Some people put forward it becauseSurvivorship biasHowever, for more than 30 years of continuous decision-making, it may not be possible to rely solely on survivor bias. Exploring problems has always been the reason for stripping off layers of fog and pursuing the deepest level.

The appearance of the problem-- the failure of Economic Model

Some people have used the joke "in the past five economic crises, economists have predicted 15 times" to laugh at economists' inability to predict economic crises. Not only that, economists often make mistakes in predicting ordinary economic affairs. Economists and media people often use economic model failure to explain this problem.

Indeed, it seems appropriate to explain this problem in terms of economic model failure, because its own economic operation connects many elements, and the results produced by the interaction of these elements are difficult to explain and predict by economic models. I'm afraid it's a bit untenable to take it as the root cause.

In particular, many people can also regard economics as pseudoscience and negate the role of economic models in essence by comparing with mathematical science.

At the same time, the second question at the beginning of the handover, that being the case, how can there still be people who continue to outperform the market?

Alternative explanation-- Behavioral Psychology and reflexivity

There is an effect to be avoided in both medical and psychological experiments-the placebo effect.

Placebo effect means that although patients receive sham treatment, they have a useful therapeutic effect because they believe that the treatment is effective. Placebo effect is a typical psychological suggestion, and its existence shows that psychological suggestion has a strong power. At the same time, this force often affects economists, analysts and even the securities market as a whole.

Economists and analysts are often overconfident because they have more relevant knowledge than ordinary people, and statistics have shown that the more confident economists are, the more likely they are to predict economic phenomena and are much more likely to make mistakes. At the same time, psychological cues often lead people into a single clue, making it easier to follow emotion than reason.

Some analysts often give a stronger meaning to a research newspaper because they have made relatively great efforts to it, while those hot stocks will increase the confidence of investors and even analysts in it as the number of research institutions increases, making it easier for people to ignore some common sense business risks.

Soros used reflexivity theory to explain the occurrence of some economic phenomena. He believes that when someone is involved in an event, the participants' view of the world is always one-sided and distorted, which is the principle of fallibility.

Another proposition is that these distorted views can in turn affect things related to that view, because wrong views can lead to inappropriate actions, thus affecting the event itself. This is the principle of reflexivity.

For example, treating drug addicts as criminals causes them to commit crimes. Because it misunderstood the problem and interfered with the proper treatment of drug addicts.

The author believes that the latter problem can be explained slightly from this point of view.First of all, experienced investors have often learned how to avoid emotional troubles on their investment behavior. Secondly, they either adapt to or make use of this reflexivity, or they themselves become participants in the formation of reflexivity.

The first article can correspond to not only some technical analysis factions, but also value investment factions. The latter is the important reason why they have continued to compound interest for decades. That is, they themselves become the promoters of reflexivity.

Interesting analogy-- Butterfly effect and Quantum Physics

A butterfly flapping its wings in Brazil could cause a tornado in Texas in the United States. "the butterfly effect refers to the result of the development of things, which is extremely sensitive to the initial conditions, and the minimum deviation of the initial conditions may cause great differences in the results.

This effect can be used to explain some phenomena of inaccurate weather forecasts, and it can also explain some of the errors in economic models. Generally speaking, economic models are multi-factor, with the establishment of more factors, the greater the possibility of error. Using more intuitive words to explain is non-linear.

Combined with enterprise multi-factor research, it can be understood that the element that supports an enterprise is a complex network structure, and the change of any node will cause a chain reaction of other nodes, which can not be simply explained by the simple linear causality we thought.

In addition, there are different dimensions that we can't predict, which are also affecting the change of things. At the same time, although classical physics has established a definite law of physics, which we recognize as science, and many people also distinguish it from the scientific nature of economics, there are some interesting analogies worth paying attention to at the level of quantum physics.

The first is the Heisenberg uncertainty principle, which is explained in popular words that it is impossible for a particle to have a definite momentum and a definite position at the same time, at the same time, some people think that the particle itself is a probability distribution.

The second is the conjecture of multi-dimensional space caused by string theory. According to this theory, particles are tiny strings that vibrate in space-time. In order to make this theory compatible with quantum mechanics, this theory requires that space-time be ten-dimensional.

The first question can lead to such a thinking: since the matter that can no longer be divided in this world is a probability distribution, or probability, is the complex social and economic activity itself a probability form?

The second problem is more realistic. The technical chart can be said to be a kind of dimension promotion that reflects the real stock price fluctuation through the relationship between volume and price, so what is the specific scope of its error and application when explaining or trading in this way? Will the same technical graphics come from different motivations and affect the results?

Although the above are just some inconclusive conjectures, maintaining an open exploration of the origin of things seems to be respected by many investment masters.

The regression of the problem-- probability and certainty

Any experienced investor will find the importance of probability, both fund managers and professional individual investors are committed to looking for opportunities with high odds and low odds.

However,Why is it that only a small number of people in this group can achieve compound interest for many years? The answer may lie in the jump from nonlinearity to certainty.

First of all, following probability comes first.Although there are only two words, it is necessary to master a wealth of knowledge behind the success rate. From finance to enterprises to technology and human nature, every jigsaw puzzle is part of the probability assessment. If some parts are flawed, even with short-term performance, it will also be tested by time and style changes in the long run.

Secondly, it has the ability to intervene or contribute to certainty.When capital reaches a certain level, like lions on the prairie, wolves and vultures keep an eye on every move, making it more difficult to achieve compound interest. At this time, I am afraid it is necessary to convey ideas, capital operation, and create value, which is where entrepreneurs and investors end up in the same way.

Each of the above steps is a great test of people's energy and interest, whether it is self-cognition or external cognition, it is a very difficult threshold for everyone to pass. Therefore, like any industry, investment is full of 28 rules everywhere, not only that, even well-run enterprises often have their cycles, prosperous years and depression years are common.

Conclusion

Many people have not formed nonlinear thinking for a long time, because through the progress of science and technology and the efforts of the whole society, we have built a relatively stable society with sense of security. Most people are different from school to family and then to old age, but there is little difference, but those uncertainties have been borne by scientists, politicians, entrepreneurs, medical practitioners, military and police and other social roles. To return to the original dangerous living environment of human beings, uncertainty is the original appearance.

Therefore, investment is no different from other industries, on the one hand, to seek a safe place of certainty for capital, on the other hand, it is also to support enterprises to turn countless uncertainties into certainty. Such a paradox is the norm in the investment world.