A few days ago, I shared three major financial theorems: the value of time, the agglomeration of funds and risk sharing. Today, we continue to share how to build a financial world outlook. World outlook first, methodology second. The relationship between worldview and methodology is worldview. In fact, it naturally contains methodology, but many of us don’t think so. We will try our best to find this method first.
For example, many of us are thinking about whether we can get a stock code from an “insider”, and then determine whether we can buy it tomorrow, whether we can sell it the day after tomorrow, and how much money I can make. This is an instinctive idea of many people to say how to get this method, but I want to say that it doesn’t make much sense, Because the money earned by luck will eventually lose out by strength.
The old ancestor said well: if morality does not match, there will be disasters. This is why we should share the financial world outlook with you today.
What is the financial worldview
What is a complete financial world view? It should include two aspects. On the one hand, you should recognize the power of finance; On the other hand, you should also know the negative effects of finance.
Three days ago, we explained in detail how finance can empower us from the dimensions of time, capital and risk: finance can help us process time, gather capital and disperse risks. These three abilities are called “three theorems of finance”. However, if we think from another angle, may these huge financial capabilities also lead to negative effects? Of course, there are many criticized financial phenomena in society, among which the most well-known are “Matthew effect” and “moral hazard”.
Matthew effect: finance can amplify the accumulation of social wealth hundreds of times, but the problem is that this ability is not shared by the whole society. As the old saying goes, “people go up and water flows down”, so does capital. It will naturally flow to those who have more initial wealth and more initial power. The greater the leverage effect of finance, the more prone it is to the Matthew effect of “the poorer the poor, the richer the rich”.
Moral hazard: because finance and future time are connected, and the future is invisible and untouchable, the financial market naturally has great information asymmetry. With the huge wealth temptation and the huge information asymmetry, the greed and desire of human nature will inevitably be amplified, and many people will use their information advantages to obtain ill gotten Wealth: for example, in the 2008 global financial crisis, many Wall Street staff actually knew that the quality of subprime mortgage products was particularly poor, but they didn’t care, As long as they can play the game of beating drums and passing flowers and sell their products, they use this complex financial model to package and deceive investors. Ordinary investors are particularly easy to fall into this “moral hazard” pit.
How to build a financial world outlook?
Just now we talked about a complete financial world outlook. On the one hand, you should recognize the power of finance, learn to choose the right financial market at the right time and make investment and financing decisions that are conducive to you; But you should also recognize the negative effects of finance, avoid the minefield of Finance and avoid falling into the pit of Matthew effect.
To do this, it is not enough to have “concept” and “framework”. You also need to have a lot of basic financial knowledge. I divide these basic knowledge into six sections, which I call “six key techniques of finance”:
Financial institutions: financial institutions refer to financial intermediaries engaged in the financial industry. They are part of the financial system. The financial industry includes banking, securities, insurance, trust, fund and other industries.
Financial instruments: financial instruments are your weapons in the financial world. The more skillful you use various weapons, the greater the probability of your survival. What financial instruments are there, such as stocks, futures, options, foreign exchange, bonds, etc.
Investor decision-making: after understanding financial instruments and financial institutions, we will return to our investors’ decision-making itself, a series of contents about asset allocation, securities selection and irrational decision-making. For example, how to determine your investment direction according to your own and family’s anti risk ability and income level; For example, given the investment quota, do you choose Tencent’s stock or Maotai? Which of the hundreds of monetary funds do you choose? How much? For example, how do you overcome your human weaknesses in investment decision-making: panic, fear, etc.
Corporate decision-making: at what stage does the enterprise apply to what method of financing? Bonds or stocks? What is the best stage for you to go public? After making money, do you want to pay dividends to shareholders? How much? If you are a business owner, do you want to give equity incentive to your employees, and how much? How? How do you confront others when there is merger and acquisition pressure in the market?
Financial regulation, innovation and Crisis: why do financial markets need regulation? Why do financial institutions engage in financial innovation? Why is innovation and regulation a cat and mouse game that will lead to the financial crisis? What impact will these financial supervision, innovation and crises have on our lives and investments?
Technology Finance: the last sector is also the hottest topic now, technology finance. We want to discuss the future of the financial industry. For example, how does the Internet break the scene boundary between finance, business and social networking? For example, will new terms and products such as blockchain, bitcoin and Digital Banking change our lives? In the era of artificial intelligence, will human credit relationship be reshaped? More importantly, what will the future finance look like?
When you finish learning the contents of these six sections, you will have a complete sense of the structure of the financial market, and your financial world outlook has formed a solid building. Finally, I will ask you to raise these knowledge to a “Tao” stage. You have to turn these knowledge into financial thinking and apply it to all aspects of life: job hunting, study, entrepreneurship, marriage, family, life
Using financial thinking, you can become a person who weighs risks and benefits very well. In financial terms, you should not only be a value investor in investment, but also a value investor in life.