The core of investment is risk and return. Risk and reward are two fronts of the sword, which go hand in hand and complement each other. People are born to love returns and hate risks. For investors, the strategy of pursuing low risk and high return is the holy grail of investors. However, what is risk? What is a reward? Most people are in a fog, so how can we make people clear when they are confused?
At the end of each year, when settling accounts, it's just a few happy families and a few sad families. Floating people are happy, and floating people are gloomy. Even many investors shorten the settlement time to months, weeks and days, and their mentality can get better. Naturally, with the ups and downs of the daily K-line chart, they suddenly felt happy and worried. After years of stock trading, they didn't make any money, which made them exhausted. The book wealth of the bull market is like a cloud, and the bear market is delisted. Finally, draw water with a sieve. There is a story in the Buddhist "Hundred Similes Classic": A fool was very happy when someone took his money and told him that he had married him in a foreign country; He was even happier when he told his wife to have a son. Later, he cried when he told his son that he had died. The investor's behavior is no different from this crazy fool to outsiders.
Second, how to define risk?
Buffett has a famous saying: "there are two most important things to invest: first, don't lose money;" Secondly, please refer to the first sentence (rule number 1: Neverrossemory. Rule 2: Never forget the rule number 1). This sentence has been circulating, but most of it is misinformation, and I don't understand the true meaning of the bus at all. Because it is obvious that most people's understanding is fundamentally contradictory to Buffett's other sentence, Lao Ba also said: "If your stock has fallen by half and you can't keep your face unchanged, then you should not enter the stock market. "
The key is how to define risk. If stock price fluctuation is defined as risk, Mao -Talk thinks that no strategy can effectively overcome market fluctuation, whether it is active attack, active defense, decentralized combination, buying low and selling high, chasing up and killing down. Unless you are permanently short and endure low-yield varieties such as bank deposits and money funds, as long as you expect to get high returns, you will inevitably bear the risk of high fluctuations. Only when you are always empty, your assets are a smooth straight line, without any fluctuation or retrogression.
What does the bus mean by "losing money"? On the one hand, he said that he was not losing money, on the other hand, he said that the stock price could not be calm and untrue. Very simply, if we define the irreversible loss of principal as risk from the perspective of value, rather than the stock price fluctuation and net withdrawal as most people understand, then everything will suddenly become clear. As long as the intrinsic value of assets is higher than the price, no matter how the price fluctuates, this kind of investment is actually risk-free. From this perspective, the most reliable low-risk investment may only be value investment.
Take China Ping An, the favorite stock of Laomaojun, as an example. Anyone who has read the interview with Red Weekly 13 knows that when I bought Ping An in the third quarter of 12, the insurance stocks were hit hard, and Ping An fell below 1 times the market value. At this time, buying instead of selling, although after nearly two years of stock price tempering, repeatedly taking the elevator, the worst time to retreat to 30%, but finally in the bull market of 20 14, the stock price rose three times, perfect cash.
Most people lose money in the stock market, which is a misunderstanding of the definition of risk and return. Everyone regards stock price fluctuation as a risk, and the real risk is the irreversible loss of principal. Everyone regards the rise of the stock price as a return, and the real return is the ultimate asset appreciation, so-called "putting the bag in safety." If a long-term investor, like Buffett, has never been short and has no time to calculate the bag, his real return can only be the growth of the intrinsic value of the stock. Therefore, the paradox of this problem is that most investors are just the opposite. The rise of stock price is the accumulation of risk rather than the increase of income, unless the increase of internal value of stock exceeds the increase of external stock price, which is enough to digest the risk. Therefore, real value investors talk about risks and returns when communicating with institutions and retail investors who don't pretend to understand, because the definitions of the two are fundamentally different!
Third, the real risk.
First, you bought the wrong one. Investors misjudged the company's business model, competition barriers and management, and the data fed back by the company completely falsified the logic of investment. This is wrong, and we must resolutely admit it and correct it. Buffett admits that the biggest mistake in his investment was to buy Berkshire, a textile mill, because although it was cheap, no matter how hard he tried, he could not compete with manufacturers in developing countries. Finally, I had to reluctantly close the factory, but fortunately I was transformed into an insurance company and an investment group. When talking with 20 13 MBA students of the University of Maryland, Lao Ba sadly recalled:
"My biggest mistake was to acquire Berkshire Hathaway and try to improve its original business. We invested all our money in a bad industry, which dragged down all these funds for 20 years, even after the acquisition of NationalIndemnity. It is a mistake to make BRK the foundation of the company we want to develop. You can't invest without making mistakes. "
Second, you bought it expensively. No matter how good the company is, it needs a good price, and the margin of safety is the first priority of investment. How to judge the margin of safety is the basic course of valuation. In 2007, China Petroleum returned to the A-share market with the aura of "the most profitable company in Asia". If investor 48 yuan buys PetroChina, it is estimated that their grandson may not be able to solve the problem; 20 15, CRRC China, blessed by the Belt and Road Initiative, is just another inferior copy of PetroChina. When investors shouted "100 yuan to win a car is not a dream", they actually boarded the China hearse. ...
Third, you don't know why you bought it. Ability circle is very important. If you don't know why you bought a stock, please don't waste money. This stock has nothing to do with you. If you fall, you will panic; if you rise, you will not be able to hold on. Buffett said that if you don't have the determination to hold a stock for ten years, then you should not hold it for ten minutes. The determination to hold shares for ten years is not stupid, but a deep understanding of the company behind the stock.
Conclusion: Have a calm heart.
Near the end of the year, 20 16, black swans occur frequently, so don't worry about the ups and downs of the year. Profit and loss is just a record. If you gamble, you don't lose money, but the bag is called profit Remember, the real risks and rewards are locked in the moment you buy stocks. After that, the fluctuation of stock price is not a risk, but an opportunity. Mr. Market is moody, sometimes extremely excited and sometimes extremely depressed, which just provides investors with opportunities to sell and buy.
Calm down, there may be only one real low-risk and high-return investment, and that is value investment.