Written on December 14, 2022
[To do value investing, you must first start by rejecting temptation] Let me talk about two cases first. One is Yiling Pharmaceutical. In recent years, due to the new crown epidemic, it has been sought after by the market. According to my own circle of competence, I am quite familiar with this company, and I also know that its Lianhua Qingwen has become a big seller due to the epidemic. If it was in the early stage of my own investment, I would have bought it a long time ago, or even sold other stocks and bought it, but I have not acted in the past three years, and I only treat it as a “watching stock”. The second is Songcheng Performing Arts. This is a company that I have been paying attention to for many years, and it is also a good company in my opinion. Due to the impact of the epidemic, the company has suffered operating losses in the past two years. However, with the gradual relaxation of epidemic prevention and control, I believe that Songcheng’s operating performance will gradually recover, and its stock price will “rise with the tide.” This is a high probability event in the future. But would I buy it now? The answer is no, I will still hold my own “Moutai +” combination unwaveringly.
Why am I so dull and dull, clearly seeing a market opportunity and not grabbing it?
Because I know that if you want to make a good value investment, you must first start by rejecting temptation, because there is always no shortage of attractive opportunities in the market within a certain period of time. For example, when the coal stock cycle comes, buy coal stocks, and new energy comes. Buy new energy stocks, the epidemic prevention and control policy has been adjusted, buy the beneficiary stocks of the epidemic prevention and control liberalization, and so on. If you always put your investment in chasing these kinds of hot opportunities, then you will gradually lose value. Investing and long-term investing are very different. According to my observation, such investors who frequently pursue various hot opportunities may not end up with much better returns, and may even end up with losses in the long run.
Why did it end up like this?
First, such hot opportunities in the market are often converted quickly. In this case, we generally dare not take heavy positions, and not holding heavy positions will not contribute much to the final return; second, even if such hot opportunities The conversion is not fast, and we can’t guarantee that we can grasp it so well every time we have a heavy position. A mistake may wipe out the original income (and the stop loss is far from the concept of value investment, because value investment is to stop mistakes, and not a stop loss). What’s more, people are habitual animals. If they constantly seize such hot opportunities, they will form this kind of incentive mechanism in their minds after they have tasted the sweetness, which will further strengthen their own practice. Lack of investment qualities such as concentration, patience, and delayed gratification that value investing must have, let alone the ultimate equity thinking.
Therefore, I firmly believe that if you want to do a good job in value investing, you must learn to reject all kinds of temptations in the market. It can even be said that this is a compulsory course for doing a good job in value investing.
【Football and Investment】Investors are like this. No matter what they do, they are always connected with investment intentionally or unintentionally. For example, when I watched the World Cup in Qatar recently, I thought about it while watching it, and felt that its greatest charm is unpredictability. Whether a team wins or loses, there are strength factors, luck factors, accident factors (such as injuries), and even referee factors. It is precisely because of its unpredictability that it makes fans all over the world go crazy. Crazy, can’t stop. The same is true for investment, which has the biggest commonality with football is unpredictability. ——I think this is how the world we live in works, and the future is always full of uncertainties and unpredictability.
But with unpredictability, is it impossible to invest?
No, just like the World Cup football match, although it is difficult for us to accurately judge which team will win the championship, the fans who really know how to know will generally judge several super teams based on factors such as historical performance and the technical level of existing players. star team. This actually gives us an important inspiration for investment, that is, as long as we carefully select such a “superstar combination” in investment and stick to it patiently, although the long-term result may not win the championship, the final result is often not. too bad.
Of course, in our investment portfolio, we must exclude such stinky teams as the Chinese men’s football team!
[Great Wisdom and Little Cleverness] In the early days of my investment, I did a lot of homework to study the so-called technology, so I still remember some technical terms (of course, I have long put this theory on the shelf and discarded it. I don’t believe it), so when technical people talk, I can roughly understand it. For example, in the process of Moutai’s 1333 yuan reversal upward, two gaps have been left, the prices are 1515 and 1604 respectively. Therefore, I see some technical people plausibly waiting to fill these two gaps, regardless of the future Whether it is accurate or not, if it is accurate, it is really clever to think about it. What investment requires is great wisdom, not playing tricks. For example, I am not talented, but in the five price ranges of 1800, 1700, 1600, 1500, and 1400, I have carried out swing or exchange operations again, because the time Look, what I think is important is not a few small points in the buying price, the most important difference is the amount, that is, how much amount I bought in a reasonable range.
[Thought Closing Mechanism] Duan Yongping said: “Tao is really difficult to teach, and you have to understand it by yourself. It is useless to say what you say to people who have no Dao in their hearts. Most people are not easy to open, and it is difficult to accept being with yourself. I used to know different things. Sometimes I feel very strange. If I am a very successful person, I can understand that I don’t accept new things because they already have enough successful experience and understanding. In reality, I think The situation is just the opposite. Those who are not open are often those who are not very successful. For example, people who have been speculating in stocks for 30 years (maybe 10 years, 20 years) have not made money. When I say Laoba, People actually say… blabla blah blah (2019)”.
This passage of Duan Yongping has almost the same meaning as what Munger said that we humans have a terrible thought-off mechanism. I often sigh about this, because there are some things that even if you knock his head open It’s hard to put thoughts into it!
I have a habit, that is, I like to look back at the comments under my previous notes after a period of time, because it is easier to see my own views at the time and who is right or wrong in the comments. For example, when the stock market was extremely depressed in October, I successively wrote “Swing Moutai Again”, “On the Importance of Dividends”, “Calculate whether Moutai will be expensive in ten years’ time”, “Gree’s Exchange of Moutai shares”, “Valuation Arbitrage Thinking, Equity Thinking, Fund Size and Others”, “Collectibles and Not-for-Sale Items, Investment and Feelings and Others”, “Continue to Exchange Shares to Buy Moutai”, “Rethinking Value Investing”, “Individual Investors’ The goal is to “Save Stocks”, “Advanced Stage of Investment, Moutai’s Golden Pit and Others” and more than ten “Leisure Notes” (I seem to have a habit of myself, the more the stock market is depressed, the more springy the writing, on the contrary, the stock market Rise, but feel dazed, Evans exhausted). Now it’s very interesting to look back at the comments on the above-mentioned series of notes (I think the longer the time, the more interesting it will be). From some “blabla” comments, I found that some people’s thought-closing mechanism is “ How firmly it is closed! Therefore, always remind yourself that you must always maintain an open and tolerant attitude, and don’t let this thought-closing mechanism trap you, although it is difficult to do this.
Note: The individual stocks mentioned in the article are only for my own point of view, and do not constitute investment advice!
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