Friends, let me ask you a soul-searching question:
Have you ever felt this? You buy, it drops. You sell, it rallies. You cut your loss, it starts to rip. You finally can’t take it anymore and chase it back in—and it lays down like it’s been sedated. Do you think the market makers are watching your tiny account? Do you feel like the market is dead-set on going against you?
Let me tell you—you’re not unlucky; you’re stuck in the retail trader’s hamster wheel. Today I don’t want to lecture you with high-sounding theory; I just want to use words you actually understand to pull you out of this wall. Ready? Let’s go.
Truth #1: What You’re Chasing Isn’t Opportunity—It’s the Hot Potato Someone Wants to Dump on You
Let me ask the simplest question first: why did you buy your last stock? Don’t answer yet—let me help you remember—
Was it because you saw a short video titled “Three minutes to understand the next Nvidia”? Or because a coworker leaned over at lunch and whispered, “Let me tell you about a name”? Or because a headline popped up: “This stock just ripped 50%”?
Be honest with me—right?
Okay, second question: before you bought, did you actually open the company’s financials? Did you look at what it earned over the past five years? Did you check how much debt it carries? Did you think about whether it’ll still be around in ten years?
Silence, right? You weren’t investing—you were chasing a hot name.
And hot names follow one brutally simple rule: by the time you hear about it, it’s almost over. Think about it—why do news outlets cover a stock? Because it’s already gone up. Reporters aren’t fortune tellers; they can’t interview a stock before it moves. They only write the story after the price has risen, volume has spiked, and somebody has made money.
So when you see the headline, you’re not the first to know—you’re the last. You walk in to take the handoff from everyone ahead of you. You’re not buying an opportunity—you’re buying the hot potato someone else wants to get rid of.
So what was Buffett doing? In 2008’s financial crisis, when the world was running for the exits, he was buying. In 2020, when the pandemic crashed the market and circuit breakers tripped, he was still buying. He’s not brave—he sees clearly. He looks at whether the company will go under. If it won’t, then the current price is a discount.
You say he’s a contrarian indicator? No, he’s a counter-human-nature indicator.
There’s a critical bug in the average brain: a rising price equals a good company; a falling price equals a bad company. Let me tell you—if you don’t fix this bug, you’ll never make money in the stock market.
Why? Because price is emotion, not fact. Think about it—a stock was NT80. Did the company change? No. The factory is still there, the employees are still there, the products are still selling. So why did it drop? Because someone got scared, and someone sold. But your brain tells you: “Something bad must be happening that I don’t know about.” So you sell too.
That’s textbook emotional contagion.
So what’s running inside Buffett’s brain? A completely different system. A falling price doesn’t mean the company got worse; a rising price doesn’t mean it got better. He only asks three questions:
- Does this company actually make money? Not this year—over the past ten years. One bad year is fine, but it has to make money over the long haul.
- Does it make money from skill or from debt? Skill is a moat; debt is a powder keg.
- Will it still be making money ten years from now? That is the hardest and most important question.
Let me swap in an example—no fried-chicken stalls, no Coca-Cola. Think of a repair shop downstairs from your apartment. The owner is in his fifties, brilliant with his hands—anything other shops can’t fix, he diagnoses in seconds. Business is so good you have to book a week ahead. Two chain quick-lube shops opened nearby with nicer decor and cheaper prices, but they can’t steal his customers. Why? Because car owners trust him; cars he fixes don’t break down for three years. That’s called a trust premium—it’s also called a moat.
What Buffett is looking for is exactly that kind of “repair-shop owner”—not necessarily a big company, not necessarily in a hot sector, but with something nobody else can copy.
Now think about the other kind of company—revenue keeps climbing, stock keeps flying—but when you actually look at the business, you see it’s fueled by subsidy-burning and price wars. The moment a competitor shows up, the margins vanish. Buffett won’t even look at companies like that.
Truth #2: Cheap Things Are Usually Cheap for a Reason
Lots of people pick up the Buffett vocabulary—“P/E ratio”—and then spend all day hunting for stocks with low P/Es, thinking the lower the cheaper.
Let me tell you: cheap things are usually cheap for a reason. Here are two real-world value traps.
Trap #1: The assets are fake. A company’s price-to-book ratio sits at 0.5. Translation: the company has NT5 billion. You think you’ve found a bargain—until you dig deeper and find that **NT3 billion.
This is what we mean when we say book assets aren’t necessarily realizable assets.
Trap #2: The profit is one-time. Another company has a P/E of just 3 this year—wow, you’ll get your money back in three years, that’s insanely cheap. Then you open the financial report and discover that 90% of this year’s profit came from selling a building—the core business isn’t actually making money. Next year there’s no building to sell, profits collapse back to reality, and the stock craters with them.
This is what we mean when we say one-time profits aren’t the same as sustainable earning power.
So what does Buffett look at? He looks at operating income, not net income. He looks at the ten-year average of earnings, not a single year. He looks at the debt ratio, not how pretty the ROE is.
You see numbers; he sees stories.
Let me give you an even harsher example. Some companies have ROEs of 30%, 40%—looks gorgeous on paper. But check the debt and you’ll find they’ve borrowed three times their equity capital—a big chunk of their earnings goes to servicing interest. Companies like that are fine in good times. The moment the cycle turns, interest keeps coming due while revenue disappears, and they break.
Remember when rates were hiking a few years back, how many high-leverage companies saw their stocks cut in half? It wasn’t that the companies were bad—it was that interest ate the profits.
So Buffett has a line I particularly love: “Only when the tide goes out do you discover who’s been swimming naked.”
Truth #3: Eager, Greedy, Afraid—The Three Words Behind Every Loss You’ve Ever Taken
Let me describe an experience you’ve definitely had. You bought a stock after doing your homework. Felt good about it.
First month, no move—you tell yourself it’s fine, give it time. Third month, still flat—you start getting nervous. Sixth month, it’s down 10%—you finally snap and sell.
Then what? Seventh month, it rallies 30%. Don’t you want to slap yourself?
You didn’t lose to the market—you lost to your own impatience. Buffett can hold a stock for 35 years. Don’t fight him on this line: “If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes.”
You might say, “But if I never sell, how do I make money? I have to eat, right?” Through dividends.
Let me swap in another example—no Coca-Cola this time. Picture a wastewater treatment plant. Sounds about as boring as it gets, right? But think about it—no matter how the economy is doing, no matter what the stock market does, wastewater still has to be treated, right? Factories need to discharge, neighborhoods need to drain—that’s non-discretionary demand.
A company like that earns steadily and pays steady dividends. You might buy it at a starting yield of just 3% or 4%, but if you hold for 20 years, the cumulative dividends alone can exceed your original investment. At that point, are you really going to sell? You’d rather pass it on to your grandkids.
That’s the terrifying power of compounding. Not because you earn a lot—because you hold for a long time.
You might say, “But I can’t wait 20 years—I need the money next year.” Then I’ll ask you one question: if you’re using money you need soon, are you investing—or are you gambling?
Alright, time for the gut-punch part—the real root of every loss you’ve ever taken boils down to three words: eager, greedy, afraid.
Word one: Eager. You buy a stock and expect it to rise tomorrow. One week of sideways action and you think there’s something wrong with it. One month and you want to rotate into something else. But think about it—a company earns money on a quarterly and annual basis; it isn’t going to suddenly accelerate earnings just because you bought in. Your urgency is completely out of sync with the company’s earning cadence.
Word two: Greedy. Your stock is up 20%—what’s a normal person’s reaction? “Wow, I’m a genius, let me add more!” So you pile in at the top, and one pullback later you’ve not only given back the gains—you’re underwater.
How does Buffett do it? When the price rises, he feels it’s getting more expensive and actually doesn’t buy; when the price falls, he feels it’s getting cheaper and buys more. He operates counter to your instincts.
Word three: Afraid. This one is the most lethal. The stock drops 10% and your imagination runs wild: “Is there some bad news I don’t know about? Will it drop to zero? Should I cut and run and buy back later when it’s stable?” So you sell at the bottom, then once you’re out it bounces, and you chase back in at the top.
Sound familiar? You’re not alone—this is the retail trader’s standard operating procedure.
So what does Buffett do? He treats fear as opportunity. He famously said, “Be fearful when others are greedy, and greedy when others are fearful.” If you really think about it, that translates to—whatever you do, I do the opposite.
Three Things You Can Do Right Now
Alright, here’s the question: how do you actually stop losing? How do you hold positions with Buffett-level calm—no panic, no greed, no rush? There’s only one answer—learn.
You might think I’m preaching platitudes, but let me ask—do you know what Buffett does all day? Every morning he gets up and reads financial reports, annual reports, industry research, company filings—hundreds of pages a day—and he’s still doing it in his nineties.
What about you? After you bought the stock, have you ever seriously read a financial report? Have you looked at the company’s debt structure? Have you checked who its competitors are? No—you just look at candlestick charts, comment sections, and short videos.
Then let me ask you one question: what makes you think you have the right to make money?
Think about it. If you were going to open a store, wouldn’t you research the market first? Wouldn’t you run the numbers on costs? Wouldn’t you think about how to compete with the shop next door? Of course you would—because you’re afraid of losing money. But the moment you enter the stock market, you suddenly become fearless—you’ll throw several months’ salary in without even reading a financial report. That’s not courage; that’s the boldness of ignorance.
I don’t want to just lecture without giving you a method. Here are three things you can do right now:
First: next time you want to buy a stock, ask yourself three questions first.
- Has this company earned money steadily over the past five years?
- Does it make money from skill or from luck?
- If the price drops another 20%, would I dare to add?
If the answer to all three is yes, you can buy. If any one is no, wait.
Second: learn to read three numbers. You don’t need to dig through complex reports—just three:
- Operating income: is the core business profitable?
- Debt ratio: how much does it owe?
- Free cash flow: does it actually have cash?
You can find all three on the Market Observation Post System in minutes. Those ten minutes might save you hundreds of thousands.
Third: carve the word “wait” into your heart. Good companies aren’t going anywhere; the price won’t fly away because you waited a day to buy. In fact, the longer you wait, the more likely you’ll catch it at a cheaper price.
How long did Buffett wait on Apple? Apple launched the iPhone in 2007; he didn’t buy until 2016—he waited nearly 10 years. You’re not out of opportunities—you’re just unwilling to wait.
Closing: The Market Rewards Whoever Can Wait the Longest
Friends, the stock market isn’t a place where the smartest win—it’s a place where whoever can best control themselves wins. You don’t have to copy Buffett’s methods, but you must learn his discipline. Otherwise, you’re not investing—you’re just topping up someone else’s luxury car’s fuel tank.
Let me leave you with one line I love—and hope you’ll remember:
The market doesn’t reward the smartest, but it always rewards whoever can wait the longest.
You think you’re chasing a hot name, but you’re really just handing your money to the market makers. You think you’re trading, but you’re really being traded by your emotions. You think you’re investing, but you’re only gambling. Only when you let go of short-term thinking, let go of greed, let go of fear, and start buying a company the way you’d buy a shop—only then do you truly walk through the door of investing.
So starting today, stop chasing rallies and dumping at the bottom. Stop handing money to the market makers. The next time you want to open your brokerage app, pause and ask yourself one question: “Am I actually investing right now—or am I just taking the handoff from someone else?”
Disclaimer: This article shares viewpoints and general financial literacy education only. It does not constitute any investment advice. Investing involves risk; past performance does not guarantee future returns. Please carefully assess your own risk tolerance before making any decision.
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追漲陷阱, Retail Money Loss, Buffett Stock Picks, 護城河企業, Value Trap, P/E Ratio, 營業利益, 自由現金流, 損失厭惡, 長期持有, 行為金融學, 財報閱讀
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