According to statistics, there are 2 million people in China with an annual income of over 100 million yuan, which is a ratio of 14 per 10,000. So my estimate in the title that people can reach one in a thousand is a conservative one. Most people can achieve this without relying on special luck - but they definitely need to walk in the right direction for a long time.
The thinking framework is very important here, which determines how you arrange your time: who to meet, what to do, what to think about, etc. Without a good framework, even if you reach 0.01% by chance, it is likely to be lost in a short time. With a good framework, due to the snowball effect, 0.01% will gradually become 0.001% and 0.0001%.
The reason why I suddenly wrote this is simply because sometimes I think about it too much, and I also feel that it would be a pity to forget it, so I wrote it down, and when I look at it after a long time and say “it’s pretty silly”, that’s also good.
1. Simple
I put this first because it is very important, but very difficult to do.
My understanding of this is actually to return to the essence of the matter and ignore all other noises. It is similar to Musk's first principles, which can be applied in all aspects. Here, I may use several examples to illustrate:
For example.
I was chatting with someone a few days ago, and she asked me curiously that her team felt that I was the undisputed top streamer on Twitter, so how did I achieve this in such a short time? What methods and tricks did I have?
I said, actually, when I first came to Twitter and didn’t have many followers, I told my friends that I would become the person with the most traffic in the future. In fact, it was not because I thought I was great or had a strong investment ability - when I said this, my investment level was actually very low compared to today.
But I believe in the power of some simple logic, like:
My main purpose of writing is to provide value to others, so I try to only write things that are valuable to others (although objectively limited by my level, many things may be wrong and outdated)
You must be sincere. Although there will be many people on the Internet who have various prejudices and mistakes, I believe that as long as you remain sincere, most people will see it.
People who come to the cryptocurrency circle are here to make money, so the key for me is to have stronger and stronger investment capabilities, so that the above value + sincerity will be meaningful, otherwise no matter how hard you try, it will be meaningless.
Simple things done right can have huge long-term value!
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From this case, we can see that if we ask 100 people how to do Twitter, they can write 100 academic papers, but in fact, many of them are at the level of technology. Simplicity means returning to the level of Tao. For example, my experience above can actually be simply summarized in six words: useful, sincere, and self-reliant.
These six words are indispensable, otherwise they will not last. If I can achieve these six words, I feel that if I want, I can achieve any level as long as I extend the time.
Of course, there is no need. There is a saying, what is the way of heaven? The way of heaven is to know that the tree that stands out in the forest will be destroyed by the wind - Huang Zheng will not be the richest man, and smart people will leave early. These are the ways of heaven that the big guys follow.
Today's article is mainly about humanity and the way of human effort. As for the way of heaven, my understanding is also very shallow, and I have only touched upon some very superficial things.
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How to use simplicity in life? I have some simple logic:
For example, making friends with good people. The meaning of good is very comprehensive. Everyone may have a different definition, but it is definitely not a relationship of mutual exploitation. This kind of relationship comes for profit and leaves when there is no profit. It will not last long and may even lead to disasters in the future.
I define good as some qualities: kindness, integrity, mutual benefit, etc. These are the foundation. On this basis, if we have common pursuits, we can become friends.
For example, draw a clear line with bad people, don't drag your feet. If you don't like them, don't force yourself. What is a bad person? For example, dishonesty, betrayal, dishonesty, etc., these are easy to detect. But there are some that are relatively difficult to detect, and even can't be said to be bad - just don't fit our thinking framework, don't force it. For example, in terms of personality, style, behavior, etc.
There is a long way to go from understanding these things to actually doing them well - but overall, you will get better and better as time goes by.
Of course, the same is true on the Internet. For example, I used to explain the word "sincerity" to people online. Now it seems that I didn't understand some simple hidden logic:
Explanations are never necessary or effective;
There will always be people who don’t approve of or like you;
A journey of a thousand miles tests a person's ability; time reveals a person's true character. Doing the right thing will only take a little time and no explanation is needed.
After understanding the hidden logic above, I now only classify without explanation. For example, I will block people and ignore people with different opinions.
Perhaps, respecting everyone’s destiny is also the way of heaven - the way of heaven is silent and ruthless.
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Business management should also be simple.
Things like education, background, title, and experience often make simple things complicated, so that we cannot think about things themselves.
Here is an example:
In his 2009 shareholder letter, Buffett said he sleeps soundly every night because:
We tend to let our many branches operate independently and we do not exercise any degree of supervision or monitoring.
This means that we are sometimes slow to identify management problems and occasionally make operational and capital decisions that we might not agree with if we were asked to advise on them.
Yet most of our managers use the autonomy we grant them well, maintaining a shareholder-oriented attitude that is rare in large institutions.
We would rather bear the tangible costs of a few bad decisions than suffer the large intangible costs of decisions being made too slowly or not at all because of bureaucratic rigidity.
In this example, we can see Buffett's extreme simplicity in business management. He always selects the most astute people to manage the business. If you read his letters to shareholders, you will find that he always selects reliable people who are in line with the company's values to run the business and fully authorizes them.
When he said this in 2009, he had 257,000 employees and more than 50 companies under his name, which was a huge scale, but what he did every day was still to focus on his own study, thinking and research.
He said: "Berkshire must never be allowed to become some kind of giant corporation with committees, budget reports and multiple layers of management."
More than 10 years later, Berkshire has entered the trillion-dollar club.
One manager recalled the most impressive incident. After a wrong decision led to a loss of hundreds of millions of dollars, he went to Buffett to report it very anxiously. To his surprise, Buffett replied with just one simple sentence: We all make mistakes.
When managing a business, the first step is to select people; the second step is to authorize people. If you don’t select the right people, nothing will work; if you select the right people but don’t authorize them correctly, it may be a disaster. For example, amateurs managing experts, or the strong restricting the strong, etc., will cause internal friction and conflict.
The reason why Buffett refuses to let the company become "some kind of giant full of committees, budget reports and multi-level management" is actually very simple. Committees, various reports, and multi-level management will only make the company fall into management chaos with a high probability.
2. Extreme
Perfection means victory or failure: if we achieve perfect user experience, people will have a good evaluation of the company; if we achieve perfect investment research, we will make a lot of money; if we do not achieve perfect, it is the same as not doing it.
Take the previous example, when I was doing Twitter, I knew I had to provide valuable content, but I needed to persist for a long time to see the effect. (Of course, after the internal group was established, Twitter posts were similar to Moments, which is understandable)
This is the case for investing, making products, and running a business.
I have also recently felt the extreme here, which also includes concentration. It is important to concentrate on one thing and do it well. If you are too scattered, everything will be ordinary.
Extreme is an abstract word, but it actually serves the purpose of the first and third points we are going to talk about today, namely, extreme simplicity and extreme heavy investment.
This point is very important and a bit abstract, but fortunately it is simple enough. Just remember the word “extreme” and you will understand it better the more you use it.
3. Heavy Position
As everyone knows, my investment system is called: "Watch accurately + hold heavy positions", and I have upgraded many versions. Of course, I no longer upgrade the system versions. Firstly, the upgrades are very fast, and secondly, it has been integrated into daily internal sharing.
Looking back today, my understanding and application of this system are very different or have evolved compared to back then.
In simple words:
First of all, diversification of investments is meaningless and is also speculation.
This statement is indeed somewhat arbitrary, because it is not against holding several targets - in fact, it is against diversified investment for the purpose of diversifying risks.
The risk only depends on how accurate your judgment is - of course you won’t be able to make it clear at the beginning, just like I have fallen into many big traps, but at the time I felt that I was accurate.
Therefore, there is nothing wrong with diversifying investments when you are a novice - but you must know this consciously, that is, the key is to be accurate and hold a large position.
Have you made a clear judgment on the cryptocurrency world? I was not sure before whether it included the timing of entry, but now I am sure, including it.
One of the standards for self-audit is that if you have done enough research on a target (such as mastering all the information you can know within your ability), and are willing to take a position of 20% or more, and do not care about short-term ups and downs, and feel that they are normal and controllable, and have an idea of achieving results in a vague period of time in the future, then you should be able to include it in your target.
Seeing this thing clearly is definitely subjective and temporary - you must understand this. We don't want to be prophets or fortune tellers, we can only make the best solution at the moment and remain in awe of market changes.
The most frightening thing about being able to see things clearly is that you copy other people's insights and ignore market changes.
Secondly, how do we define the extreme of heavy holdings?
I have experienced several changes in the extreme heavy position:
One is to go all in within an affordable range. For example, in X2Y2, I not only went all in, but also asked my friend to mortgage his house to give me the money. Looking back, this was of course wrong, but a few years ago, my level was far worse than today, but I was more courageous.
The so-called within the affordable range actually means that I had calculated at that time that if I was wrong and lost everything, would I be able to make a comeback and pay back my friends’ money? I knew I could, but it would be a bit difficult.
So, at that time, I was all in within my affordable range - and I was betting on one project.
In hindsight, NFT is completely gone, and no one could have imagined it at the time; the project team put monetization first, which was too naive at the time, but now I understand.
PS: I am a reliable person, so I not only repaid my friend’s loan as soon as possible after stopping the loss, but also gave him a large sum of extra money as a return - he was extremely surprised and I was very happy too.
The second is heavy positions that involve risk control.
After X2Y2, I started to become conservative. When very good opportunities appeared, I would only use part of my money, such as three months' income or part of the profits to buy.
But at this time, I read a lot of things from great people and found that many legendary bosses used a method similar to the first one I mentioned above to hold heavy positions, and moved left and right.
For example, Liu Qiangdong.
Liu Qiangdong used his first pot of gold, more than 200,000 yuan, which he earned from working as a part-time worker, to buy a restaurant with the intention of setting up a national chain. However, he lost all the money in half a year and simply gave up the restaurant and left, giving the money to his corrupt employees - he chose to draw a line between himself and unreliable people in the fastest way possible.
Later, he started a CD and computer installation business. Because of his integrity, he did better and better. However, when SARS hit, his business was wiped out. He could not afford the rent, so he posted on the forum to sell computers. His business turned out to be pretty good. Dong thought this was great and more promising than opening a store. Everyone was strongly opposed to it. After all, physical stores were too profitable and they were too successful.
Brother Dong is making trouble again, saying that neither side can do well, so I want to close the entity. Now I am selling computers on the Soha Forum. Those who are willing to work can stay, and those who are not willing will get compensation. I will not treat them unfairly.
So Brother Dong won again. His online computer sales soon became better and better, and he got an investment of 18 million to start JD.com.
JD.com initially only sold electronic products, but it found that it still had to build a full-category mall and go all in.
This time the investors were determined not to give in, because as long as they could benchmark against Newegg and the like, and then go public, the valuation would at least increase 100 times, and the investors could exit happily.
Brother Dong said no. He said how about this: listen to me and develop all product categories. If it doesn’t work out, I will compensate you with my shares in the future. I will lose all the money and leave, and you won’t suffer a big loss.
He made the right bet.
As a result of winning the bets repeatedly, he would become more persistent and more daring to go all in. Because JD.com's logistics were often stolen and because the logistics were so poor, he decided to build his own logistics warehouse and delivery team. This was too expensive and all of JD.com's profits were burned up. Investors wanted to withdraw and the company was on the verge of bankruptcy. Fortunately, another big boss took a fancy to it and saved it.
As a result, JD.com took the lead and companies like Newegg collapsed.
As for the rise of Pinduoduo today and Dong Ge's overseas expansion, these are not within the scope of discussion.
From Liu Qiangdong and some other investment and entrepreneurship gurus I know, they all spent money ruthlessly, so much so that I began to reflect that my heavy holdings were too weak. Looking back on some targets, I realized that I had been too light-handed.
So we entered the third stage.
The third is extreme heavy holdings.
This looks similar to the first part, but in fact there is a change in the underlying logic. The first part is similar to mindless heavy positions, while the third part is more cautious but also extremely heavy positions. The difference here is so subtle that I am not good or too lazy to elaborate on it.
I made a few good moves here, but I also fell into a big pit - looking back, it was probably inevitable.
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At present, my understanding of heavy positions has reached a new level - it must be heavy, accurate and fast.
Risk warning: Heavy investment without accurate assumptions can be a disaster.
Do you have the ability to see it clearly? Please use common sense to judge:
What is your level of cognition among the crowd?
Do your investment returns match your level of self-awareness?
Is it just a temporary mismatch or is there a deviation in your positioning of yourself?
Basically, each of us will think about any investment we make, but these thoughts are bound to be full of biases and errors, and can only be self-aware from the perspective of common sense: that is, the less you know, the less success you will have, and the bigger the mistakes you will make.
