How to Avoid Losing Money in a Bull Market?

Many wonder: "Shouldn’t a bull market make money? Why focus on avoiding losses?" But here’s the truth: "Bull markets are the main reason investors lose money!" Today, I’ll explain why and how to protect your profits.

1. Never Chase Prices Higher

New investors typically start small—e.g., testing with 1-2% of their 1M savings. After a quick 20% gain, they add 10-20% more capital, score another 20%, then think: "This beats my day job!" Soon, they go ALL IN at peak prices. When the market corrects, losses hit hard.

I learned this the hard way in 2015. Starting with $200, I kept adding up to my entire $20K savings—only to lose $3K. A cheap but painful lesson.

Key: Even in a non-bubble market, buy the dip, never chase rallies.

2. Either Believe Early or Stay Out

Many dismiss this rally, citing poor fundamentals. That’s fine—only invest within your circle of competence. But the worst move is doubting early, then FOMO-ing in at 4000 points. That’s just donating money.

I’ve long argued A股 is undervalued, yet most mocked it as a "casino." Now, after a 20% rise, some dream of 6000+ points. Ironic, isn’t it?

Rule: Either avoid stocks entirely (stick to bonds/funds) or get in early at low valuations.

3. Use Only Idle Cash; Avoid Leverage

Short-term moves are unpredictable. Only invest money you won’t need for 3-5 years. Using house down payments or margin loans is like free-climbing without a rope—one slip, and you’re finished.

4. Don’t Jump Between Hot Sectors

Chasing hype means buying after big rallies, when risks outweigh rewards. The more crowded a trade, the harder to profit—why would the crowd let YOU win?

Solution: Diversify. As Charlie Munger said, "Diversification is protection against ignorance." If unsure, just buy broad-market index ETFs.

5. Stay Out After Selling

If your plan is to "take profits and exit," stick to it. Many sell, then jump back in after seeing more gains—only to crash later.

Investing’s Core: Avoid ruinous losses. Survive the downturns, and a few good bets can transform your wealth.