$XIAOMI-W(01810.HK)

Continuing from yesterday.

Whether you're long or short determines your mindset and principles. Only with these can you rationally assess what a stock is actually doing.

Many people often say they "feel" it's going to fall or "feel" it's going to rise.

Whether it's Xiaomi or other stocks, the reason for this round of decline is the trade war and other factors. Currently, it has little to do with Xiaomi itself (I'm talking about this round after the trade war; the previous drop from 59.9 to 52 was due to Xiaomi's own issues).

So it's simple: no trade war or other black swan events = Xiaomi's worst-case scenario is still between 50-55. Then, for this round, at what price do you plan to buy Xiaomi? Beyond technical indicators, there's also the psychological expectation of how much profit you aim to make.

Both short and long mindsets are necessary—they complement each other. Going long = reasons not to go short. Going short = reasons not to go long (though I never short).

When you feel a stock is bottomless and you're panicking, think: if you bought Xiaomi's 20 HKD put options—no, how many people would dare to buy 20 HKD puts on Xiaomi? If you think about it and wouldn't dare, then ask yourself, "What exactly are you worried about? That Xiaomi has no bottom? That it'll fall to a very low level? What specifically are you afraid of?" Most of the time, it's just the irrational and illogical weaknesses of human nature.

Since you don't dare to buy puts, can't find enough justification to short, but also can't go long (bullish long-term), then you can just walk away from this stock.

The first principle of the stock market is that it's a binary choice: up or down. It's really that simple. For someone like me who only goes long—especially on a macro cycle—it's even simpler.

Gradually buy at relatively low points in the macro cycle, but never go all-in. At relatively high points, reanalyze to decide how much to hold and how much to reduce to lower costs. The non-all-in capital is reserved for buying cheap chips during black swan dips in an uptrend.

As someone super long on Xiaomi, my half-year setup was ruined by one abstract product launch. I didn't turn into a Xiaomi bear, either. After the emotions passed, I just realized the market must always be respected. Never go all-in with margin 🤷. Even when long, always maintain a short-seller's mindset to observe risks and hedge when needed. Always leave a safety margin and give yourself time and patience to make money.

Instead of saying "wait for the flowers to bloom" when opening a position, I'll also say it to myself. Taking it slow is just my own rhythm.