My investment mentor 400-Li Daxiao

Understanding Mr. Li Daxiao’s past

The time before I understood Mr. Li Daxiao

was the darkest period of my investment career.

At that time,

my research into technical analysis had hit a low point,

and after struggling, I chose to give up on technical analysis.

However,

technical analysis was the only method I knew at the time to make money from the stock market,

and abandoning this path was equivalent to giving up on earning returns from the stock market altogether.

In despair, I did not choose to leave the market,

after all, making money with money is too tempting,

so I chose a more chaotic path,

announcing that I wanted to do value investing without knowing how to do it.

Initially,

I heard that value investing meant buying stocks at a price below their intrinsic value,

but I didn’t actually know how to value a company,

so I took another extreme approach—since I didn’t know the intrinsic value,

I simply bought a large batch of stocks that had been declining over the long term,

thinking that some of these stocks’ prices during their long decline would be below their intrinsic value.

In fact,

looking back at the stocks I bought at that time,

some of them indeed surged later,

some fluctuated with little change in price,

some continued to fall sharply,

and a few even delisted.

But at that time,

shortly after I bought in,

one of the stocks turned into a “monster stock,”

with several consecutive limit-ups,

and even a “ground-breaking” limit.

At that time,

besides feeling that I was making money,

more often I felt confused and scared,

because I didn’t understand why this stock suddenly soared,

the numbers on my account rapidly increased,

so I sold that stock.

A few days later,

that stock plummeted again,

and my fear intensified,

worried that other stocks might also fall sharply like this one,

so I sold all my remaining stocks,

and my first attempt at “value investing” ended abruptly.

Fearing a big drop,

I searched online for many videos related to value investing,

and heard that to make big money with value investing,

you need to heavily concentrate on leading stocks,

so I selected several stocks that had fallen sharply,

which appeared as industry leaders on stock selection software, and bought them all.

Looking back,

this portfolio was different from the previous one,

first, there were no delisted stocks,

second, most stocks showed gains after several years of dividend adjustments,

some of which had significant increases.

However,

it was 2022 at the time,

so when choosing the heavily fallen leading stocks,

I almost inevitably picked the real estate sector leaders at that time,

which now, in hindsight,

had already fallen by about 80-90%.

But,

luck was still on my side at that time,

shortly after buying in,

the market rebounded and experienced a special valuation rally,

and my stocks gained some profits again,

but then the market started to decline steadily,

and when my gains nearly disappeared,

I couldn’t resist and sold all my remaining stocks.

After clearing out my holdings this time,

I found that the market was still continuously falling,

so I looked for safer investment options,

and after some research,

I heard that index funds are less risky,

so I bought several different types of index funds,

including broad-based indices,

industry indices,

and strategic indices.

This time, my luck was not as good as before,

the market kept falling after I bought in,

but because I firmly believed that index funds had lower risk,

I didn’t sell my funds,

and at the market bottom,

I endured a maximum drawdown of about 25%.

At that time, I couldn’t eat or sleep well,

the only thing I remember was endless Genshin Impact,

every day I dared not look at the market,

waking up and playing Genshin Impact,

when tired, grabbing a quick meal or taking a short nap,

then waking up and continuing to play.

Finally, when the market rebounded,

I felt I had almost broken even,

so I quickly sold all my fund shares.

After once again clearing my holdings,

I looked for even safer ways to invest,

and after some research,

I thought that buying more during dips and dollar-cost averaging into index funds were good strategies,

so I started trying to invest this way,

but I still couldn’t invest calmly,

when prices rose, I felt I had bought too little,

so during dollar-cost averaging, I bought more when prices rose,

but when prices fell, I felt I had bought too much,

so during dips, I bought less.

Similarly,

it was also difficult to stick to the plan of buying more during dips,

and even hard to set the plan in the first place,

after buying once, if prices fell,

I hoped they would fall further before buying again,

after buying once, if prices rose,

I wanted to buy a little more,

and I would just combine these actions into one calculation.

Thus, in this tug-of-war,

my funds once again ran out,

and the market continued to decline.

At this moment,

I met Mr. Li Daxiao.

Meeting Mr. Li Daxiao

actually, I don’t have a specific moment in time for when I met Mr. Li Daxiao,

although my clear memory is that I met him after I started dollar-cost averaging,

just before my funds were nearly exhausted,

but I always believe that I brushed shoulders with Mr. Li Daxiao earlier in my investment journey,

or perhaps before I started investing,

maybe I heard his voice,

or read his writings,

it’s just that the timing wasn’t right,

fate was insufficient,

so I couldn’t truly see Mr. Li Daxiao,

nor truly meet him.

I think this is a reflection of Mr. Li Daxiao’s efforts in spreading his ideas,

he’s like an endless gentle rain in the investment world,

many people dislike him,

a few appreciate him,

many ultimately ignore him,

in the eyes of those who ignore him,

he seems nonexistent,

and indeed, it’s hard for him to influence them.

But those who can truly see Mr. Li Daxiao,

will feel his influence in every blade of grass and every tree in their investments,

in the vast sky and land.

I first started watching Mr. Li Daxiao’s videos during a time when bearish market comments were rampant,

at that time, the A-share market was constantly searching for a bottom,

while other emerging markets,

East Asian developed countries’ markets, and European and American markets kept reaching new highs.

The self-media I could see mostly posted losses,

criticized the market,

and I desperately longed for a voice that could be bullish on the A-share market,

and that voice was Mr. Li Daxiao.

Initially, I watched his videos mainly for entertainment and distraction,

every market close,

there was an old man on the screen constantly saying “A red signal flare rises steadily,” “Incremental funds are on the way,” “The three indices surge by 3 points,” “Limit-ups outnumber limit-downs X:1,”

“what a big deal,” “Institutions are sweeping retail and big players’ chips into one net.”

Watching Mr. Li Daxiao chuckle on the screen,

I also felt that days of holding stocks and watching them fall weren’t so boring,

sometimes I could even laugh out loud.

Gradually understanding Mr. Li Daxiao

When I first watched Mr. Li Daxiao’s videos,

I can say I was a numb investor,

this numbness came from the long-term decline of the market,

and from confusion about how to invest.

However,

during the process of watching Mr. Li Daxiao’s videos,

I found that he often repeated a few sentences,

and I didn’t find it annoying,

on the contrary, I found it quite interesting.

Over the years,

with the bombardment of four or five videos every day,

I gradually went from numbness to vitality.

So I went back to my old profession—backtesting.

I kept searching online for Mr. Li Daxiao’s investment-related remarks over the past decades,

and compared them with the market conditions and policy trends at the time.

Eventually, I found that,

the principles behind Mr. Li Daxiao’s past remarks were consistent.

So,

I began to try to understand the specific meaning behind Mr. Li Daxiao’s words,

or rather,

I wanted to find the rules of the capital market from someone with 34 years of experience,

who often makes mistakes in the short term,

but has predicted long-term peaks and bottoms multiple times,

and try to make my own choices based on these rules.

At that time,

every day I kept listening to or watching Mr. Li Daxiao’s videos,

by the end of 2023, he had about one or two hundred videos,

to be honest,

I had watched each more than five times.

Through this repeated process,

I gradually understood many of the capital market laws behind Mr. Li Daxiao’s remarks and the choices I wanted to make,

and my investments began to become more peaceful,

and naturally, a personal investment system emerged.

In fact,

the thing I hated most in school was repetition,

I was obsessed with understanding a principle,

solving one or two example problems,

and then feeling free to roam in the science and engineering exam halls.

But when dealing with complex problems,

facing my undeniable mediocrity and countless flaws,

I realized that repetition is an extremely important solution.

Because of mediocrity and flaws,

mistakes are easy to make,

while doing things right is very difficult,

especially when I was clueless or went astray and wanted to get back on track,

I needed to constantly repeat correct principles and fundamentals.

To this day,

my flaws are still countless,

the mistakes I make are replayed over and over,

and I don’t think I fully understand Mr. Li Daxiao,

but I believe I am definitely not completely unaware of his ideas.