It is hard to explain how lifesaving these ideas are. In a calm setting, they look banal, almost boring. But markets are structured in such a way that they truly sink in only after mistakes, losses, sleepless nights, and the desperate desire to “at least break even.”
Here is what the market teaches harshly and without sympathy.
Cheap can always get cheaper.
Price is not an argument. The fact that something has “already fallen a lot” means nothing. An asset is not obliged to reverse just because it seems to you there is nowhere lower to go. The market does not know the word “bottom” until it defines it retroactively.
Expensive can always get more expensive.
What looks overvalued can remain so for months or years. Strong assets rise longer than seems reasonable. Attempts to “catch the top” usually end with the market moving on without you.
The trend matters more than your opinion.
Your beliefs, analysis, and logic are irrelevant if the market is moving the other way. A trend is the collective decision of millions of participants with money. Arguing with it is costly.
Markets can stay irrational longer than you can stay solvent.
Even if you are conceptually right, it does not mean you will survive financially. Margin calls, liquidations, and psychology do not ask who was “smarter.”
Strength almost always leads to more strength. Weakness leads to more weakness.
Assets with momentum attract capital. Weak assets lose trust and liquidity. Trying to “catch falling knives” is the ego’s favorite trap.
Losses compound faster than gains.
Minus 50% is not just a loss, it is a problem. To recover, you need +100%. The market does not punish mistakes, it punishes the lack of control over them.
Recovering from large drawdowns requires unrealistic returns.
The deeper the fall, the more extraordinary the performance needed to get back. That is why major losses break strategies and psychology.
You do not have to recover losses in the same way you lost them.
The most common mistake is trying to “win it back” where you lost it. The market owes you nothing. Sometimes the best move is to close the page and start from scratch.
Cash is a position.
Not being in the market is also a decision. Cash provides freedom, time, and psychological calm. No trades are often smarter than bad trades.
Not losing money is half the success.
Many can make money. Very few can preserve capital. In the long run, the winners are not the bravest, but the most disciplined.
The market does not punish ignorance. It punishes overconfidence, haste, and refusal to accept reality.
Save this. Let it seem obvious now, rather than become clear too late.
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