process may take only a few months, and it may take only a few days for the market to disappear if it finds a pricing error. Recently, Pharmaceutical commerce