In the stock market alone (III): Every crisis creates new millionaires.

We continue with the third chapter of the book One Up On Wall Street written by Peter Lynch.

*"The future we always think about can never be the same as the past, but we still prepare in our own way. All of this reminds me of what the Mayans thought about the universe. According to Mayan mythology, the universe was torn apart and destroyed four times. Each time, the Mayans swear that they will learn from their sufferings and be better prepared from now on, but their preparations are always made according to the previous disaster, first there is a flood, the survivors of the flood move to the hills in the forests, build high embankments around their villages, and build their houses on trees. But all their efforts are in vain, because the second catastrophe sets the world on fire. After the fire, the survivors descended from the trees and built new stone houses for themselves, but the village was built on a large crack in the ground. Soon, the world suffers an earthquake again. I don't remember the fourth catastrophe that befell the Mayans, maybe it was an economic recession, but no matter what, the Mayans were caught off guard by that too. At that time, they are busy building houses that will not be damaged by the earthquake." *

Capturing opportunities in a crisis environment

As can be understood from this story, what we do is to take precautions in our own way by preparing scenarios about the future based on the past, but the measures we take are based on the premise that the past will be repeated exactly. Because of all this, what really needs to be done is to change our tendencies in general. In other words, we need to prepare for different scenarios on what we can do in times of crisis by strengthening our psychology and creating new mental frameworks for ourselves. People often believe that the world comes to an end after every bad event, but throughout human history, it has been seen that adaptation to new environmental conditions has always continued. In other words, human beings are essentially creatures that can adapt to any situation, and therefore we can use this feature to our advantage. The saying "every crisis creates new riches" is proof of this situation. If you can train yourself to see the opportunities in crisis environments, it is quite possible to buy at the point where everyone is afraid at this point. When Bitcoin fell to 15 thousand dollars, one group thought that the sector was completely dead and was nothing more than a scam, while another group must have been a mass that made (alım by buying at those levels, so the price continued to multiply and grow their yükselebilsin) balances. Educating yourself in different areas will allow you not only to "look", but also to "see" beyond looking.

Risk balancing

*"Unrealistic expectations can alienate people from the stock market. You may get frustrated and throw your investments in the air at the wrong moment. Or worse, you can hold on to the shares longer than necessary and make a loss, waiting for some gains that will never materialize." * In some periods, you can make a profit of 25 percent and in others you can lose 10 percent, it is the nature of the stock market to win and lose. What needs to be done is to continue to play the game systematically, consistently and consistently. During portfolio management, it is the most rational way to evaluate the risk correctly and turn to different types of shares/coins. The trick is to act consciously. It is necessary to balance risky investments with a high rate of return with investments that are risk-free and have a relatively low rate of return. Lynch also states that younger investors are more fortunate than older ones because they have more time ahead of them to try different methods and make mistakes and find the right stocks/coins. You may not get rich right away, but if you can really pocket the experiences you've gained by keeping your perspective broader, you'll be able to position yourself more accurately in the future.

The Importance of Portfolio Diversification

Finally, Peter Lynch has repeatedly emphasized the importance of portfolio diversification in his book. According to him, it is much more sensible to spread your money across multiple products rather than investing all of it in a single product, because even if one of the products makes a very high profit, it will positively impact the overall portfolio performance. So how should you diversify your portfolio? First, as the risk ratio increases, the reward ratio also increases. Therefore, different categories can be established based on risk levels when creating a portfolio. Low, medium, high, and very high-risk investment instruments can be selected. Even if some of the pairs cause you losses, if one or two of your high or very high-risk investments rise, your profit level will be so high that you can more than compensate for your losses. Secondly, you should buy as many stocks/coins as you can control. If you are constantly engaged with the markets and can follow price movements, and if you can react quickly to market movements, then you can have a slightly larger number of products on hand. Thirdly, portfolio diversification also includes active control. For example, when you make a very high profit from a product, you can sell it and transfer a part of your gain to a different product that you think has potential or to a product that is at a loss.

This article does not contain investment advice or recommendations. Every investment and trading action carries risks, and readers should conduct their own research when making decisions.