Why does the investment system in the crypto world require supporting capital positions and cognitive evolution

Retail investors will face uncertainty about future business changes and emotional barriers throughout their long-term investment careers.

Investing is not a smooth process,

it also encounters challenges and opportunities brought by various uncertainties,

what’s more frustrating is that one’s own emotions follow their nature,

a person’s investment always involves emotional fluctuations.

Regarding the uncertainty of the future,

objectively speaking,

everyone faces the same uncertainties,

so how to reduce relative uncertainty,

depends on the cognitive evolution of retail investors themselves,

the more you improve,

the more likely you are to discover opportunities behind uncertainties in advance.

But when most retail investors discover an opportunity early,

the next test is that walking alone through a thousand mountains isn’t so enjoyable,

holding stocks that are carefully selected but keep falling,

how to adapt? When reaching a breaking point of pressure,

retail investors are very likely to go all-in.

In reality, many people are very honest,

but when driving a nice car,

seeing others drive recklessly and flashing their lights,

they may suddenly burst into road rage,

is this talking about oneself?

Evolving cognition can reduce the level of insight into future uncertainties,

and appropriate capital allocation can reduce the stress points caused by overly concentrated positions, leading to investment road rage.

Avoiding leverage is a form of risk avoidance,

maintaining sufficient flexible cash positions is a basic redundancy,

and establishing a reasonable, moderately diversified investment system is the bottom line for reducing emotional decision-making.

Or,

the long-term problems everyone faces are the same,

but the handling logic and methods differ,

some like to take a gamble,

if the capital amount is not large,

the absolute value of low-risk returns is not much,

then pursuing high returns must involve taking certain higher risks,

and indeed, their own cognitive strength may not find rare, excellent future opportunities that are currently quiet,

which is understandable,

retail investors with smaller capital are more burdened by time opportunity costs,

conservative development may not be ideal,

and it might be more practical to try to increase earning capacity outside the market to supplement capital.

If a retail investor’s capital grows,

and it becomes difficult to generate incremental outside funds,

regardless of whether the past accumulated capital was at higher risk or maintained a certain risk-return outlook,

they are likely to develop a long-term risk reduction logic,

and aiming for returns that outperform the market and individual points over the long term is sufficient.

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