Investing Is a Modern Survival Skill: 7 Beginner Concepts from Inflation to DYOR

TL;DR

The core idea for new investors isn't "how to get rich" — it's how to keep what you've earned from being eaten by inflation. This article covers seven concepts: fighting inflation, the cycle between inflation and investment behavior, the psychology of optimism and pessimism, risk-return ratios, asset allocation, five common analysis methods, and continuous learning + DYOR (Do Your Own Research). Three recommendations for learning at the end.

Disclaimer

A heads up: what follows is my personal view, not investment advice. I'm not encouraging anyone to copy my moves — I'm just sharing how I think about investing and money.

Why do I say this? Because giving actual investment advice requires a license.

So be especially wary of unlicensed people offering investment opinions, free investment groups, and tips from friends and family.

But don't assume that having a license means you're safe either — plenty of licensed analysts also pump and dump.

What are the seven concepts every beginner should know?

These seven concepts are what I — after going through funds, Taiwan stocks, bonds, and a crypto bear market from 2019 to 2023 — wish I'd known from day one:

Fight inflation, protect your gains: investing is about stopping inflation from "diluting" the money you earned.
The cycle of inflation and investment behavior: inflation and investor behavior feed each other in a vicious loop.
The psychology of optimism and pessimism: market ups and downs are driven by collective optimism and pessimism.
Risk-return ratios across asset types: understand the risk-return profile of different instruments.
The right asset mix for you: figure out your investment style and pick a matching allocation.
Five common analysis methods: fundamentals, chip flow, technicals, news, and capital flow.
Keep learning and DYOR: do your own research and own your decisions.

My investing background (why am I writing this?)

I started investing for real in 2019. My first product was a mutual fund.

In 2020, fed up with the limitations and downsides of funds, I exited and moved into Taiwan stocks.

That same year, thanks to Taiwan's growing fintech sector, I got access to bonds (in the past you needed NT$30M to open a bond account).

In 2021, COVID drove a huge rally in shipping stocks. I held Wan Hai and Evergreen, both rose sharply, and I took profits.

In 2022, I started investing in crypto and NFTs, then got hit by the bear market — losses of 50%+ on most positions, some down 90%.

In 2023, I kept buying through the early-year bear market. By year end the rebound had wiped out my bear-market losses.

After surviving that bear market, I finally got what Howard Marks meant:

If you've lived through a financial crisis and stayed in the market long enough, you'll naturally accumulate wealth.

I recently caught up with a friend I hadn't seen in a while and we got into a long conversation about investing.

He said my views were fresh — he'd never heard anyone frame it this way. I didn't invent any of this, of course.

But seeing that other investing friends might benefit from a different angle, this article was born.

Concept 1: Why is investing about "protecting gains," not striking it rich?

The goal of learning to invest is: don't let the money you earn get eaten by inflation.

Right — not to strike it rich, not to chase high risk for high return, not to compound your way to riches. The goal is to protect what you've already earned.

The normal inflation rate should sit around 2% per year. But COVID pushed it past 6%.

That's terrifying — it means the money in your bank account is shrinking three times faster than usual.

Flip it around: if inflation makes money smaller, what gets bigger?

Answer: the price of everything. So when inflation hits, you should buy as many assets as possible.

In accounting, an asset is defined as:

Something that earns money for you — bonds, stocks, equipment, intellectual property, real estate.

Why buy more?

Because the things you buy will get more expensive due to inflation. When you need cash, you sell — protecting your gains, maybe even profiting.

But before that, there's something you need to understand:

Concept 2: How do inflation and investment behavior form a vicious cycle?

First: inflation is inevitable. It's only a question of how strong, and how much regular people feel it.

Inflation usually spikes during unpredictable global events — financial crises, pandemics, the Russia-Ukraine war.

Why? Because any major global event tends to create scarcity in certain limited resources.

Wealthy people who anticipate this scarcity start buying in bulk — i.e. buying assets, as I described above.

This behavior further raises inflation, creating a vicious cycle.

Here's how it plays out:

Global event hits, supplies dry up → inflation +
Some people predict more inflation, hoard assets → inflation ++
Government sees the economy struggling, cuts rates and prints money → inflation +++
People notice low rates and excess cash, borrow to hoard more assets → inflation ++++
Inflation ++++ → stocks, gold, futures all soar (the hoarding effect)

Inflation happens because people buy assets en masse and push prices up — not just because currency loses value.

Once currency depreciation crosses a threshold, those who notice trigger the chain above and create the cycle.

Look at the MSCI Global Economic Index — a chart of world economic growth from 1987 to 2023.

Three things to notice in this chart:

The line trends upward across decades — inflation is inevitable, and cash quietly shrinks if you don't invest.
When a global crisis hits, the index drops first, then climbs higher than before. Remember the post-COVID stock market? Hit a record 18,000.
The long-term trend is up, but there are cyclical swings. Master the cycle and you've mastered the timing of buying and selling.

That's why I keep saying investing is a modern survival skill.

If you don't invest, inflation eats your savings.

In Mastering the Market Cycle, Howard Marks writes:

The index trends up over the long run, but with cyclical fluctuations. The question I get asked most is "where in the cycle are we right now?"

That question determines whether to buy or sell right now.

The challenge: how do we know where in the cycle we are?

Concept 3: How do optimism and pessimism drive market cycles?

The famous Shoeshine Boy Theory says: when even the kid shining your shoes on the street is talking about stocks, the market is overheated.

In my own version: when I see high schoolers checking stock apps on the MRT, that's when I get nervous.

What does this have to do with cycles?

Cycles are a natural phenomenon — they show up not just in markets but everywhere.

When you're too optimistic, you misread situations. That misreading produces the pessimism that follows.

When the whole world is in the market, the market is full of optimists.

Optimists push prices up, which attracts more optimistic and frenzied buyers, which pushes prices higher again.

But here's the question worth asking:

If everyone in the world has already joined and there are no new buyers left, what happens to prices?

They stop going up.

What comes after they stop going up? They fall.

Because someone takes profits and sells, the slide begins.

As more people sell, the slide turns into a crash.

How do the people who bought at the top feel? Extremely pessimistic.

The crazier the buying on the way up, the crazier the dumping on the way down.

The cycle is a natural phenomenon: after optimism comes pessimism. After things go up too much, they fall.

By watching market indicators and the levels of collective optimism and pessimism, you can sense where you are in the cycle.

But for beginners, you only need to ask one question: am I being too optimistic? Am I being swept along by the crowd?

The biggest beginner trap: getting too optimistic about an asset because of someone else's influence.

I've fallen for this myself. Someone hyped up a stock to me, I bought with full confidence — and lost 50%. A painful lesson.

Emotions are dangerous in investing. They lead you to make irrational decisions without realizing it.

That's why understanding risk-return ratios matters.

Concept 4: How do fixed deposits, bonds, stocks, and crypto compare on risk-return?

Not investment return — risk-return. I think that's the more accurate framing.

I wrote about this in high risk, high reward.

If you arrange common investment products by return rate, it looks roughly like this:

From low to high: fixed deposit > real estate > funds > bonds > stocks > futures > crypto

Fixed deposit: ~1.5% in Taiwan, slightly below the inflation rate.
Real estate: ~2%. A NT$15M property earns ~NT$300k/year in rent, but you have to deduct expenses.
Funds: I don't recommend buying. Even if a fund goes nowhere, management fees eat your principal.
Bonds: good ones run 5–9%. I've personally bought one at 8%. The downside: your capital is locked up and can't be withdrawn freely.
Stocks: 3–5% dividends counts as a decent stock, but I personally look for growth potential. Watch out for getting fleeced.
Futures: don't recommend. Too dependent on experience and skill, usually involves leverage, you usually get fleeced.
Crypto: chance of getting straight-up rich (10x+ returns), but you need strong research or technical skills. Hackers and scams everywhere. Think hard before buying — it's not just getting fleeced, the chance of going to zero is much higher.

PS: I bolded the risk elements above.

Another way to describe risk: the probability that your investment is cut in half or goes to zero.

Among the above, stocks, futures, and crypto can go to zero. The others rarely do.

In other words, the further down the list, the higher the chance of going to zero.

So to avoid getting wiped out, the standard advice is to spread your money across instruments with different risk-return profiles.

That concept is called asset allocation.

Concept 5: How do you pick an asset allocation that fits you?

Asset allocation is investing your capital across different risk-return profiles in proportion, to spread risk.

Conservative investors lean toward low-risk options — real estate, bonds, fixed deposits, with stocks at the upper end.

Aggressive investors lean toward high-risk options — usually stocks and futures, with the more speculative ones adding crypto.

My own preference: 40% bonds, 30% stocks, 20% crypto, 10% cash.

In practice, the bigger your principal, the more diversified you should be — because the point is protecting gains.

If you earn NT$50k/month and can only save NT$10k, you can take on more risk.

After all, if you only have NT$10k, you only lose NT$10k.

But if you have NT$10M, I'd recommend spreading it across different vehicles by ratio.

Asset allocation depends on your principal — and on whether your knowledge edge beats most people.

Investing has a knowledge moat.

If you know a particular industry well, you can use that information asymmetry to invest. Someone whose family runs a textile business knows the market dynamics there, and that's an edge.

I'm from a CS background with some startup experience and a lot of friends in crypto, so naturally I know the crypto space better.

Crypto risk for me isn't necessarily as high as it looks. Honestly? I've lost more in stocks than in crypto.

In fact, the higher the risk, the more an investment looks like a zero-sum game — only a minority profits, most lose.

So whether you can win at investment analysis against other investors is the foundation of winning at high-risk investing.

So how do people actually analyze investments?

Concept 6: What are fundamental, technical, chip-flow, capital-flow, and news analysis?

There are many analysis methods. Each person has their own strengths, and there are primary and secondary methods.

Fundamental analysis: read financial statements to assess company health and outlook.
Technical analysis: read price and volume K-line patterns to evaluate moves.
Chip-flow analysis: track the holdings ratio between large holders and retail to predict big moves — more big-holder buying suggests upside.
Capital-flow analysis: track which countries or sectors money is flowing into to gauge market direction.
News analysis: read domestic and international news, forums, and analyst commentary to predict moves.

I'm strongest at fundamentals, technicals, and news, and I usually combine them:

I use fundamentals to decide whether to invest (team, strategy, product positioning, market trends)
I use technicals to decide buy timing (is this a low? what was the recent price swing?)
I use news to decide sell timing (product roadmap, industry news, surprises, market chatter)

For beginners, I think you must master fundamentals first — at minimum, learn to read financial statements, especially quarterly reports.

For technical analysis (TA), many people teach this. So I will skip this at the moment.

Chip analysis: I'd wait until you're comfortable with investing to learn this. It needs a software to track data — not beginner-friendly.

Macro-economic analysis: needs heavy economics knowledge. I just read analyst reports for this. Don't recommend learning.

News analysis: needs psychology and mind-reading — heavy research into news content and the implied intent of the people releasing it, then reverse-engineering what they're thinking, while watching investors' emotional reactions to news, and regularly checking forum comments to gauge sentiment. In short: you need to be very good at reading people.

A news-analysis example:

A crypto company releases a new milestone, but investors aren't impressed. Complaints flood in, the token tanks.

The company then ships several more updates, but the price keeps bouncing around — investors keep griping.

Then one day, the token doubles. Investors flip from pessimistic to optimistic.

Does the company's actual operating quality matter at all if the price goes up?

If you held this token, watched it crash, and saw investors raging online — would you sell?

Even if the company is shipping important new features and investors are still bashing it — would that influence you?

When there's no actual bad news but investors are raging on social media — could it be that they're trying to convince you to sell so they can buy cheap?

News analysis isn't intuitive. Sometimes someone is fanning the flames. Sometimes the news itself is fake.

The most important thing: read the collective emotion around an event, watch what the KOLs (Key Opinion Leaders) say — don't just get blown around by the wind.

To read trends correctly, I keep watching news, community channels, and price movements.

Investing takes time and study — strictly speaking, investing is a competition.

Concept 7: Why is DYOR (Do Your Own Research) the most important habit for beginners?

High-risk investing is a zero-sum game. For every winner there's a loser.

You're competing against everyone else, so you have to keep learning and sharpening.

Investment strategies from 2000 may be totally useless in 2020.

Times change, industries evolve, investor mindsets shift, analysis methods multiply, analysis tools improve.

For example:

Taiwan has many tech contract manufacturers. Contract manufacturing is labor- and cost-intensive.

When a contract manufacturer lays off staff, it signals a shrinking business — bad for the stock, expect a drop.

In the US, big firms like Apple, Facebook, and Amazon — they have software and hardware products, and when they announced layoffs, the stocks actually went up.

The investor read: cutting unnecessary expenses!

Some of that is also because these companies have largely automated their operations, and half their products are software.

So labor-intensive vs. labor-light industries get judged on layoff news using completely different standards.

If you have doubts about that logic — you're absolutely right.

In investing, everyone has their own narrative. Only the result is real, but no one can be sure why the result happened. It's all hindsight, Monday-morning quarterbacking.

Like in 2017, when I first encountered crypto. I thought the tech wasn't mature and there were unsolved technical problems, so I didn't follow up.

Result: from 2018 till now, how many times has BTC and ETH multiplied?

Actually, the upside existed precisely because the tech wasn't mature (says me, talking to myself).

A junior of mine made a fortune on it and used the gains as a down payment on a house.

Final word: DYOR — Do Your Own Research.

You can ask others, read books, search online — but cross-check, and own the consequences yourself.

If investing is starting to interest you, here are some recommendations:

Howard Marks, Mastering the Market Cycle
Howard Marks, The Most Important Thing
Howard Marks' memos

Have you had any bad investing experiences? Like a friend or family member recommending a stock that tanked?

FAQ

Q: I have zero investment experience. Where should I put my first chunk of money? A: First, make sure you can read financial statements. Until you can, stay away from stocks and crypto. Start with regular savings plans, fixed deposits, and low-fee ETFs to build up principal — and read books on fundamental analysis while you save.

Q: What inflation rate counts as "abnormal"? A: The norm is around 2%. During COVID it spiked above 6%, which is when your cash is shrinking three times faster. When you see inflation suddenly jump, that's the signal to buy more assets.

Q: What does DYOR mean and why does it matter so much? A: DYOR stands for Do Your Own Research. It matters because investing is a high-risk decision and no one is going to cover your losses. You can ask others for opinions, but the decision has to be yours.

Q: As a beginner, what allocation ratio should I aim for? A: Small principal (e.g. saving less than NT$10k/month) can take on more risk because the absolute losses are limited. Large principal (tens of millions) should diversify across bonds, stocks, and cash, with at least 40% in low-risk assets.

Q: Why don't you recommend funds? A: Management fees eat your principal. Even if a fund goes nowhere, the annual management fees slowly drain you. If beginners want passive investing, low-fee ETFs are a better choice.