Emotional circuit breaker, winning by cycles - Understanding the essence of investment from a historical perspective

From childhood, we are taught to be rational and logical, but when it comes to critical moments, decisions are often driven by emotions. This is especially true in investing. Everyone knows "Buffett's approach," but when the market crashes, many people don't seize the opportunity to buy low—instead, they panic sell. It's not that they don't understand; it's that their amygdala overrides their rationality.

Investing is, at its core, a game of probabilities.
Calmness, restraint, and an objective view of volatility are the most basic disciplines. But let's be honest—if you completely shut off your emotions, life would be pretty dull. How do you make the journey both long-lasting and enjoyable? Frankly, it's not easy. Many people constantly name-drop "Munger, Buffett," turning investing into a recitation contest, but that doesn’t necessarily translate to real profits.

Understanding history and seeing through cycles is key to truly grasping human nature.
Isn’t investing all about the ups and downs of human behavior? Historical anecdotes often hide the patterns of cycles.

Take Fan Li, for example. After helping Goujian conquer Wu, he retired at the height of his success and became a merchant known as "Tao Zhu Gong." He practiced counter-cyclical investing—"buy boats during droughts, buy carts during floods"—which is the same logic as buying assets in a bear market and selling at bull market peaks. Bai Gui of the Warring States period also said, "When others discard, I collect." Isn’t that just a low-valuation strategy? The old-school version of "be fearful when others are greedy."

Zhao Kuo, who only theorized about war, is the ancient equivalent of modern "theorists" who only quote Buffett’s annual reports but never actually invest. They might teach MBA classes, but in the real market, they lose money fast.

Cao Cao followed Xu You’s advice and launched a surprise attack on Yuan Shao’s Wuchao, turning the tide in one battle. This reminds us—intelligence is important, but independent judgment is even more critical. Not everyone can spot the "Wuchao," but you must identify the key variables and trends in the market. When a real opportunity arises, you must act decisively, not hesitate or dabble half-heartedly.

Sun Tzu’s *The Art of War* says, "First, make yourself invincible"—in other words, don’t lose money first. Buffett’s "Rule No. 1: Never lose money" echoes this. Defense comes first; offense comes later. This applies to the U.S. market too. There will always be hot sectors, but you must avoid overvaluation traps and focus on mispriced opportunities.

Lü Buwei’s bet on Yiren is a classic example of "spotting rare goods and placing early bets." In the U.S. market, such "rare goods" could be undervalued quality companies or overlooked sectors, like certain AI hardware or cloud services before they take off.

Zhao Xiangzi held Jinyang until he turned the tables on the Zhi clan, thanks to his "mental fortitude." Investing is the same—especially in a highly institutionalized, algorithm-driven market like the U.S. Short-term volatility doesn’t equate to long-term value. You must hold firm to reap the rewards.

Many people lose money not because they’re not smart, but because they’re too smart. Faced with a crash, overthinking leads to paralysis. They enter trades thinking, "I’ll just scalp a quick profit," but once they exit, they rarely re-enter—because the more prices fall, the more fearful they become, and the more prices rise, the more reluctant they are to buy back. Over time, they fall into the trap of "dodging paper losses" and miss out on big opportunities.

That’s why, beyond intelligence, what’s more important is a "cyclical perspective" and "historical depth." History doesn’t repeat exactly, but it rhymes. Before every bubble bursts, there’s always a "new story" or "new concept." But remember—a wise man doesn’t stand under a crumbling wall.

True long-termism means seeing the future within cycles and resisting the temptation of short-term volatility. The crash isn’t the enemy; emotions are. Without panic and sell-offs, there would be no great investments.

History isn’t just about the past—it’s a reference for the future. Understanding human nature, grasping the interplay of greed and fear, and spotting patterns are how you navigate cycles. Master investors aren’t "mentally fragile"; they’re those with knowledge, emotional resilience, and the ability to execute strategies over the long term.

So, studying history isn’t about pretending to be cultured—it’s about seeing the present clearly.
Cycles offer opportunities, risks, and wisdom. Endurance, holding firm, and decisive action—that’s real skill.

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