Stocks and Industries

A stock represents a company, not a highly liquid security. The essence of investing in stocks is to invest in a company, so the essential source of profit is the company rather than the securities market. The corollary of long-term investing is that the investor’s return is close to that of the company. If you make good use of the market, investors can exceed the income of the invested company itself, and this excess income comes from the stock market.

Situations where a company is too undervalued or overvalued is an excellent opportunity for investors to act. Be sure to buy big on stocks when they are seriously undervalued. But such opportunities are rare. In most years, you can find some excellent companies at reasonable prices, and these are also appropriate buys. In the long run, it will inevitably accumulate a number of outstanding company stocks. as a long-term investor. Never sell your own stock lightly. But it can be sold in two cases. First, the company’s substance has changed and its original competitiveness has been lost. Second, the company’s stock price is seriously overvalued. Third, there are better investment options.

Profits come from two aspects, the company and the market. Regarding the company, if you hold the stock for a long period of time, the company can maintain or enhance its competitiveness and generate good compensation. That investor will get a satisfactory return. Regarding the market, if you can buy at a low price and sell at a high price, then you can make a profit from the market.

Risks come from two sides, the company and the market.

In terms of the company, if you make a mistake in judgment, the company will lose its strength and become less competitive during the period, it will suffer a great risk, which is also the risk of the nature of investment.

The so-called market risk is that stocks do not rise for a long time, and stock market volatility is not a real risk for real investors. As long as the company you invest in is right, you don’t need to pay attention to this risk. The real risk to the market lies in the big crisis of the capital market, the market crash. Or you leveraged your investment and invested money in a hurry. In this way, ordinary fluctuations in the market can also make you lose all.

Regarding risk, I think that the risk of stock investment is less than that of industrial investment. There are three reasons. First, it is easier to choose a good company than to start a good company. Second, stocks can properly diversify investment in several excellent businesses, but it is difficult for industries to do so. Third, stocks are easier to get out of the market than businesses when you spot a problem.

But in reality, many people in business make money, while in the stock market, few people make money. The essence of industry and stock, which are both assets, is the same, the only difference is liquidity. And it is precisely this liquidity that makes such a big difference. People who do business have shown a series of excellent qualities such as their hard work, diligence, courage, and decisiveness. The people who make stocks show a series of human weaknesses such as greed, impetuousness, aggressiveness, quick success and short-sightedness. Therefore, in business, small abilities can make small money, and large abilities can make big money. And for investment. Only have a complete knowledge system such as a unique vision for excellent companies, a correct investment theory system, and a deep grasp of business principles. As well as calm, self-discipline, patience, principles, strategies and other perfect personality and wisdom can truly become a successful investor.

2012,12,23 Liang Xiaoyongkang wrote in Changsha (share my investment thinking notes ten years ago)

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