"...... reverse thinking, especially in the crypto sector we have been focusing on, raises the question of whether certain individuals can achieve results on PONS. It could be said that they have made precise research judgments about a few possible tokens for the next Dragon One, and if they are certain that these tokens will yield returns of over 30 times... they will divide their chips into these portions for betting. Ultimately, doesn’t this make their probability of winning one hundred percent..."

This was a comment from a reader following the September 8 article "PONS Review: Speculation is Gambling on Luck, Investment is Waiting to See Clearly."

I believe the most critical word in this comment, which determines investment strategies and thoughts, is "the next" from the phrase "these possible tokens will yield returns over 30 times."

What does "the next" refer to?

A month, half a year, a year, or even several years later?

If "the next" refers to a timeframe of within a year, then I think judging a project's fundamental changes (such as its moat, cash flow, profit model, and other commercial and financial indicators) from the moment it was born to the next year is close to gambling, or has a significant element of luck.

Because the project has just been born, and the information available about it is extremely limited. It has not yet been tested by the market, nor has it demonstrated the team's various capabilities, moreover, too many variable factors exist. In such cases, even if one is willing to spend a lot of time searching for information and conducting "precise research," the reference information obtained is still very limited.

Whether in the past or present, all the great projects and companies we have seen have become great after long-term market refining, overcoming hardships time and again, and enduring long nights to emerge as remarkable and astonishing.

Most companies cannot be seen as destined for greatness or long-term profitability within just a year of their birth, because most companies are not great and it is far more common for them to quickly go bankrupt and fail.

The remaining exceptionally few great companies that can be recognized shortly after their birth (the most famous in the crypto ecosystem being Wanxiang and Distributed Capital investing in Ethereum, and in the traditional market, the most familiar is Masayoshi Son investing in Alibaba) are basically rare cases.

Therefore, in most cases, for a newly born project, if investors want to profit within the next year, in my perspective, it largely depends on its emotional value and the capital game situation in the market. The optimal solution is to cash out when market sentiment is at its peak and capital competition is at its most intense.

To achieve this, it doesn’t rely on analyzing the project itself but on analyzing the market's game.

If "the next" refers to a longer timeframe, such as over a year or even several years later, then it is still too early for judgment, because the available information is still too thin. At the very least, it hasn’t even experienced a bear market, so we don’t know if it has the capacity and resilience to withstand a bear market.

In contrast, Uniswap stands out as a typical example.

In the crypto ecosystem, Uniswap is undoubtedly one of the few remarkably impressive projects to date.

It issued its token in September 2020 and reached its historical peak of about $42.5 in May 2021. However, since then, it has never reached its historical peak again; even today, with such solid fundamentals, significant profits, and unprecedented buybacks, its price (as of writing) is less than $9, which is less than a quarter of its previously peaked price.

If we look at it from the fundamentals, today's Uniswap is far stronger than that of May 2021, yet its current price is significantly lower than that of May 2021.

If we could traverse time and space back to the day it issued tokens in September 2020, and we wanted to judge whether UNI could bring returns to investors within the next year, wouldn’t we have to rely on judging the sentiment and the capital games in the market to gain substantial returns?

Looking at today’s PONS from this angle, the reasoning is the same.

If we are to judge what its fundamental situation will be in a year or even longer, such as whether profits will continue, whether buybacks will persist, whether the team has resilience, and whether the business model has a moat, I think the difficulty remains high.

If we want to judge whether we can earn from the increase in token price within a year, I believe it still mainly relies on judging market sentiment and capital games, rather than fundamentals.

Judging whether an asset can yield returns based on market sentiment and capital games is not investing.

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