Why do the world's top VCs prefer bear market layouts?

There is a famous saying in the investment circle: Risks come up, and opportunities come down.

But in real life, most people like to revel in bubbles and expect this bubble to last forever, just like Dutch tulips in the seventeenth century, Japanese house prices in 1990, Nasdaq in 2000, new Three boards... and ignore the layout of the bear market, many top VCs like to make layout in the bear market.

How is the bear market laid out?

1. Reduce valuation expectations and enter the mid-to-late bear market

Many people will use the so-called valuation to predict the position and enter the early stage of the bear market. The problem lies in the anchoring effect of this valuation. In the bull market, the high valuation has been accepted in the heart, so when there is a 20-30% valuation discount, it feels that the opportunity has come. In all bear markets, the overall decline in valuation will start at 50%, and it is normal to have a halving. Therefore, the layout of the bear market is definitely not to enter the market in a hurry at the beginning of the bear market, but must wait until the middle and late stages of the bear market. The so-called mid-to-late period refers to the time when the market is sluggish, the price is sluggish, the transaction volume is sluggish, and the popularity is sluggish. When there are people in the market complaining about the decline, it cannot be said to be in the middle-late period. The middle-late period is often the time when the market is numb.

2. Allocate funds reasonably, and never fill up the warehouse quickly

Another major feature of the bear market layout is the arrangement of funds. In a bull market, the time is right and the position is filled quickly. In a bear market, the layout is slow and the position is never full. The layout of the bear market should always ensure that there is money in the pocket, because no one knows where the "bottom" is. Many investors did not invest in the wrong way, but quickly filled their positions in the bear market, blocking their liquidity. In this case, both in terms of position and mentality, it will be unusually passive. Reasonable allocation of funds and entry into the market in batches are one of the fundamentals of the bear market layout.

3. Abandon precise bargain hunting

Many investors are keen to buy bottoms, and they all want to find the real bottom, but they don't know that the bottom is not copied at all. Even if you buy the lowest point, it is just luck, not because you have good eyesight and strong ability. The market can only form a bottom when it is extremely pessimistic, and extreme pessimism means that ordinary investors will give up the idea of buying the bottom, and there will be no mentality of buying the bottom in the market. The layout of the bull market is fast, ruthless, and accurate, and the layout of the bear market is slow, soft, and partial.

Slow refers to slow layout, soft refers to gentle entry, and partial refers to inaccurate prices. Time for space is the core of the bear market layout.

4. Have sufficient foresight

The most important point of the bear market layout is to have a full understanding of the investment target. Look at the future development trends, look at the concepts behind it, and see if the business model of the project has prospects in the future. For example, the current Metaverse, WEB3 and other high-quality currencies will definitely allow you to recover and make money in the bull market.

Buffett has a saying: Be greedy when others are afraid, and be afraid when others are greedy. Although the decline brought about by the fundamentals is unpredictable, the idea of buying on dips is still necessary. It's just that the most important thing this year is to adjust your position not to be too heavy and buy in batches. First of all, you must consider your risk tolerance, and leave the rest to time to verify. Historical trends tell us that the future of cryptocurrencies associated with the metaverse is very promising. Everyone must grasp the dividends of the blockchain and wait for the return of the bull market. We will meet at the top!