The stock market is a noisy place. Many people who are more sensible in life become deaf and deaf as soon as they enter the stock market. The stock market is also a place full of temptations. Many people who are more rational at work enter the stock market. It’s easy to be in chaos; the stock market is a place with great uncertainty, and there are too many variables and competitions in this world. Therefore, investing in stocks requires independent thinking and calmness; it is necessary to simplify the complex, abandon the small and go big, and grasp the main contradiction; it is necessary to hold patiently, "remain unchanged in response to all changes", and achieve the ultimate goal of "win without fighting" realm.
Human nature has its weaknesses. I have also gone through a long detour and am a relatively stupid person. To summarize my own investment process, the period from 1999 to 2002 is particularly important. In order to clear up the mistake of blind speculation that almost led to bankruptcy in 1999, I read hundreds of books and thousands of financial statements for three consecutive years, and investigated more than a dozen listed companies. I racked my brains on thinking about investment. After a lot of pain and practice, I discovered that the principle of investment is actually very simple. To sum up, there are four lessons: investment should be generous, stock selection should be strict, stock buying should be done at any time, and stock holding should be patient.
Investment should be generous
Stock investment should be generous. In an atmosphere where market prices are ebbing and flowing, rising and falling, in an environment where bull markets and bear markets alternate, and there are endless profits and losses, we should be in a high-level position, grasp the core issues, and use this as a guide to easily solve everything that makes money. question. The core issue is that in the long run, society will continue to progress, the economy will continue to develop, and the stock market will always be upward. No matter how many ups and downs it goes through, it cannot change the long-term upward nature of the stock market. The Dow Jones Industrial Index in the United States was at 100 points at the beginning of the last century, and now it has exceeded 13,000 points; the Shanghai Composite Index was at 100 points in 1990, and now it has jumped over 5,000 points. As an investor, you only need to be strict in stock selection and simply buy and hold.
Specifically, investing in a generous manner includes the following points:
First, do not care about small interests mentally. For example, a band, a little price difference, or even a few cents when buying and selling. People who focus on small profits and speculate all day long will not be able to achieve big things. Although some investors know that a certain stock has extremely good growth and development prospects, and can increase ten times in ten years, they always stare at the ups and downs after buying it, calculating the price difference of a few dollars, and keep going back and forth. , As a result, I picked up sesame seeds and lost the watermelon. I can never buy it back again. For example, Kweichow Moutai, PetroChina, and China Merchants Bank. Many stock investors followed me and bought them at extremely low prices, but very few people have held them until now. In fact, none of the world's top investment gurus are short-term traders. If you think about it carefully, you will know that since the overall trend of the stock market is always upward, investors should have lofty goals, firmly hold on to the stocks of outstanding companies, and be determined to make sufficient profits, relying on time to eventually become billionaires.
The second is not to pay attention to small skills in operation. For example, sell high and buy low, stop loss, bottom top, pyramid structure, time window, golden section, including the so-called bull market strategy, bear market strategy, etc. are all skills, not wisdom. There are more than 100 dazzling technical indicators in technical analysis, which are full of various seemingly exquisite techniques, just like the "blackjack winning method" in the casino, but in fact they are just some small tricks, and this operation can be successful. How many people can there be? Among them, the wave theory is the most typical. There are small waves inside the big waves, and there are thin waves under the small waves. There are always countless possibilities for the direction. How do you operate it? I later invested in stocks and adopted the "Five Nos" (I once talked about the Three Nos): not following the market, not listening to the news, not making predictions, not focusing on skills, and not trusting technology. The most fatal problem of technical analysis is that it is divorced from the company's fundamentals and uses price changes to explain everything, that is, the essence is separated from the phenomenon, or the essence is discussed apart from the phenomenon. Investors should abandon all techniques. This is not an overstatement, but an important conceptual issue.
Xiang Yu said in ancient times: "If you learn swordsmanship, one person can be an enemy; if you learn books, you can be enemies of ten thousand people!" A general may not be a sharpshooter, but he can command thousands of troops. A true master can win with his bare hands without any weapons. Although buying and holding for a long time is simple, it is a wise thing. Wisdom over skill. In fact, as long as a person owns a few excellent stocks for a long time in his life, he will enjoy endless enjoyment, just like Liu Yuansheng in Hong Kong who held Vanke for 18 years and became a huge wealth.
The third is to have a stable mentality. Ignore the fluctuations of the market, and don't be afraid of emergencies such as "9/11", the financial crisis, and the recent U.S. subprime bond crisis. An unstable mentality is the enemy of long-term investment. A sound and stable nervous system is an important condition for successful investment. At the same time, don't look for trouble by predicting short-term trends. That is actually fortune-telling for the stock market. As soon as investors make predictions, God laughs. I have always advocated not watching the market, not looking at the red and green jumps in prices, and just paying attention to the fundamentals of listed companies. Before 1999, I did technical analysis for five years, and the effort I put into it was far more than when I was in college. I finally came to the conclusion that short-term trends cannot be predicted, and there is no need to make short-term predictions. To talk about the bottom and the top, before the reform and opening up, it was the biggest "bottom" of China's economy, and the "top" will never be seen in this life. We should only care about whether it is an excellent company, focus on the company's future, choose long-term holdings, and focus on long-term returns.
The fourth is to have a high vision. If you are bold and have a high vision, you will not always stare at mediocre and failed companies, that is, you will not buy junk stocks. You will make up your mind to only own stocks of the best companies, and you will work hard to improve your own quality and abilities. Hone a pair of sharp eyes like an eagle to identify various companies. What we want to select should be excellent companies, not only the best in the industry, but also the best in the domestic market. It is best to put them on the world stage for inspection and comparison. You should put your time and energy into choosing a company, and try your best to make sure that all your stock varieties are the best. When you open an account, flowers will bloom instead of growing weeds.
It is important to be generous in investing, otherwise you will not learn the essence of value investing. Of course, learning value investing is much better than learning technical analysis and listening to gossip, but it does not mean learning Buffett. To learn Buffett is to pursue excellence and grandeur on the basis of value investing. With grand thinking, in terms of ideology, Only then can we have lofty goals, have long-term vision, and have lofty thoughts. Be a good person, buy good stocks, and invest your money in companies that have a positive impact on society. There is a sentence in Mr. Rong Yiren’s family motto that is worthy of our imitation: “Make high aspirations, make middle fate, and enjoy low blessings.” The first thing that is emphasized is to have lofty aspirations. This is a very important thing in the guiding ideology and investment philosophy.
Strict stock selection
Strict selection of stocks is the main contradiction in stock investment. The core issue of investment is how to obtain higher returns with lower risks. To solve this problem, we must choose stocks well. What is an investment philosophy? This is the investment philosophy.
Looking back at history, among all traditional stock investment theories, the most basic theory is the "long-term friend theory". This theory has a famous saying: "Buy whatever you want, buy anytime, don't sell." It captures the key issue that the stock market will always rise, but unfortunately the method is not rigorous enough and the thinking is not outstanding enough. I advocate criticizing and inheriting this classic: I oppose "buying at will" because "buying at will" will affect the long-term income level and become mediocre; some agree with "buying at any time" because "buying at any time" is suitable for most people; fully agree with "buying at any time" Don’t sell” because “don’t sell” captures the general direction of investment. My motto is "Select strictly, buy at any time, never sell".
The brilliant performance of many investment masters in the world proves that strict stock selection is extremely important. The following focuses on the issue of “strict selection”.
This has to mention the "random walk theory". This theory is inexplicably very famous. In order to prove that the market is efficient and investors' stock selection homework is futile, they often cite monkey throwing. The example of darts shows that you don’t need to spend time to carefully choose when buying stocks, and the results of your choices are not much different from those of a monkey throwing randomly.
Although this experiment is very interesting, it is not scientific and cannot prove that "buy whatever you want" is correct. Because most people's attention was directed to the monkey by the experimenter, they forgot that the investors who made the analogy to the monkey were mediocre investors (some Wall Street stock commentators to be precise). Therefore, Buffett seriously pointed out that if the market is always efficient, those of us will have no choice but to drink from the northwest wind.
To become an excellent investor, you must strictly select extremely good companies. I have repeatedly said to reporters who interviewed me that investors must have the spirit of "never stop until the stock is amazing."
So, what kind of stocks are amazing? There are two main meanings. One is to own a few stocks that have increased by 100 times in your lifetime. I have owned several stocks that have increased more than ten times in the past five years. I believe that one day, a certain stock will increase more than 100 times under my collection. I am over 50 years old, and I deeply feel that it is too late to realize this, so I only dare to lift it 100 times. My requirements for my daughter are different. I want to own a few stocks that have increased by more than 300 times in my lifetime. The second meaning is that the selected stocks must be "loved by thousands of people", that is, they must have multiple unique competitive advantages. No matter which aspect you look at the company from, no matter how harsh you are, you can't find any faults that will affect the company's long-term growth and earnings. It is so outstanding and superior.
Many people will be a little surprised when they hear 100 times. In fact, a few examples will show that this is not uncommon. For example, Wal-Mart and Microsoft have only been listed for 20 to 30 years, and their stock prices have increased by 500 to 600 times. Vanke around us has increased by more than 1,400 times based on the original stock price of one yuan in 1990.
How should we choose such excellent listed companies or stocks? Should we read more financial statements? I would like to emphasize that reading financial statements is only one fundamental aspect of value investing. I myself have gone through a detour and almost got into trouble. Paying attention to studying financial statements only shows that you care about fundamentals. This is indeed different from looking at K-line charts and listening to gossip. However, this is not considered value investing, nor does it mean learning from Buffett. In my opinion, it is important to investigate and think about major issues of enterprises, such as sustainable competitive advantages, profit models, independent pricing rights, future profit growth points, industry characteristics, management issues, differences between market prices and intrinsic values, etc. , is the first step and key content of value investment. These issues are not reflected in the financial statements, or are not directly reflected. Reading financial statements is included in the survey. Think about the company's major issues by reading financial statements. "I think, therefore I earn", this is the importance of thinking. Because to choose extremely good companies, reading financial statements is not enough. A good investor should be the chairman, not the accountant.
To start from the big picture, first consider whether the company has a unique competitive advantage. This "uniqueness" is extremely important, and you will be able to sort out advantageous companies and ordinary companies in one go. I have a habit, if I can't find a "unique" one after half an hour, I will give up on it, even though it may appear to have a lower stock price. If someone asks me how a certain stock is, I will first ask: "What unique advantages does it have?"
When it comes to unique competitive advantages, many people will think that this is what is often called core competitiveness. . In fact, it includes core competitiveness, but not only core competitiveness. Strictly speaking, core competitiveness is a concept of management science. This concept was proposed by two American management scientists in 1990. It mainly refers to the research and development capabilities, manufacturing capabilities and marketing capabilities of an enterprise, and is the basis for product innovation. on, the ability to bring products to market. It emphasizes core competencies and skills. This ability is only one type of what I call a unique competitive advantage. It is far from enough to use it as a criterion for judging the quality of an enterprise. Management is science, while investment is a combination of science and art. In investment science, the meaning of unique competitive advantage is much richer. Otherwise, it would be impossible to understand what a company that “any fool can make money” is.
I once summarized Buffett's investment strategy in twelve words: good stocks, good prices, long-term holdings, and appropriate diversification. The good price is already included. But the main issue we’re talking about is the issue of great companies. At the same time, I believe that relative to price, good stocks come first. Good stocks first, then good prices; first qualitative, then quantitative. This is also an investment philosophy.
Buy stocks at any time
Buy stocks at any time, which means "buy at any time". It must be stated that this is for most people, especially working-class people with stable follow-up funds.
Some people often ask me with a stern face: "Buy at any time, don't worry about the price? What if you buy something at a high price?" In fact, the friend who asked the question has not thought about it carefully. The price issue is a complicated one. Problems, in practice, are even problems that can be encountered but not solved, problems outside the circle of competence. If you are lucky enough to often encounter big opportunities like "9·11" or after the financial crisis when entering the market, it is of course a good thing. However, the stock market is unpredictable and uncertain, and uncertainty is the mainstream. "Stay unchanged and cope with all changes" to deal with it. My experience is that if you try hard to seize opportunities, you will also lose them. If you give up such efforts, you may seize more opportunities. Think more about methods instead of thinking too much about the timing of buying, and don't calculate the price-earning ratio all day long. Different people join the work sooner or later, and enter the market sooner or later. Once they decide to invest, they will inevitably buy at high points and low points. But with strict selection and don't sell, even if you are not so lucky, you will still win in the end.
Some stock traders cited the example of Mr. Buffett sitting on tens of billions of cash and not selling it, and expressed his willingness to wait (until the right price) to refute my "buy at any time", and even accused me of having Be suspicious of Buffett. However, after thinking about it again and again, I firmly believe that this is not a big mistake, especially after so many years, I have seen many friends waiting for the prices of Kweichow Moutai, China Merchants Bank, Hong Kong Stock Exchange and other stocks to fall to their psychological price, but in the end they may never be able to buy them. , or examples of losing patience and buying higher, you can feel the importance of learning from Buffett and not being dogmatic. Don’t forget that in the survey on the status of millionaires and multi-millionaires in the American investment community, although the top ones are often professional investors, the highest proportion of them are ordinary investors who simply bought and held it for a long time after World War II. investor.