The most common misunderstanding in value investing is that I know this company very well, and I can calculate the profits in the next few years. Although the stock price is falling now, it is not a risk. Buy with leverage.
Regardless of whether the future profit calculated by yourself is correct, even if the calculation is correct, it is confirmed that the future profit will continue to grow. What does this have to do with the short-term stock price? Short-term stock prices are priced by thousands of people who don’t know much about the company. They subjectively believe that the company will sell its stocks if it gets worse in the future. For example, in the current China Merchants Bank, after the news of the president was sentenced, China Merchants Bank was judged to vigorously support the real economy in the future, resulting in a large number of bad debts, so the valuation should be in line with the four major banks. So I started to smash stocks and smashed the valuation of China Merchants Bank to the four major banks. Regardless of whether China Merchants Bank will really change its business direction in the future, there is a problem with the assertion that bad debts are high. Are the bad debts of the four major banks high? Looking at the annual reports of the four major banks, the core asset adequacy ratio and provision are all ahead of ordinary joint-stock banks, and second only to China Merchants Bank among big banks.
Investors who have an in-depth understanding of the bank realize that the fundamentals of China Merchants Bank have not changed fundamentally. Instead of reducing leverage, they have increased their positions against the trend. They are likely to liquidate their positions in the continuous decline of China Merchants Bank. Now, the stock price has risen back, and it has nothing to do with the liquidator.
Buying stocks is like going to a movie. Suddenly someone in the movie theater shouted that it was on fire, and people rushed outside the movie theater regardless of whether it was on fire or not. You are in the movie theater, and you know that there is no fire, but if you don’t follow the crowd and instead try to move to a better viewing position, you may be trampled to death by the panicked crowd.
$ China Merchants Bank (SH600036)$ $ Gree Electric Appliances (SZ000651)$ $ Poly Development (SH600048)$
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