Killing logic kills valuation kills performance. Three kills is an inexorable poison, a destroyer of wealth, and the natural enemy of all investors. The only thing we can do is to find out early and escape in time. In turn, it is the double-click of valuation and performance. I will add another one called logic or industry trend, which is called three-click for short. The timely intervention of the three-strike start-up stage is the beginning of the contrarian trend of Diaosi. What he does is not an elevator but a helicopter! Because every time the big market of the three strikes will appear several times or even ten times the shares in two or three years.
Recently, many golfers have said that I am a market fan, a short-term speculative fan, and a big slick. They have a deep misunderstanding of me, so I will talk about my understanding of the long-term clip. The reason why I have been more flexible recently is a helpless choice under special market conditions. In fact, I want to make a price investment that saves money and effort, and my ability in this regard may be stronger than short-term speculation.
Many people have a very wrong understanding of price investment, and they are completely fooled by so-called masters with ulterior motives. There is no necessary relationship between real value investment and holding time. If you hold it for two or three years, you can call price investment and hold it for twenty or thirty years. The core of price investment is value rather than holding time.
Let’s talk about logic, valuation and performance separately first.
Logic is in the general direction, such as economic trends such as industry trends such as the company’s core advantages, etc. Logic is the root of reasoning and the source of predicting the future. Just a few examples. For example, when it comes to cyclical stocks, the extremes of things will inevitably rise and decline. When the industry is at its most pessimistic, it will clear and then supply will decrease and a new cycle will begin. For example, the long-term investment value of pharmaceutical stocks under the aggravation of aging, such as the opportunities of photovoltaic and new energy vehicle industry chains under the carbon neutral situation, etc., and then subdivided into small and medium details, such as the logic of oil transportation due to the reduction of supply and the conflict between Russia and Ukraine The increase in oil transportation distance and the increase in European demand, etc., for example, the high probability of price reduction of silicon materials in the next year will benefit downstream operators and the material supports required for installation.
Valuation is the most mysterious thing. We often say that valuation is an art. Everyone understands art. Everyone has their own opinions and understandings. For example, the normal valuation range of a certain industry may be 15-25pe, but if the outside world or the industry itself changes, the valuation may be less than 10 times or more than 40 times. However, it is not completely disordered. In the upward trend of the industry, the valuation will increase and in the downward trend, the valuation will decrease. When the industry boom is growing at a high rate, 30 times may still be underestimated, and it may rush to 40 times or even higher. 20 times may also be overestimated to 15 times or even 10 times. Therefore, it must be flexible enough and it must be clear whether the industry is in an upward cycle or a downward cycle. This is why I regard the ability to predict industry trends as the most important ability for price investment.
Performance is easy to understand, just numbers. Here I emphasize the growth rate and expectations. The future growth rate largely determines the level of valuation. Expectation is the expected value and tolerance value. Even if the performance is very poor, as long as it is expected, it will be fine. Even if the performance is very good and does not meet expectations, it will still fall .
In this way, the logic, valuation and performance are first figured out, and then the three kills and three strikes are considered.
Let’s talk about three strikes first.
Logic (industry trends) determines the general direction. In the rising cycle, the valuation of the performance explosion will also increase. In two or three years, the performance may increase by one or two times, and the valuation may increase by two or three times, and the four or five times increase is just like this. There is no doubt that the increase in valuation in the big market is far greater than the increase in performance. Usually, the increase in valuation accounts for 60-70%, and the increase in performance accounts for 30-40%. If you don’t believe me, go check it out. The only thing that has continued in the past year or two is coal, because it is a cyclical stock that looks more at PB and less at pe than cyclical stocks. You can also review chip semiconductors, consumer electronics and innovation, medical and medical equipment, the Internet, photovoltaic new energy vehicles, etc. from 19 to 21 years. The decline in the past year or so happened precisely in the context of interest rate hikes. This is not a coincidence. This is a simple truth that everyone understands.
The main uptrend in the three-strike market has a very easy to distinguish feature, that is, the 60-day moving average in the daily chart. You can review all industries and individual stocks. Most of the main uptrend stocks are along the 60-day moving average. The line goes, every time it pulls back to the 60-day line, it is a good buy point to buy at a low price. Is it a coincidence that the daily chart of Shaanxi Coal Industry has come out this year? No, this is the commonality of most of the main rising stocks even regardless of industry and individual stocks. .
Then let’s talk about the three kills. Many times it occurs when the industry’s most prosperous period reaches its peak and then declines and begins to decline. Because at this time, the performance is very good and the valuation is high. If there is a problem with the logic, it is appropriate. Three kills. The most typical example is the bank stocks after 2007. Friends who are familiar with bank stocks during that period should have a deep understanding. Recently, the typical ones are chip semiconductors, the Internet, medicine, etc., especially the masks, protective clothing, Inke Medical, etc., which benefited from the epidemic some time ago. I chatted a few votes at noon today. Everyone agrees with the killing logic of China Merchants Bank. Everyone has differences in the killing logic of Kweichow Moutai and Haitian Flavor Industry. Here we have to see which aspect of the logic is. It is already in a downward cycle, and this aspect can also be understood as killing logic. Although Haitian’s additive incident is positive, it just happens that consumption can be upgraded to non-additive products. In addition, its strong channel is the limited impact of catering. Haitian and Maotai are more likely to see that the growth rate of future performance is not enough to support the current valuation, and more is to kill the valuation. Moutai is now 40 times smaller than pe, and there is a high probability of seeing it in the next few years by 20 times. In a few years, when the growth rate drops to 10% or even single digits, it is possible to see 10 times pe. In addition to China Merchants Bank, another typical example is Tencent.
What everyone is most looking forward to is which industries and which stocks have three-strike opportunities in the future. Let’s talk slowly when you have time.
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