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FishOracle Conversation: How to HODL Quality Assets? How to Buy the Dip and Re-HODL?

FishOracle Conversation: How to HODL Quality Assets? How to Buy the Dip and Re-HODL?

BlockBeatsBlockBeats2024/11/20 13:00
By:BlockBeats

HODLing a good asset has two aspects: first, earning money in the realm of mindshare; and second, money often tends to be non-linear, surpassing everyone's initial understanding.

Source: E2M Research


This content is compiled from E2M Research's weekly space "Speculation and Refutation."


The book "Speculation and Refutation" has benefited several speakers at E2M Research, and we hope that reading the book is not limited to just reading, but that its good ideas can be applied in practice, even in our own investment cases for validation.


As we believe: there are many things in the world that are not black and white, and there are many "third-party thoughts" that encourage us to constantly seek better explanations, encourage everyone to boldly speculate, actively refute, carefully verify, and implement in real life.


With the recent good market trend, how can we hold onto assets for the long term? How can we reposition after selling at a high price? It is worth discussing again, and the guests also exchange ideas based on their industry experience.


Full audio: https://www.xiaoyuzhoufm.com/episodes/673b43ef43dc3a43879d5cb8


Key Points


· Bitfish Twitter @bitfish1


The dimension of a good asset is judged based on the current perception for future prediction. If its development curve, future growth trend, and key inflection points already satisfy the current situation, it will be placed in the basket of good assets for comparison with other assets.


The ultimate core issue is how to hold onto good assets in the long term once found.


HODLing, the key point that needs to be emphasized here is not at the rational level but more at the psychological level. Therefore, we need to establish some methods and rules while still rational to ensure that we can maintain relative rationality even when in a FOMO state.


How to construct this framework?


Here, we have to mention the "Position Management Doctrine," which requires dividing the asset pool into four pools:


The first is the cold wallet, mainly used for hodling coins, creating various obstacles to make it difficult for you to access, and storing core assets, which will account for more than 60% of assets.


The second is the warm wallet, the so-called warm wallet system is mainly used to manage assets and can provide cash flow relatively safely and steadily, allowing us to maintain a stable mindset even in extreme pessimistic situations, accounting for approximately 20% to 30%.


The third one is the Hot Wallet, mainly used for spending, to experiment with speculative assets, to try product experiences, to gain experience in judging the future of an asset, with approximately a certain percentage of assets' scale, maybe even less. If this wallet does grow in scale due to speculative spending, immediately transfer it to a Warm Wallet or the corresponding Cold Wallet.


The remaining one is the Fiat Wallet, which follows a small principle called the 4% principle: 4% of the asset scale in the Fiat Wallet is equal to annual expenses. Assuming the previous wallets suffer mishaps, the fixed deposit interest or government bond interest generated by the Fiat Wallet can basically cover daily life expenses. This can be considered as a life reserve and isolated asset.


· Zhen Dong Twitter @zhendong2020


If you currently hold Crypto assets or Tesla, you need a better understanding of models similar to complex system evolution or nonlinear growth, as well as innovation diffusion. In today's Internet age, we can see that the speed, efficiency, and cost of information dissemination or knowledge dissemination have grown exponentially compared to decades ago.


Understanding good assets requires a certain foundation of knowledge. One significant reason that hinders many people from holding good assets is that most people nowadays have mistaken beliefs about long-term holding. The greatest enemy of holding good assets for the long term is enthusiasm for short-term trading, with many people confusing long-term holding with short-term trading.


What did Popper say is the most important thing? The most important thing is more rational humility.


How to analyze what is a good asset? You should continuously make positive expectation, good investment decisions, decisions that have long-term compounding effects, rather than performing repetitive and futile tasks. Humility means knowing that mistakes are possible, and once you realize you've made a mistake, continually make changes and adjustments.


· Odyssey Twitter @OdysseysEth


Long-term holding of good assets has two key points: one is understanding, and the other is called long term. Understanding is further divided into two understandings: one is rational understanding, and the other is emotional understanding. How do you understand? The things you build at the time of buying will also be effective on both cognitive and emotional levels when selling. How do you build when buying? This is the question of how to understand a good asset.


The cognitive building process will have several points, all of which will definitely come into play when selling.


The first point is not to ask about those early assets because they have not yet reached a critical point of sale. If you couldn't understand them at the beginning, naturally, you wouldn't touch them, and you wouldn't sell out later. If you've already passed the critical point when entering, when you look back, your focus will be more intense, and your understanding will be very deep.


The second point is to think and validate monopolies from multiple dimensions. If a purchase was made solely due to a monopoly, then the only reason to sell would be the disappearance of the monopoly or the emergence of a better monopolist. This symmetry can be entirely constructed, understanding that the monopoly process will enrich our understanding of user needs, overall potential market, and so on. This process will bring about a significant amount of rational and emotional construction.


The two aspects of holding good assets long-term are as follows:


One aspect is earning money within the known realm. If one has clearly envisioned the long-term product roadmap from the beginning and has also achieved that roadmap, should one sell at this point? Not necessarily. Some individuals can indeed earn this portion of money, but the unfortunate ones will not earn money beyond the known.


The other aspect is that money is often nonlinear, surpassing everyone's initial understanding. As an investor, one must be able to embrace this element of surprise, not needing to rely on the limited rational brain of ten years ago to predict the future but rather to construct this asymmetry to reap the benefits of the future. How can one embrace the benefits of the future? After owning the asset, one should recognize its characteristics, acknowledge it as a good asset, and believe that it can perform well beyond imagination.


What about re-entering a heavy position after selling? It's mostly a psychological issue, including a cognitive one. Cognitively speaking, if one increased their position with the rise of a monopoly, on this mentality basis, one naturally would not be concerned whether the previous price was high or low because with the increased position due to the monopoly, it has already decoupled from the price. The key to re-entering a heavy position is having sold before, which is very painful for almost everyone. Many people think investment is just investment, but it's not. Behind investment lies a desire to prove oneself or solve current life troubles. Often, to make good investment decisions, one must first address this desire or the underlying psychological issue itself. If one was initially driven by a very strong desire, it's challenging to make rational investment decisions.


· Q: Why establish a position management system?


I have analyzed some of the significant decisions I have made in trading, and my success rate is only slightly above 40%, not exceeding 45%. Therefore, later on, when making significant decisions, I would write decision logs, analyze various circumstances at that time, my emotions at the time, analyze my understanding of the world's development, my judgment of the event's future, why I made such a decision, whether I would regret it, and review it after six months or a year.


Ultimately, one will realize that the world is unknown, and our modeling and rationality of this real world are limited. During the modeling process, one must ensure that they have an open mind and brain.


Some very painful mistakes are essentially the information that this real world provides us. Often, the key to whether a person can grow is when the real world offers real and effective feedback and information, not to become trapped in those emotions, and to be able to review, think, and iterate afterwards. (Fish God Twitter @bitfish1)


· Q: Which is Harder, Finding a Good Asset or Rebuilding Confidence to Hold After Selling?


Holding with confidence is already harder than finding a good asset. Many people around me who held Bitcoin sold a portion after making some profit, but very few were able to buy back after selling. Once they sell, they rarely talk about rebuilding confidence to buy back. Holding with confidence means allocating a large proportion of assets into a certain asset type, which is inherently a challenging task.


When I initially bought Tesla, even though I had done a lot of research, I still found it difficult to pull the trigger when it came to actually making the purchase. I could only buy at an absolute value, so I realized that human psychology has some trouble adapting to large numbers. This is similar to when I used to play Texas Hold'em and noticed that the increase in chip value would bring psychological pressure, even though in terms of asset proportion, it wasn't significant. However, that absolute value would involuntarily be compared to my usual expenses.


One of the hardest parts about rebuilding confidence to hold after selling is facing your mistakes. Recognizing a mistake is not enough; it requires a process of reconstructing many underlying logics. Furthermore, many times, our attitude toward mistakes can be problematic because sometimes we relate them to our personal image, feeling embarrassed after realizing the mistake. Some ordinary people may think that making mistakes is shameful, but many intelligent individuals believe that it is more shameful not to have the capability to correct mistakes.


Popper's scientific philosophy provides an antidote, allowing us to understand from a philosophical perspective that the entire human race progresses through these mistakes. The only way to create new knowledge is through conjecture and refutation, where we eliminate those erroneous conjectures. Ultimately, what remains are the relatively correct conjectures. This means that the process of making mistakes is not only unavoidable but is also the only path to discovering new knowledge. (Peicai Li Twitter @pcfli)


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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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