What are the three most important criteria for Buffett’s stock selection?
There are three iron rules for Buffett’s stock trading. Compared with other billionaires with assets exceeding US$10 billion, Buffett’s way of making money is not to focus on developing innovative technologies or investing in industries to generate profits, but to use capital. value added. So today the editor is here to sort out what are the three most important criteria for Buffett's stock selection. Let's take a look!
Buffett’s three most important criteria for stock selection
1. Pay attention to avoiding risks and preserving principal. No matter any investment or financial management, there are risks, and the risks can be high or low. What investors have to do is to choose an investment method that suits their risk tolerance. Before investing, you must clarify your risk tolerance and psychological tolerance. Investment and financial management are the icing on the cake, and you should not bear too much fluctuations that affect your normal life.
2. Try to avoid risks and preserve principal. After clarifying your risk tolerance, you should use a sound investment strategy to ensure that your principal is not lost. Investment is a long-term activity. You must not have the idea of ??getting rich overnight. Instead, you must choose those areas where you continue to be optimistic about investing, and set a reasonable rate of return based on your own needs.
3. Firmly keep Articles 1 and 2 in mind. Not being superstitious about Wall Street is a key to Buffett's investment. He always invests in companies with good prospects that have been thoroughly investigated by himself, and will not listen to the investment trends in the market. Before Buffett buys a company's stock, he will collect as much relevant information as possible, have an in-depth understanding of the company's financial status and other aspects, and only make investment decisions after careful analysis.
How to judge whether the stock trend has reached the top
High tombstone line
Tombstone line is a very common K-line combination signal. When the tombstone line appears at a high level, it usually It is a signal that the market has peaked. Generally, after a positive line with heavy volume appears and accelerates its rise, a larger negative line appears immediately the next day. Sometimes there is a small negative line or a small positive line in the middle. The trading volume of the large Yinxian line allows a slight reduction in volume, but it is better to increase the volume. The occurrence of such a signal mostly means that the main funds are shipping in large quantities. Investors must not go in to buy the bottom and rush for a rebound. Those who have positions should immediately clear their positions.
Death Doji
It refers to the inverted doji with a long upper shadow line that is now at a high level. After the stock has risen for a round, it is close to the main shipping position, and the power of many parties begins to weaken. , the power of the short side is getting stronger and stronger. The appearance of the Death Cross indicates that the bulls' last long attempt failed, indicating that the future trend will begin to turn from bullish to bearish, so it is also a common peaking signal. As long as it is confirmed by a middle Yin line or a big Yin line the next day, the top will be initially established.
High inverted V top
Generally, it is a sharp rise and fall after the hype of hot topics ends. The main players control the market better in the early stage, leaving almost no opportunity for retail investors to enter the market. Wait until the high They are never willing to fight when shipping, and often decisively ship large quantities of goods before retail investors can react. This form almost reaches the top in one wave. As long as you see the first negative line after shrinking and rising, you should clear your position immediately.
Arc top and head and shoulders top
The formation of arc top usually takes at least two months, and sometimes even as long as 4 months. Therefore, it is generally used to judge the trend of the market index and weight. Due to the long transition period and gentle trend of the arc top, it does not have an obvious selling point like other forms. Sometimes after the arc top is formed, the stock price does not necessarily fall immediately, but repeatedly develops sideways to form a platform consolidation area. Until the starting point of the arc top is broken, the stock price continues to fall along the previous trend.
The head and shoulders pattern is relatively easy to identify, but to be fully confirmed, you must wait for the formation of the right shoulder. However, the better selling point is often after the head pattern appears, so the confirmation of this pattern is very important for the selling operation. Doesn't make much sense.
Double top pattern
Double top is also a relatively typical top K-line pattern. As long as the second top is not significantly higher than the first top, you should leave the market decisively. Don't continue to add positions, otherwise profits will turn into losses or even get trapped.
Multiple tops or high-level boxes
Multiple tops and high-level boxes are similar. They are basically formed by the main force repeatedly inducing bulls at high levels and shipping in batches. You can reduce your positions on rallies in the upper part of the box. As long as the price falls below the lower part of the box, you should clear your positions immediately, otherwise the decline may accelerate.
Why are there still people buying stocks that are about to be delisted?
Speculation on the concept of delisting
The concept of delisting was also very popular in the past. Some stocks may be because There has been continuous losses for a period of time, but the development prospects are good. Once the losses are reversed, it will return to a reasonable valuation. For example, Wuhan Fangu’s stock price rose from around 3 yuan to around 27 yuan in less than a year after it was removed. With such huge profits, many people would rather take the gamble and take the huge risk of delisting. There are also some people who made a mistake in their bets, and the stocks they bought were eventually forced to be delisted, which is likely to cause large losses.
Betting on the resumption of listing
There are many people who want to buy stocks even though they know they are delisted. They can generally be divided into the following three categories:
1. People There are probably relatively few people who are stupid and do not understand the risks of delisted stocks. They are mainly accustomed to buying low-priced stocks and holding them for a long time, but they do not know that these stocks have almost no value after being delisted.
2. We are very aware of the huge risks of delisted stocks. People who gamble on buying them at cabbage prices can get several times the income if they are reinstated. They usually buy at the lowest price during the delisting consolidation period, which is the final period.
3. There are many people who take short-term speculation. Some bookmakers take advantage of opaque information to speculate after delisted stocks have fallen sharply. After a few daily limits, some people can't help but bet on the turnaround of delisted stocks, hoping to make a profit and run away. But the result is likely to be counterproductive and end up being a wedding dress for shareholders.
Significant negative news
When buying this kind of stock, there is usually an unexpected negative news, such as the fake vaccine of Changsheng Biotechnology. Many people may have underestimated the problem at first. Due to its seriousness, I thought it would not be forced to delist. You may even add positions to reduce costs after knowing about the delisting, hoping to get lucky, and ultimately suffer even greater losses after delisting. Therefore, it is better not to touch such stocks. There are also some people who were deceived by false news from the main force. For example, Hemei Group once announced that after the company failed to reorganize its major assets, the main force released false news that it had not failed. As a result, investors who did not know the truth chased after them and were trapped until they finally became ST is beautiful.