Value investing, long-term thinking investing + arbitrage

When retail investors first come to the stock market, they think they are here to make money, and most likely they are here to give away money.

In the actual stock market, there are already some experienced retail investors, institutions with very large funds, and large shareholders with a lot of stock chips. These are all opponents with certain experience, capital, and chips advantages. Without equipment or sufficient defensive capabilities, if you want to make money, you can only rely on following the trend and hitting the big luck, so the long-term is the return of risk.

Value investment really provides a direction for retail investors to invest in long-term without losing money, because the starting point is to seek undefeated first, and then to achieve small victories. Through the compound interest effect of 10 or 20 years, the small victories can be converted into proportional series Logic turns into a big win. Of course, there is a lot of dedication and hard work involved, and it cannot be said that many people can pass the test of waiting patiently, but it is a relatively safe investment path after all. If you persist for several years or more than ten years, you will make progress slowly, even if you do not win big. Can you be undefeated or win a small victory?

How to seek invincibility first? Long-term thinking is the thinking of not earning short-term losses, and earning the returns brought by the growth of the company and the inherent earning power, such as dividends, buybacks, and steady growth of the company. Here, the main thing is to buy companies with clear and strong earning power, condensed into two Words are meritocracy. From choosing the best to buying at a low price, you need to wait patiently for the emergence of unpopular opportunities, because unpopular excellent companies are rare, but only unpopular opportunities have low buying prices. Buying at a low price can bring out better capital efficiency while reducing price risk, and it also lays a good cost foundation for possible arbitrage in the future.

The foothold of value investing is the margin of safety. Buy excellent companies and buy them at a discounted price. The conditions can be said to be strict, and you can choose the lowest price from the best. In real life, it can be said that it is difficult to find such a good thing. In fact, it is also difficult to find it in the stock market, but you can still find it. Why? Because whether it is retail investors or institutions, they are all looking for the next hot spot to make money. At this time, there will always be some industries whose business cycle is at a low point that will be ignored by the market. However, sometimes the market is right in risk pricing, and sometimes it is wrong. The specialty of value investing lies in finding outrageously wrong market pricing, relatively excellent corporate value, and obtaining a margin of safety. Senior investors must trust their own judgments and be able to constantly correct their own risks according to changes in business operations. judge.

What advanced investors do with most retail investors and institutions is the time difference, that is, the market sentiment is the present, and advanced investors can evaluate and reasonably predict the future. The hot trend of the market is fascinating, riding the wind quickly and in a good mood, but the price risk is hidden in the possibility of making money, the performance of fluctuating ups and downs, and the compound interest effect of not losing money for a long time will not appear.

The arbitrage of value investment uses the future appraised value to make arbitrage predictions on the current market price. The future is uncertain. It is still very difficult to find the company’s appraised value in an uncertain future. Maybe It is not necessary to understand the business details of the company, but the basic securities analysis and business analysis capabilities still need to be continuously evolved. There is no shortcut to this. Whether to buy or sell, we can only hope that the stock price will continue to rise by more than 15% per year, or that the growth rate of intrinsic value will continue to exceed the growth rate of stock price. How to reduce the risk of lower margin of safety if the stock has risen too much and is not sold? How to increase cash reserves and continue the cycle of picking the best and buying the cheapest?

I personally feel that the risk fluctuations in several major stock markets around the world are greater than in the past, and the big A still has relatively less fluctuations, which is equivalent to increasing the risk safety margin and obtaining satisfactory returns. Satisfactory long-term returns at lower rates.

I continue to invest in CNOOC. I bought and held it for two years. The current intrinsic value assessment of 20 to 25 yuan is still reliable, and the future value is still expected. There is already enough room for arbitrage at the market price, and I began to sell some positions slowly. Of course, my cost here has been reduced to less than 5 yuan. For example, because the stock price continues to rise, it has already accounted for too much consideration, and there is also the reason why CNOOC has increased dividends in the past two years, and the cost has been reduced rapidly; the background of the surprise is that arbitrage can start in such a low-risk high margin of safety. If the stock price rises, you can continue to sell some slowly, if the stock price does not rise, you can continue to receive dividends, if the stock price falls, you can slowly buy some back, and even reinvest dividends to increase shares. On the surface, of course, it is the opportunity brought by CNOOC’s excellence, but the opportunity is here. When CNOOC’s stock price is in a downturn, there are not many investors who can grasp the opportunity in advance.

The evolved value investment system can gradually gain more value, returns, and cash advantages in the process of rising, not rising, not falling, and falling stocks with good risk-to-price ratio. These advantages do not happen all at once, but take time to brew Appropriate trading conditions occur alternately. Investing in low-risk areas, waiting patiently, or long-term large-band arbitrage, the low-risk and satisfactory return practice of value investing, probably like this?

Personal investment thinking, not advice, spectator Haihan

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