About fixed investment and steady holding and buying high and selling low

In addition to fixed investment and steady holding, will BTC, ETH or other altcoins also use part of their positions to buy high and sell low? Or will they wait until the bull market is considered to be boiling before selling all their positions in batches?

Seeing this reader's message, I remembered the experience of Li Lu, a very successful senior Chinese investor, which I read some time ago.

Before introducing Li Lu, let me first answer this reader's question.

I regard fixed investment and steady holding and buying high and selling low as two operations: one is medium- and long-term, and the other is short-term.

Simply speaking, since I entered the crypto ecosystem, I have never used fixed investment and selling high and buying low for all my investment products.

Most of my operations are to hold on.

So my investment methods are all medium- and long-term (steady holding), not short-term (selling high and buying low).

For the stocks I hold, if I find problems with the team or the project itself, I will sell them all without hesitation.

If I think the price is too outrageous, I will also sell them all.

There is another situation: I am not sure how the project will develop, but I don’t find any serious problems with the project, so I will reduce my position.

In the past, I did not have any strong ideological support when I did this operation. Perhaps this motivation only came from the experience of short-term failure.

But when I read a self-narration by Li Lu a while ago, I found resonance in my thinking about this operation method.

We all know Mr. Buffett and Mr. Munger. Li Lu can be regarded as Mr. Munger’s long-term partner and friend. Many of his insights and experiences in investment are deeply influenced by Munger. If you read more news or books about Mr. Munger, you will definitely see Li Lu’s name.

Li Lu mentioned his experience of short-term operation in his autobiography.

There was a time when Li Lu thought that the long-term holding operation was too inefficient. One wave and price difference after another slipped away under his nose, but he was indifferent.

Not seizing these opportunities not only wasted the opportunity but also greatly reduced the efficiency of capital use.

So Li Lu began to let go and try a more flexible operation method: a part of the funds were kept for the long-term holding method he was familiar with; the other part of the funds were focused on short-term operations, and various financial tools (long, short, etc.) were used. In short, the purpose was to make the use of this part of short-term funds as efficient as possible.

This operation method that does not affect each other and has the best of both worlds seems wonderful.

After a while, Li Lu conducted a thorough inventory of his operations during this period, and he found the following problems:

- These short-term operations did make money, and the returns were not bad;

- But because time and energy inevitably had to be dispersed to short-term operations, he missed several good projects that he was very optimistic about but did not continue to study and track in depth due to lack of time;

- Those good projects that he could have bought earlier later could bring him much more returns than he got from short-term operations;

- His attention and thinking depth were not as good as before he did short-term operations.

In summary, he felt that this experience of short-term operations was more loss than gain.

From then on, he completely abandoned short-term operations and focused on the long-term holding method he recognized.

He also required his fund investors to do the same: if they did not recognize his long-term holding investment method, they should not invest in him.

I deeply agree with Li Lu's feelings, but my results are not as good as those of my predecessors - in fact, they are very bad.

I used to do swing trading and buy high and sell low, and I can't bear to look back. Although I have enjoyed the fruits of victory from time to time in the process, the total returns are terrible after the final inventory.

So later I was completely isolated from short-term operations. I would rather spend the time and energy of these operations to read various materials, read various reports, and have a deeper understanding of the projects I am interested in.