Utilize the difference between the company's value and the stock market price to achieve investment profits

The market value cannot grow far beyond its intrinsic value

The stock price will remain at the same level as the company's intrinsic value for a long time.

Stay away from stocks whose price is higher than the company's long-term growth rate

Stocks whose stock prices are trading below the company's long-term growth rate can be considered a buy signal.

Because the gap between stock price and company value must be bridged

The specific calculation method of safety margin is as follows:

The concept of margin of safety can be used as a touchstone to help distinguish investment operations from speculative operations.

The margin of safety can be proven by data, rational reasoning, and a lot of experimental experience

If you ignore the margin of safety, even if you buy stocks of very good companies, it will be difficult to make a profit if the purchase price is too high.

The risk of buying at too high a price is considerable

The margin of safety is the most important thing in investing. It can:

The investment return of value investment with safety margin is not directly proportional to sharing but inversely proportional. The lower the risk, the higher the return.

If a common stock is calculated to be worth only slightly more than its value, there is no need to be interested in buying it

Assess business value and think about market price

The Golden Triangle of Successful Value Investing

Stock prices are essentially determined by value

Market prices often deviate from a security’s actual value

When deviations occur, a self-correcting tendency occurs in the market

Intrinsic value and speculative factors are factors that influence stock market prices

Their interaction causes stock market prices to fluctuate up and down around the stock's intrinsic value.

The prices of financial securities are governed by a number of far-reaching but unpredictable factors.

Market prices fluctuate, but many good stocks have relatively stable basic economic values.

Buy when the market price is significantly lower than the calculated intrinsic value

The performance of every value investment comes from exploiting the difference between a business's stock market price and its intrinsic value

Invest in stocks with low price-to-earnings ratios, low stock price dividend-to-income ratios, and low stock price to cash flow ratios

Although the indicator cannot directly indicate the size of the margin of safety, it can indirectly prove that companies with lower ratios have larger margins of safety.

The key to value investing lies in stock market fluctuations and rational use of the law of value

Value investing is not difficult to understand, but it is difficult to practice it literally because it conflicts with certain inertial effects in human nature.

The important thing for investors is not to understand other people’s investment ideas, but to know how to apply them in practice.

Value investing is the investment behavior of buying low and selling high due to price fluctuations around the value axis. A simple understanding is value return.

Having long-term value expectations and value realization follows the long-term appreciation of the company's assets, not short-term speculation.

A mature stock market lies in its value assets

Value investing is not only a correct concept, but also a correct investment method and technique

Value investing is based on the analysis of basic aspects such as market environment, industry status and intrinsic value, building a model of data to express prices, and achieving effective investment through comparison.

The value of listed company stocks is mainly composed of five major factors

market leader

Return on equity = net income/(beginning capital, ending capital)/2 When a company achieves a higher level of return on equity, it indicates that it is efficient in using the assets provided by shareholders. Therefore, the company will increase its equity value at a higher rate, which will also lead to a corresponding increase in the stock price.

You should buy when the stock price reaches an attractive level relative to its earnings growth and return on equity.

Returns to stock investors include dividend payments plus the increase in stock price

Sustained equity returns are good, 20% is a staggering number

Companies that maintain high profits are rare.

It is easy for a company with a small share capital (1 billion) to earn a high rate of return, but it is extremely difficult for a company with a large share capital (10 billion) to earn a high rate of return.

Earnings per share = Net income after tax/Special stock dividends Number of ordinary shares outstanding

Per share makes up for the fact that we only know the dividends received per share but do not understand the full picture of earnings.

Our task is to find a profit situation that can convert every dollar of retained earnings into at least one dollar of market value.

The goal of every investor is to build a portfolio that will generate the highest overall earnings for many years to come.

When evaluating future earnings, one should first study the past. Historical records are an indicator of future trends.

Regardless of whether the economy is strong or weak, profits can grow at a long-term and stable rate, and it is possible to do equally well in the future.

The company's growth level cannot be extrapolated beyond the true growth rate, and it cannot be completely disconnected from the past.

Sooner or later, the company's overall earnings will eventually decline, as it becomes more difficult to find new markets and expand sales.

Simple and effective when using cash flow assessments

Three things must be done to make an accurate assessment

Multiply the probability of loss by the amount of possible loss, then multiply the probability of gain by the amount of possible gain, and subtract the former from the latter.

The use of probability in investing

In the stock market, if you don't find the difference between price and value, you can't determine the appropriate price to buy a stock.

Intrinsic value is the discounted value of the cash flows a business can generate during its lifetime

Primarily an estimate of a forecast of future cash flows, rather than an exact value

Value investing is also limited to a value range for evaluating the intrinsic value of a small number of stocks, and it is by no means those numbers that appear to be accurate but are actually fallacious.

What we actually have to do is find out the difference between the overall value of the company and the stock market price and make investments.

Valuation is both an art and a science

Important Aspects of Intrinsic Value Assessment

The accountant's job is to record, not to value. Valuation is the job of investors and managers

Neither the relative value valuation method nor the asset-based valuation method is suitable for the valuation of enterprises with sustained competitive advantages.

Asset-based valuation method determines the value of a company's stock based on the value of a formula's assets

Relative valuation method evaluates the value of a company based on comparison with other similar companies

In short, neither the asset value assessment method nor the relative value assessment method is suitable for advantageous enterprises that continue to compete. This is because the fundamental characteristic of advantageous enterprises that continue to compete is to create more value with fewer assets. The value of their assets is often Much lower than the company's operating value as a going concern; in addition, in addition to the tangible assets reflected in the books of advantageous enterprises that continue to compete, their brand, reputation, management capabilities, sales network, core technology and other important intangible assets are not on the books at all reflection, so it is also difficult to evaluate based on replacement cost or liquidation value. Or Yuan Di, smoke a big chapter

Mr. Market is the sum of all stock investors, he has emotions

Reason and calmness are the keys to defeating Mr. Market

Mr. Market buys when his mood is bad and sells when his mood is good.

In the investment market, we do not follow the trend or blindly follow market sentiments, but through in-depth research and long-term observation, we discover and invest in high-quality stocks that are undervalued by the market. The core of this strategy is to find the intrinsic value of the enterprise rather than chasing short-term fluctuations in the market.

Buffett believes that Mr. Market ultimately follows the law of value when reporting stock trading prices. The reason is simple: the law of value is the basic law of the commodity economy, and the stock market is a product of the commodity economy, so it is natural that it must follow the law of value.

Graham believed that there are two most important factors that affect stock prices:

Buffett is good at selecting companies that can create higher profits with smaller net tangible assets. Because of this advantage, the market still allows Sees to have a higher price-to-earnings ratio even if it is affected by inflation. . Although inflation will harm many companies, companies with consumer exclusivity will not be harmed. On the contrary, they can benefit from it.

In 1983, Buffett wrote in a letter to shareholders: "Over the years, accumulated experience tells us that companies with tangible assets such as resources, equipment and plants are more advantageous in resisting inflation, but in fact they are not. Not so, with rich

Diversification is a kind of protection against ignorance. Not only will it not reduce your investment risk, but it will share your investment profits. Concentrated investment can help us concentrate our returns.

The prerequisite for concentrated investment is careful stock selection

Concentrated investment is an advantage given to individual investors by the market, and should be taken advantage of

Life doesn't need to be repeated three times, it only needs one chance

When selecting stocks, we must be very rigorous and our standards must be very strict.

Limiting the number of choices to a small number of stocks makes it easier to make correct investment decisions and achieve better investment results.

I would rather have a choppy 15% return than a steady 12% return

Adopting a centralized sustainable competitive advantage value strategy will have certain competitive advantages.

Concentrated investment can both reduce risks and increase returns, so what's the harm in short-term performance fluctuations?

Determine risk not through price fluctuations, but through changes in a company's value

The accuracy of computer model predictions is nothing more than a basis for price fluctuations, which may very well induce decision makers to make completely wrong decisions.

The so-called winning probability is actually the accuracy of the value assessment of the enterprise invested in.

The accuracy of valuation depends on the accurate probability of predicting the company's long-term sustainable competitive advantage in the future.

Unlike probability calculations for other things, investing companies will always face a different competitive environment than in the past. Everything is uncertain and unrepeatable, so there is no way to estimate the probability of success.

Therefore, we must collect as much information as possible. As the situation develops, we will continue to add new information on the basis of the original information. We should always consider the probability of winning or losing. If there is a chance of success, then do it.

Concentrate investment in outstanding companies that are within the investment circle of competence, have simple and stable businesses, and can reliably predict future cash flows

If the company is complex and the industry environment is constantly changing, then we don’t have the intelligence to predict future cash flows.

As long as you try to avoid making major mistakes, investors only need to do a few correct things to ensure profits.

Choose a small number of stocks that can produce above-average returns in the long term, and concentrate most of your capital on these stocks. Regardless of the short-term ups and downs of the stock market, stick to holding shares and seek steady victory.

Eighty percent of investment profits come from 20% of stocks

The smaller the holding, the lower the risk

The fewer shares you hold, the more profit you make

For investors, the key is not to determine how much impact an industry will have on society, or how much it will grow.

Rather, it is about determining the competitive advantage of the chosen enterprise and, more importantly, the sustainability of this advantage

Investment is most sensible when it is closest to business operations

Stocks are not an abstract concept. When investors buy stocks, no matter the quantity, it is not the market or the macroeconomics that determines the stock price, but the company's own operating conditions.

Sustained and stable profitability, a company's equity capital and shareholder return rate are the most important indicators of a company's profitability.

The capital used by management to achieve profitability includes two parts:

The future profitability of a company is the key to the success of an investor's investment, and future cash flow is a way to reflect it.

Investing in the best companies does not necessarily have the best returns, because a necessary condition for investment success is to buy at an attractive price

After an investor finds a company with sustainable competitive advantages, buying its shares does not guarantee him a profit.

The stock price has a large enough margin of safety compared to the calculated value

We must remember that we are not buying stocks, but companies. Economic franchise is the force that affects stock prices.

Economic franchises are the key for companies to continue to achieve excess profits. Compared with companies without economic franchises, companies with economic franchises are much less likely to be eliminated, and long-term profit forecasts are easier to make.

In the principles of business warfare, franchises have extremely strong defensive advantages, and the entire economic world can be divided into two categories:

The most important job of a business manager is capital allocation. Once managers make capital allocation decisions, the most important thing is that the basic criterion of their behavior is to promote the growth of the intrinsic value of each share, thereby avoiding the decrease of the intrinsic value of each share.

The ability of capital allocation is mainly reflected in whether management can correctly invest a large amount of capital in projects that maximize the long-term growth of shareholder value in the future. The foresight of allocation determines the company's future development prospects.

A simple understanding is to invest the remaining funds or buy back the stock price

For investors, the key is not to determine the impact of an industry on society, or how much the industry will grow, but to determine the competitive advantage of any chosen enterprise, and most importantly, to determine this advantage. Continuity

Many companies fall into two broad categories:

It is not the stock class itself that is of interest to us, but the underlying value of the company and its prospects for growth.

Invest accordingly based on a company's long-term prospects, not be a stock market gambler

When the company makes a profit, investors will naturally make profits.

It doesn’t matter the size of the company. The really important factors are how much we know about the company and business, whether people we like are managing them, and whether the products are competitive.

One thing you must do before buying a stock is fundamental analysis. Determine the quality and strength of the stock through analysis, which is the process of distinguishing its advantages and disadvantages.

Fundamental analysis mainly analyzes the company's earnings, sales, equity returns, profit margins, assets and liabilities, stock market, as well as the company's products, management, and industry conditions.

The company's profitability is the most important factor that affects the stock price. That is to say, only buy stocks of companies whose profits and sales are constantly increasing, and whose profits and return on equity are high. This can be measured by earnings per share.

Pay full attention to companies whose earnings growth rate has reached or exceeded 30% for three consecutive years.

The company will not undergo major changes, the operating industry is simple, the single brand is competitive, and the products have monopoly rights for more than ten years and will not decline.

Refuse to invest in companies that are solving certain problems. Choose companies to solve problems one by one. It is better to directly choose companies that have no problems.

For enterprises whose previous plans failed and are preparing to change their business direction, enterprise transformation means that the original competitive products have lost the market and must not make changes. Once changes are made, there will be many problems, which must be solved one by one. A crow cannot become a phoenix.

To test whether a company has a good governance structure, you should focus on checking the company materials such as shareholder power of attorney, whether it is open, transparent and clear, and whether the company's management puts the interests of shareholders first, always from the perspective of investors Consider whether there is a good fit between the company's management team and the board of directors

The income statement allows investors to understand how the business performed over a period of time.

Whether a company can be profitable is only one aspect. We should also analyze the way the company obtains profits. Whether it requires a lot of research and development to maintain competitiveness, and whether it needs financial leverage to obtain profits can determine the driving force behind the company's economic growth.

The cost of sales can be the purchase cost of the products a company sells, or it can be the material costs and labor costs of manufacturing the products.

Total revenue minus the cost of raw materials consumed by the product and other costs required to manufacture the product

It is key to determine whether the company's products with high gross margins are sustainable, which excludes selling and general administrative expenses, depreciation expenses and interest expenses.

Companies with high gross profits may also be a risk,

Various expenses incurred by the enterprise in the process of selling goods and the operating expenses of the sales agency specially set up to sell the company's goods.

If operating expenses are too high, it will greatly affect the overall efficiency of the enterprise, such as excessive advertising fees and channel construction fees.

Operating expenses include five aspects

A truly great enterprise has very few sales expenses and general administrative expenses. Only through strict control can it stand out in the fierce market competition.

If a company can control the proportion of selling expenses and general administrative expenses to gross profit below 30%, then it is a company worth investing in.

If it exceeds 80%, there is no need to consider it. If the industry average ratio exceeds 80%, then the industry does not need to consider it. Aviation is

When examining a company's profitability, we must not only look at the company's profit amount, but also the company's profit structure, that is, which profits can be obtained continuously and which profits are obtained accidentally.

No matter what indicators are used to measure whether an enterprise has a sustainable competitive advantage, we should exclude the impact of recurring items. Only by excluding the impact of contingency can we make a more accurate judgment.

When judging whether a certain profit or loss is a non-recurring profit or loss, the nature, amount or frequency of occurrence of the profit or loss should be considered.

A truly good company does not need to borrow money, and among these excellent companies, except for a few high-tech companies and pharmaceutical companies, most companies are in very ordinary industries. The products they currently sell are the same as those in 10 years. No different from before

A very low debt ratio allows for less interest payments, plus low assets require less money to operate. In the end, the company's after-tax profits will be huge.

For a truly great company, abundant free cash flow must be one of its prerequisites

Cash equivalents are investments held by enterprises with short term, strong liquidity, easy to convert into known amounts of cash, and with little risk of value changes. They are generally bond investments that do not exceed three months, are easy to liquidate, and have low transaction costs. Therefore it can be regarded as cash

If the company holds a large amount of cash and equivalents and has no debt, the company can successfully save itself. If there is no money, it will be useless no matter how powerful it is.

Three ways to obtain large amounts of cash. If a company can continue to obtain large amounts of cash through these three methods, it will often have sustainable competition.

f Debt management is not a very safe way to operate. A good company or a good investment decision will definitely achieve satisfactory results in the end even if it does not rely on financial leverage.

It would be foolish to expose confidential corporate information to unnecessary risks for a little extra reward.

Different industries have different debt ratios. Although there are differences, they will not be very high.

If the debt ratio is too high, the operating income will not be worth the interest paid.

Enterprises with sustainable competitive advantages generally do not frequently update their factories and machinery. They will only purchase new equipment when the original equipment is scrapped.

Companies that do not have sustainable competitive advantages often need to update or adjust in order to meet the constant competition from their peers.

Really excellent companies do not need long-term loans (more than 5 years)

Excellent enterprises can generate a steady stream of cash flow and can maintain normal operation of the enterprise without further investment.

When choosing an investment target, you should pay attention to whether it has debts and how much debt it has. You should also observe the debt situation of the company over the past 10 years, as well as the company's ability to repay debts.

Only companies with abundant free cash flow are good companies, and their growth rate should be greater than the interest rate on government bonds.

How can investors profit from a business if it generates no cash flow at all?

Having strong and abundant cash flow can bear all risks independently. If an insurance company has a strong business-bearing capacity, it will naturally receive more premiums, which will result in higher profits.

If a company can generate sufficient free cash flow on its own, without relying on subsequent investment from investors or relying on corporate debt to operate, it can achieve stable development and even promote the growth of operating performance and free cash flow, then it is truly worth investing in. enterprise

How to allocate a company's funds is closely related to the life cycle of the company.

Free cash flow is a good indicator to measure the intrinsic value of a company, but you can't just focus on the numbers on the books. You must truly understand whether the cash flow earned by the company is at the disposal of the company. If the free cash flow obtained by the company must be handed over to the head office , if a state-owned enterprise belongs to the state and the company has very little discretionary power and cannot retain it, the value of the company may be greatly reduced, and the company will be abandoned once it encounters difficulties.

Free cash flow that can be retained is good cash flow

The company's profitability is ultimately reflected in the creation of value for shareholders, and the growth of shareholder value is ultimately reflected in the growth of stock market value.

We must value the company's profitability, which we understand and can maintain. A company may not be the most profitable, but its product profitability is often beyond the reach of competitors in the same industry.

We can't just care about one year's performance, but more about the long-term average performance over four or five years. The long-term average performance indicators more truly reflect the company's true profitability, because the company's profits are constantly fluctuating.

The profitability of a company's products is mainly reflected in the company's sales profits. If managers cannot turn sales revenue into sales profits, then the products produced by the company will not create any value.

Not all stocks bought need to be held for a long time. Only stocks with sustained profitability are worth holding for a long time.

How is the company's share price reflected in its share price? That is reflected through the holding time

Stock investment is a risky investment, and the existence of risks forces you to first consider the safety of your investment.

Stock investment risks come from three aspects: the enterprise, the stock market and purchasing power. The safety of the invested funds depends on the operating conditions of the enterprise.

Investors need to pay attention to tips for choosing safe stocks

High-growth companies have rapidly growing profits and are extremely scalable. Investing in such stocks can often turn your stock selection risks into invisible and ensure that investors receive excess profits.

Therefore, when selecting stocks, investors should study the growth potential of listed companies, discard the false while retaining the true, discard the rough and select the essential, and remember that growth is gold.

Generally speaking, companies with high growth potential have the following three characteristics:

With sustained competitive advantages and excellent management, be preferred

A company with mental resources has a single product that occupies the first place in the mind.

Diversified business customers are confused, management is complicated, and the initial investment in new products is relatively large, which is not conducive to the company's development.

To judge whether a company is excellent, the first thing to analyze is the company's business. Only with good business can the company develop better

Many people think that good management and high-quality products will definitely turn losses into profits, but the most important thing for a company is good business coupled with smart products first, good horses with good riders and good horses with average riders. All can achieve good results, but it is difficult for a clever woman to make a meal without straw.

If a company does not have a good business, even if its stock price is cheap, it has no prospects. Just like the positioning theory, only good business products are good products that are recognized by consumers.

What investors really need is the ability to correctly evaluate the companies they invest in, not to be an expert in every industry.

Investors only need to correctly evaluate a few stocks within their circle of competence.

Everyone's circle of competence may be large or small, but the size is not important as long as you know where the boundaries of your circle of competence are.

Looking for companies that gain mental resources is my assessment of the circle of competence.

The more a company has a sustainable competitive advantage, the simpler and easier its business operations are.

Excellent companies that have only focused on a certain field for decades will naturally have more time and money to improve production technology, services, production equipment, etc., and their products will naturally become better.

A simple business with extraordinary achievements. The positioning theory is simple and easy to understand and focuses on category development.

The macroeconomic situation is not the basis for us to make purchases and sales. In the field of investment, what we need to do is to understand what is important and what can be understood.

Inflation is not a simple economic phenomenon

If you can't profit from inflation, you should find other ways to avoid companies that will be hurt by inflation

It doesn’t make much sense to predict the direction of the stock market, which is the top or the bottom. As long as you evaluate the value of the stock, buy it at a reasonable price and make a long-term investment.

We have to wait for high-quality, cheap and cheap stocks that are priced much, much, much lower than their intrinsic value, with a sufficient margin of safety.

In addition, there are several indicators that can be used as reference

Resist stocks that are attractive but uncompetitive

Only stocks with reasonable stock prices and good investment potential can be bought.

You must not follow the trend of stocks that have no value due to their relatively low prices.

Be patient and wait for the stock price to drop until it becomes very attractive, and then buy at a suitable time

No matter how good a company is, it will not always grow at a high rate and will be broken one day. However, if it is a good company but it has problems, it is a good time to buy.

When the market is overly enthusiastic, few stocks are trading below their intrinsic value, and there are fewer stocks to buy.

When the market is excessively depressed, many stocks are priced below their intrinsic value, and there are more stocks to buy.

We need to use funds when the market is overly depressed. The market crash has a large margin of safety and is a good time.

When a good company's stock price temporarily falls due to operating difficulties, doubts, fears or misunderstandings, it is a good entry investment.

If some companies have maintained their competitive advantage, don't sell them

But there are four situations where selling is also a favorable option

Investment strategy standards are very important. They are important standards for guiding investment transactions.

If stocks are the same as love, it means holding shares for ten thousand years

Economic theory tells us that the vast majority of stocks we buy are for the purpose of selling, otherwise we will never get the maximum profit return. Otherwise, what we buy should be real estate, not stocks.

To sell, first of all, the investment object no longer meets your long-term investment standards.

Resolutely use investment strategy standards to measure the companies you have invested in. Once they do not meet one of the standards, sell them decisively without considering other factors, because they are related to

For example, PetroChina, the rise in raw materials will affect the company's profits, but the increase in product prices will not be too great. As a result, the company will lose continued competition or its profits will not rise.

In the past, newspapers had income, but now the impact of the Internet has diversified the ways to obtain knowledge.

As an investor, you must determine three price points before each purchase.

You must have a 50% loss reserve when entering the market, so you must have a sufficient margin of safety to reduce risks.

The return of capital is not the return of the stock price, but the return of capital.

Eliminate the weak and retain the strong, sell the losing stocks and keep the blue-chip stocks

Several situations of high-quality stocks losing money

If each trade is favorable, by putting together a series of arbitrage trades, investors can turn each low-yielding trade into a lucrative annual return.

Good arbitrage opportunities generally appear at various points when a company changes hands, reorganizes, merges, withdraws capital, and is taken over by a rival.

Arbitrage generally means using the cash to be invested in short-term investments first. There are two methods of arbitrage.

What is the probability of the expected event occurring?

How long is your cash allowed to be tied up?

What are the chances that something better will happen?

What to do when expected events don’t happen

Try to avoid risks and preserve principal

firmly remember

When the bull market comes, be prepared to stop. When the big bear market comes, be prepared to buy

Once investment encounters unpredictable risks, never be reluctant to fight

We will always encounter unpredictable risks in our investment career. Most investors seem to hold on to a glimmer of hope, but this slim hope will only sink deeper and deeper.

The correct thing to do is to cut off the position and exit resolutely, no matter how painful it is

When China's A-shares were overvalued in 2007, the subprime mortgage crisis in 2008, real estate in 2020, the Fed's interest rate hike and snowball liquidation in 2023

We need to leave a margin of safety in our buying price

The higher the buying price, the higher the risk. The main business of a good company is not affected. A temporary setback is actually a good opportunity.

We cannot accurately calculate and predict stock prices, but we can use a multi-buy strategy to steadily build a position

There is no infinite growth in a finite world

It is impossible to maintain a compound annual growth rate of 20%-30% for a long time.

However, failure to achieve an annual compound rate of return of 15% is also disqualified.

In order to obtain an annual compound return of 15%, the purchase price must be lower than 15% of the intrinsic value. Of course, this is just a simple fallacy. How can there be profit margins if it does not fall, because the world is limited.

When we invest in stocks, we also invest in businesses

The number of the same green vegetables varies in different seasons, because the standards for measuring their value are also different in different periods.

Depreciation explains the formation of hot spots. When vegetables are in winter, people's value standards for them go up, and the company's price-to-earnings ratio increases. This is reflected in the stock market, forming a hot spot, and the stock price also rises.

Therefore, as long as the value standard determines the company's final stock price, if the value standard given by the market goes up, the stock price will also go up, and vice versa.

For example, if a company has new business, profits increase, and value increases, the stock price will always move closer to the value and increase accordingly.

The development direction of the country has prompted changes in the industry. In the past, whether the competition was fierce or becoming mature, with the emergence of new value standards, there will be new values. As long as the company stands on the new value standard, then the company will stand firm. In terms of hot spots, there is no way to become a hot company anyway.

my country's stock market

The more concentrated the investment, the better the performance; the more diversified the investment, the worse the performance.

Put your eggs in one basket and invest in a few good companies.

Just like positioning theory, diversification is a trap

The market is said to be turbulent because there are some so-called expert institutions in the market. They control tens of thousands of funds. However, the main focus of these institutions is not to study the next development status of listed companies, but to analyze the future development of listed companies. The main energy is spent on studying the trends of how peers will operate next.

No matter how much money you have, everyone is equal before the stock market. Instead, try to buy cheap stocks when the stock market fluctuates.

Investors should focus on the stock, rather than judging whether the major institutions have entered the stock and will then pull up the stock.

The essence of value investing lies in whether the reason for each operation is based on the relationship between enterprise value, price, certainty and safety margin, rather than the operation itself.

Misunderstandings about value investing

This can only be done if we can buy an attractive enough company at a reasonable price, and we also need moderate cooperation from the stock market.

For investors, if the buying price is too high, the profit will be small, and they may be stuck forever.

We must have enough patience to wait for good companies to have good prices

Our economic destiny depends on the economic destiny of the company. There are many experts in the market who only care about the price of the stock market and do not care about the development direction of the enterprise. They are like chess pieces in the hands of Monopoly.

Whether it is short-term, central or long-term investment, all have their own strategies. The short-term cannot be made into the center, the center can be made into the long-term, and the long-term can be made into the short-term due to temporary fluctuations.

We should focus on investing in the stocks of outstanding companies at prices well below their intrinsic value and hold them for the long term.

The premise of long-term investment is that the enterprise is worthy of long-term investment. You can only buy it if you are sure there is no risk.

Two prerequisites for long-term investment

Invest in companies that do not have long-term and durable competitive advantages

Invest in depressed industries

Investing in stocks instead of cash

Sell ​​too quickly

Although I saw the investment value, I did not take any action

too much cash

Yunnan Baiyao, Pien Tze Huang