Two factors necessary to make big money in the stock market—time to buy and patience to hold shares
Buffett bought the Washington Post with a price-earnings ratio of 14 times. He bought the Washington Post by 30% for nearly 3 years. After that, it rose sharply, and it rose by 128 times in 40 years. Buffett finally sold after more than 40 years because people stopped reading newspapers. what do people watch Watching Apple mobile phones to understand major events in the world, so Buffett bought this stock after the stock price of Apple mobile phones rose hundreds of times at the bottom. After buying it, I made a profit of 6 times.
Buffett bought Coca-Cola with a price-earnings ratio of 14 times. After holding it for 10 years, Coca-Cola rose 15 times. The price-earnings ratio came to 60 times. The time is 1998. Buffett always praised Coca-Cola in his speech that year. Later, from 1998 to 2011, Coca-Cola traded sideways for 13 years, and its stock price fluctuated sideways. Buffett never sold. From 2011 to 2021, Coke has nearly tripled.
Buffett bought BYD for 8 yuan in 2009. This time he was lucky. BYD rose 11 times in a year to 88. Buffett did not sell a share. Later, BYD fell to 11 a year later. Then it traded sideways for 10 years, and the stock price was still around 30. It is equal to the market value of Buffett’s shareholding in BYD, and after ten years it is still one-third of the high point ten years ago. Then it is ten times a year, from 30 to 330. Buffett has been selling from 200 to more than 300.
This is, patience. Patience is one of the most profitable factors in investing in stocks.
Yiling Pharmaceutical, the high point in 2011 was 12 yuan, and the low point in 2019 was more than 6 yuan. We only saw that its price soared more than 8 times in more than 3 years. But he didn’t see that he had been sideways for 8 years before the skyrocketing price and even cut the stock price in half. Stock God Linyuan began to buy Yiling Pharmaceutical in 2016, and waited for more than 3 years before ushering in a real surge.
Xinhua Pharmaceutical, the share price in 2010 was more than 7 yuan. By 2021, the stock price will still be more than 7 yuan. The stock price has not risen for 11 years. We only see that his stock price has risen more than 6 times from 2021 to now. I didn’t see the 11 years of sideways trading ahead.
Kweichow Moutai had a market value of more than 100 billion in 2007, and by 2015, the market value was still more than 100 billion. We have only seen Kweichow Moutai’s nearly 20 times in seven years from 2015 to today, but we have forgotten that the previous seven years have not risen sideways.
Wuliangye, nearly 200 billion in 2007, by 2014, the market value was only 56 billion. We only remember that Wuliangye’s stock price has soared more than ten times from 2014 to today, and we forget that its stock price has plummeted by more than two-thirds in the previous seven years.
China Resources Sanjiu, the stock price was 25 in 2010, and the stock price is still 22 in 2021. The stock price has been sideways for 11 years. We only remember that from 2021 to 2022, the stock price of China Resources Sanjiu went from 20 to 61 in more than a year. We don’t remember that his stock price did not rise for 11 years before.
Why do most people in the stock market not make money? One is that they will not choose the time, and the other is that they are impatient.
If you buy the above stocks at the wrong time, you will often not make money for 5 or even 10 years. If you are not patient, it will be difficult to enjoy the soaring stock prices in recent years. These two factors are indispensable.
Some people say, how do I know when to buy?
The best buying points for the above stocks are obviously regular.
Coca-Cola, BYD, Xinhua Pharmaceutical, Yiling Pharmaceutical, China Resources Sanjiu, Kweichow Moutai, and Wuliangye, these seven stocks all had their stock prices sideways for about ten years before suddenly skyrocketing. What they have in common is that almost all of them have a price-earnings ratio that is dozens of times larger. After long-term profit growth, the price-earnings ratio fell to around 10 times after the stock price went sideways. Therefore, if you want to make a lot of money, the first thing is to insist on buying such good companies with a price-earnings ratio of 10 times.
Second, after buying at a price-earnings ratio of 10 times, the general stock price has a high probability of skyrocketing within 2 to 3 years. You have to be patient. Wait for that Davis double tap. And you have to have enough positions. If you can wait for 7 years, there is a high probability that you can earn 10 to 20 times. Refer to the case of Wuliangye Kweichow Moutai above. If you wait for 3 years, there is a high probability that you will earn 3 to 6 times. Refer to the above Xinhua Pharmaceutical, Yiling Pharmaceutical, and China Resources Sanjiu.
Many people buy Tongrentang with a price-earnings ratio of 60 times, Dong-E-E-Jiao with a price-earnings ratio of 40 times, Guangyuyuan with a profit loss, Pien Tze Huang with a price-earnings ratio of 80 times, Haitian Flavor Industry with a price-earnings ratio of 70 times, and Kweichow Moutai with a price-earnings ratio of 40 times. Wrong, it is actually difficult to make money. They most likely bought at the wrong time, and bought at the starting point of the above 7 stocks whose stock prices have been sideways for ten years. (Dong-E-E-Jiao and Guang Yuyuan may belong to the reversal of dilemma here, which is unclear at present.)
Therefore, if you want to make a lot of money, you must buy a big white horse in the market with a price-earnings ratio of 10 times and buy an industry leader.
For example, a year ago, I bought the Hong Kong stock Baiyun Mountain with a price-earnings ratio of 6 times. Although it did not rise as fast as Yiling Pharmaceutical, Guizhou Bailing, Teyi Pharmaceutical, Zhongsheng Pharmaceutical, Zhendong Pharmaceutical, and Xinhua Pharmaceutical, but as of today In 14 months, it has risen by nearly 40 points, and it is still possible to go far and win the market. And now the price-earnings ratio is only more than 8 times. I believe he is on the road to 6 times in the next 3 years.
Half a year ago, I bought the Hong Kong stock of Xinhua Pharmaceutical, which plummeted from the previous high of nearly 10 yuan to 6 yuan, at a price-earnings ratio of around 10 times. After buying it, it continued to plummet to 3.65 yuan. But instead of selling, I waited patiently. Finally waited until this stock soared to 15.6 yuan last Friday. I believe that the current price-earnings ratio of 20 times the Xinhua Pharmaceutical Hong Kong stock market is not the real stock price high.
Nearly a year ago, I bought Tongrentang Technology with a price-earnings ratio of around 10 times, and experienced this stock from 6 yuan to 9 yuan and then down to 4 yuan. Now the stock price is still more than 5 yuan.
At present, there are only three stocks in the pharmaceutical industry. Among them, Baiyun Mountain is absolutely heavy. Because he is the industry leader. Compared with the 2014 Kweichow Moutai.
Many people compare Guangyuyuan, Tongrentang, Pien Tze Huang, Shouxian Valley, and Dong’e Ejiao to Kweichow Moutai, and Baiyun Mountain to Erguotou and Damao.
Kweichow Moutai is a high-end liquor. In 2014, its profit was 15 billion yuan. Now it has a profit of more than 60 billion yuan. Shunxin Agriculture, which sells Erguotou, has been struggling on the verge of loss for many years. Pig raising, real estate, and the troika of low-end liquor are all high-input, hard-working businesses. It’s hard to make money together.
These high-end pharmaceutical supplement companies are all good, but which one has the same status in the Chinese medicine industry as Kweichow Moutai, leading the industry in profit and revenue for many years in a row? One doesn’t. Some even lost profits.
In contrast, Baiyunshan, although many medicines are cheap, but they have revenue, profits, and dividends. The dividends have increased by more than 60 times in the past 20 years. From 17 million dividends in the first year of listing, to 1.1 billion dividends last year. It has increased by 65 times. After deducting the additional issuance of consolidated shares, it has also increased by 32 times. The price-earnings ratio dropped from 100 times when it was listed to 10 times now. Moreover, more than 3 billion of Baiyunshan’s 3.7 billion profits are contributed by Great Southern Medicine and Great Health. The gross profit margin of these two businesses is as high as 48%. It is not a hard business, and it is an obvious money printing machine.
Therefore, if you want to seize the next big bull stock, you need to buy a high-quality big white horse with a price-earnings ratio of around 10 times, which is the industry leader. At present, Baiyun Mountain perfectly meets this standard.
Some people complain that Baiyun Mountain has not risen for ten years. That’s because you bought it expensive. If you buy at 60 times the price-earnings ratio, 30 times the price-earnings ratio, or even 20 times the price-earnings ratio, it will be expensive. You have to buy with a price-earnings ratio of 10 times or even a price-earnings ratio of 6 times like me. Then the probability of not making money for a long time is greatly reduced.
Some people complain that Baiyun Mountain’s rise is slow, and the market for such a good traditional Chinese medicine often lags behind popular stocks in the market. This is a sign of impatience. Making money in the stock market is based on wealth planning in units of years, not by looking at changes in market value in a day or even a month.
At present, the national epidemic is still fermenting, and many places have not really spread on a large scale. According to online reports, the price of ibuprofen cattle has risen to 5,000 yuan, and we can reason about the popularity of this round of antipyretics and cold medicines and the logic of future performance surges. However, there are some stocks whose short-term gains have been too large, with a price-earnings ratio of 50 times or even close to 100 times. At this time, Baiyunshan’s safety cushion is high enough. If the market continues in the future, he will most likely make up for the increase or even skyrocket, because he is the real leader, product line and The increase in sales and future revenue and profits will be the best among all. If the Chinese medicine market stops here, then under the background of the collective stock price plummet, the correction of Baiyunshan’s stock price will be relatively mild, and it will not be cut in half like other skyrocketing stocks.
Note, the article serves as a record of the author’s investment thinking, not as an investment recommendation. Investing is risky.
$Baiyunshan(00874)$ $Shandong Xinhua Pharmaceutical Co., Ltd.(00719)$ $Kweichow Moutai(SH600519)$
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