Don't be a turkey You think you live in a linear world, and that is your greatest risk. Imagine a turkey. From the very first day of its life, there are kind humans feeding it. With each feeding, a "truth" is reinforced in the turkey's mind: humans are my guardians, the world is safe, and there will be food tomorrow just like today. In this data model, confidence increases over time. On the first day, the sample size is 1; on the hundredth day, the sample size is 100. By the nine hundred ninety-ninth day, this turkey can even cite "first principles" to prove: based on the historical data of the past 999 days, its life is extremely stable, and its Sharpe ratio is nearly perfect. Its confidence peaks on the thousandth day. Then, Thanksgiving arrives. What happens on the thousandth day is a complete "black swan" for that turkey; but for the butcher, it is just a pre-planned certainty. In the world of investing, 90% of people unknowingly play the role of that turkey. Mistake 1: Confusing "induction" with "deduction" The most common mistake we make in investing is over-relying on the rearview mirror. When you see a candlestick rising for three consecutive months, your brain tells you: this is a good company, this is a good asset. You look at the floating profits in your account and feel like you have mastered the wealth code. But this is just induction. The fatal flaw of induction is that no matter how many white swans you observe, you cannot deduce the conclusion that "all swans are white." As soon as one black swan appears, your entire logical edifice will collapse in an instant. True top players never rely on past candlesticks to deduce the future. They use deduction; they deduce from the essence of business, from the source of cash flow, from the underlying logic of supply and demand. If you buy because of past gains, you are just waiting for the Thanksgiving turkey. Mistake 2: Mistaking "luck" for "alpha" Bull markets are a breeding ground for turkeys. In a period of excessive liquidity, even junk assets can soar. At this time, many people develop an extremely dangerous illusion: not only do they think they are making money, but they also believe they are making money because they are "smart." This is called "self-serving bias" in psychology. Do you think your stock-picking skills are exceptional? No, it’s just because the wind is strong, and you happen to be standing in the wind. The butcher feeds the turkey not because it behaves well, but simply because it’s not yet time for slaughter....