The Essence of Investment: The Art of Accepting Gradual Wealth Accumulation

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In the vast world of investment, there is a seemingly simple yet elusive truth: the most difficult thing in investment is to accept the process of getting rich slowly.

When reading *The Psychology of Money*, we come across an interesting story. The legendary investment duo, Warren Buffett and Charlie Munger, actually had another member in the early days – Rick Guerin. Buffett once said that he and Charlie Munger knew early on that they would become extremely wealthy, but they were in no hurry. They firmly believed that this outcome would surely come to pass. However, Rick Guerin was quite different. He was equally intelligent but overly impatient. During the economic recession from 1973 to 1974, with the stock market in turmoil, Rick Guerin chose to use margin loans to increase his investment. But the harsh reality of the market was beyond his imagination. In just two years, the stock market plummeted by nearly 70%. Eventually, due to a margin call, he had no choice but to sell his shares in Berkshire Hathaway to Buffett at a low price of less than $40 per share. When Buffett talked about this incident, he said that Rick Guerin was forced to sell his shares because he took on inappropriate leverage. Delving into the root cause, it may be related to their backgrounds. Buffett's father was a congressman, and Munger's grandfather was a federal judge while his father was a lawyer. They had the risk-resistant buffer space brought about by intergenerational accumulation, which enabled them to calmly practice the investment philosophy of "not selling for ten years." In contrast, Rick Guerin started from scratch. He joined the army at the age of 16 and after graduating from the University of California, Los Angeles, he had to rely entirely on his own efforts for everything. Such an experience made him eager to accumulate wealth rapidly within a single generation to compete with the accumulation of others over several generations.

This story profoundly reveals a truth: in investment, accepting the process of getting rich slowly is an extremely challenging task. Even Buffett's partner had difficulty controlling his inner desires, let alone us ordinary investors. In the waves of investment, we must face the reality and abandon the fantasy of getting rich quickly. Because once desire gets out of control, it will be like a black hole, consuming everything. From the perspective of human nature, those who can achieve gradual wealth accumulation are, first of all, those who can control their desires. Secondly, they are either those with a strong economic foundation who have no urgent need for wealth or those who have a clear understanding of themselves.

So, in the two extreme market environments of a bull market and a bear market, how should we control our inner greed and fear? This is an eternal problem in investment. When a bull market arrives and the market is booming with stock prices rising steadily, people are often carried away by greed and keep adding to their investments, expecting to obtain more profits while ignoring the potential risks. In a bear market, when the market is sluggish and stock prices keep falling, fear causes many people to hastily sell their assets, missing the opportunity for a rebound.

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