The core logic of long-term value investment is to increase the margin of safety, first have a base of risk-to-performance ratio, and then use a reasonable landing operation system to obtain a long-term low-risk satisfactory and reasonable return. Therefore, the direction of evolution is first to expand the risk pricing ability of the margin of safety, that is, to evolve the fuzzy and precise long-term thinking perspective of valuation. The limitation of valuation is applicable to a wide range. Maybe 99% of the companies in the stock market are not suitable or suitable. It is not worth the time to evaluate. For enterprises with a small number of evaluations, the evaluation ability must have a free dimension, and do not use a single perspective or formula to evaluate. To put it simply, the choice is extremely limited, but when an excellent company is selected, the perspective of valuation should be free and comprehensive without being restricted.
Valuation is fuzzy and precise, and it is natural to find targets with good risk performance and cost-effectiveness to choose the best and buy at a low price, but how to implement it? Buying good stocks cannot be left alone, nor can it be counterproductive; there must be a reasonable investment system to complete the execution from buying, waiting, observing, and selling. The key to the evolution of the investment system is also the dimension of freedom.
Why is stock selection so restricted, valuation and investment systems need to be free? The reason is that the limited stock selection is to ensure the margin of safety, and the freedom of valuation and system is also to improve the margin of safety. In fact, the purpose is to improve the evolution of the margin of safety.
Shenhua, CNOOC, and Alibaba have mainly held heavy positions in these three stocks in the past three years. The valuation dimensions are different, and the investment system has different responses, but they can all use the evolutionary valuation and investment system to invest in value.
When Shenhua started investing in 2018, it understood that Shenhua is a low-cost coal supplier. What is uniquely valuable is the advantages of integration, high dividends, high intrinsic value, and low market prices. Valuation is not difficult, and the actual operation is also very simple. Buy slowly, and continue to buy during the decline, but it is very difficult. The stock price keeps falling. I remember that in June 2020, when the stock price was at its lowest point, I took about 500,000 shares. ? The cost is 13 yuan, the market price is 12 yuan, it has fallen for 2 years and 3 years, and it has been bought for 2 years and 3 years, and the stock price has plummeted. There is not enough price difference for arbitrage. Fortunately, there are good dividends to reduce the cost slowly, and continue to buy dividends. However, the book continued to lose money, and the experience of holding shares was uncomfortable. Afterwards, it was too early to intervene. The price fell at a period of more than 17 yuan and started to buy. In 2018, Shenhua’s risk-to-performance ratio and the market environment at that time should be able to wait for the buying point. It will start to rise in 2022, and the 400,000 shares will be sold for more than 20 yuan and sold slowly until 27 yuan. In the end, you will earn 6 million yuan, right? Then use the principal and capital return to replenish cash reserves, start buying Ali, and add a little CNOOC. Shenhua’s investment has been stumbling, but the results are not bad. Shenhua is indeed excellent and has a high margin of safety for a low stock price.
I bought CNOOC in December 2020, and I felt very anxious, because the reason for the sudden appearance of the opportunity was the news that some markets were suppressed by the beautiful country, and CNOOC had indeed a good historical performance, and the price was 6.6 at that time, because the opportunity suddenly appeared, it was too late to find information I understand, bought 300,000 shares in a hurry, right? I dare not buy it. In 2021, slowly understand, slowly build positions and increase holdings, and complete the target of building positions by the end of the year, about 1.2 million shares, right? In June 2022, 150,000 shares were sold from 12 to 12.5 before the dividend. Later, CNOOC fell to more than 9 yuan and then slowly bought it back. After 7 months, an opportunity for long-term arbitrage appeared. The experience of CNOOC and Shenhua Investment is very different, that is, CNOOC has almost no chance to buy at a low price. The stock price has risen from a low of more than 6 yuan in 2020. Value investment generally means that the stock price falls more and more, but the value of CNOOC itself increases. According to the improvement of the margin of safety, even if it is already the most heavily held stock, I still increase my position a little bit, but if the stock price rises too much, I still have to sell a little bit. The mentality of long-term investment may be more balanced and stable. .
Ali started to build positions in 2022. When buying, I thought about the business cycle and price cycle. The stock price will continue to be depressed for another year. I have made a plan for the capital position and planned how to buy from 120 to 80. I plan to use the upper limit of 20% of the position. Buying, buying some at 120, quickly rose to 130, and buying less, but unexpectedly continued to fall to 60. I remember when I continued to buy 1000 and 2000 shares in batches around 70, 65 and 60, the market was really crazy. Clearance. Later, the stock price rose, and I had bought enough, less than 70,000 shares, right? The cost is around 90, right? The cost of buying is not bad, and the process is not easy, but with a certain amount of capital and position preparation in advance, it is not so sad to buy when it falls.
Before the actual battle, you must have an investment system with a high dimension of freedom, and you must have risk pricing capabilities with a high dimension of valuation freedom. The most important thing is that the margin of safety must be to find excellent companies among excellent companies to continue to observe and follow up. The price is high Excellent companies continue to look up, and excellent companies whose prices have fallen to the bottom must seize the opportunity. Look for opportunities, buy at low prices, hold patiently, make reasonable arbitrage, and continue the investment cycle. It is true that the road is simple, but how to get on the road? Insufficient level, investors feel that the future is bright but they can’t find a way out. This is also the state of my full-time investment for the first 6 or 7 years. Only by evolution, only by honestly facing one’s own shortcomings, evolutionary thinking logic, and investment system, investors must accumulate enough evolution before they can continue to respond reasonably, and accept changes as normal due to time and events, and further be able to reasonably ignore or be reasonable Take advantage of time changes and events.
Personal investment thinking, not advice, spectator Haihan
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