If this world gives you positive feedback, you can accept it calmly without being arrogant because of it; on the contrary, if this world does not give you positive feedback, or even negative feedback, you can still accept it calmly without being discouraged because of it - what is this not courage? Below I have excerpted a part of the interview and dialogues of Buffett in 2020, which I believe will be very inspiring to us now.
How much cash should investors hold?
Host: Berkshire has more than 100 billion US dollars in cash. You said that you have always wanted to build Berkshire into a very safe castle. What percentage of cash do you think should be held by an ordinary investor?
Buffett: This depends on the investor's personal situation.
If you need to live on weekly salary, you have to keep some cash on hand, and you will definitely not be able to swipe your credit card.
But if your mortgage has been settled, your living expenses are not high, and you already have a reasonable and diversified investment portfolio, then you don’t need cash.
Host: Compared with Berkshire, can your own life be more cash-free?
Buffett: pair. Berkshire has to pay insurance, and insured customers may encounter accidents such as hurricane disaster, and Berkshire may have to pay billions of dollars. Berkshire has more than 1 million stock holders and hopes that I can run the company well and ensure that I can survive all kinds of accidents safely.
But for me personally, even if I retire, I have a multimillion-dollar stock portfolio that pays me about 30,000 dollars in dividend each year. My child has grown up, and everything has been settled, so I don’t have to worry too much about not having enough cash turnover in my hands.
Apple is like a farm
Host: Let’s talk about Apple. You own approximately $45 billion in Apple equity, will you keep track of the latest situation of Apple?
Buffett: If you need to closely track the dynamics of a company, you should not own the equity of the company.
Host: Really?
Buffett: Of course, if you buy a farm, would you go to the farm every now and then to see how tall the corn grows?
Are you overly worried because some people say that due to exports, agricultural product prices are expected to fall this year?
When you buy this farm, you think about holding it all the time.
I bought a farm in the 1980s and my son runs the farm, but I have only been there once. Even if I stare at me, the crops won't grow faster. I shouted "Come on, come on" to cheer, which would be useless.
I know the prices of agricultural products will rise and fall, I know that some years will have better harvests than others, but since I have bought the farm, I won’t care about economic forecast and other things.
What I care about is that the farm can be taken care of frequently. I hope the harvest will get better and better, and the results will be the same in general.
In fact, 100 years ago this farm might have harvested 30 bushels or even 35 bushels of corn per acre. And to this day, 200 bushels can be harvested in a good year.
This country is constantly improving. Compared to hundreds of years ago, the price of commodity is volatile because we are getting better at farming.
Whether you plant cotton , corn or soybeans, you and I are all beneficiaries.
Host: So, Apple is like a farm?
Buffett: pair, this is a long-term investment.
If you have the best car dealer and the most well-known brand in the town, it would be great to leave it to excellent managers to run it.
You don’t have to go to the store every day to ask “How many customers are coming today?”; you won’t say, “I think interest rates have risen slightly, maybe we should slow down sales”, you won’t do that.
When you buy this store, you will know that there are 365 days a year. If you want to own this store for 20 years, that is 7,300 days.
Day after day, year after year, things will keep changing. If you have to pay so much attention to daily trivial matters, you shouldn't buy it.
repurchase and dividend policies should not be decided by the government
Host: Repurchase is a hot topic recently, and your repurchase scale is not small.
annual report shows that from December 13 to 24, 2018, you repurchased Berkshire stock worth about US$233 million, which was exactly at the stage bottom of the stock market. How did you expect this? What did you think at that time?
Buffett: If I really could predict things like a god, the repurchase would not have been only $200 million. For us, this scale is not large.
When all business needs are met and there is a large amount of excess cash on hand, we will buy back Berkshire stock.
Last year, we spent $14 billion on real estate, factories and equipment, far exceeding the depreciation value. When the business needs are met, we still have excess cash on hand.
What we like most is to find companies to acquire, but if my partner and Charlie Munger both think that Berkshire's stock price is below its intrinsic business value, we buy back it.
Host: Is it obvious that was on this node at that time?
Buffett: pair, so what we think.
However, what is really attractive is when the stock price plummets, it is like buying a dollar bill at a discount of $0.6 or $0.7. This kind of opportunity will also appear in the stock market periodically.
Whenever such an unexpected surprise occurs, as long as we have excess cash, we will buy this type of stock as quickly as possible.
Host: This is more like the situation in 2009, not just December of this fiscal quarter, right?
Buffett: Yes.
If we jointly own an McDonald's store, the store is worth $1 million, you own 50% of the shares, and then you come to me and say, "I'm going to clear my shares for $400,000", and I will buy out your from immediately.
Host: However, if you do this, I will be alert (not sold).
Buffett: Of course, you should be alert. But if you want $600,000, I will say to you, "Come back tomorrow."
Host: We continue to talk about repurchases, Senators Schumer and Sanders hope that the government will legislate to regulate the time when companies can repurchase. Recently, there are reports that corporate executives may engage in insider trading during the repurchase. Does the issue of stock repurchase urgently need supervision?
Buffett: There will always be some people who are misbehaving in any matter, which actually has nothing to do with the repo.
According to my years of observation, the relationship between repo and illegal activities is almost zero. But this may be just because there is no way to take advantage of it.
I don't understand the conclusion of that report. In essence, repurchase is to pay money to shareholders, and you can also pay money to shareholders through dividends.
Theoretically, companies should give money to shareholders from time to time. We are giving money to shareholders through repurchase. We have operated several times, and we are not paying money through dividends.
Most companies will send money to shareholders according to their dividend policy. If the cash they hold exceeds the company's demand, the repurchase will be completely feasible when the stock price is undervalued.
Host: Should the government tell the enterprise when, or at least what mandatory conditions should be met before it can be repurchased?
Buffett: In the regular regulations of the SEC, there are indeed restrictions on repurchases, especially when it is discovered that companies have some behaviors such as manipulating stock prices, although this statement is not very accurate.
However, I do not think that the dividend policy of enterprises should be decided by the government, and I do not even think that the investment direction of enterprises should be guided by the government.
The government will invest some funds in particularly attractive packaging, such as renewable energy. I mean, when the U.S. government is interested in advancing long-term development in certain areas.
html More than 150 years ago, the government issued a special oil exhaustion subsidy (Note: A tax reduction subsidy for US mining companies is exempt from 14%-22% of its pre-tax net income, but the tax-free funds can only be used to explore new ore bodies). This is not so much a government policy as a political show.
Of course, renewable resources are the best example of this, but I don’t think it makes sense to see whether a company has the right and in what form it will return cash to shareholders.
Looking back, I just founded a partnership in 1956, which was the prototype of Berkshire in the future, and there were seven people sitting around the table for dinner, mainly my relatives.
I said, this is the partnership agreement, which is drafted in accordance with the laws of Nebraska , and it is four to five pages. You don’t need to read the terms through, but this has about half a page of " basic guidelines ". I want you to read this.
If you agree with these, such as the interaction methods, common expectations and other things between partners, we can cooperate. If you don’t agree, it’s okay, we just can’t become partners.
If I want to establish a partnership with someone, I hope to get along well. Once I become a listed company, I have to accept all kinds of new shareholders.
Whether they think Berkshire should issue large dividends or split stocks, I cannot control the new shareholders to join. Therefore, with my words and deeds and other methods, I will try my best to attract the desired shareholders from the open market and exclude unwanted shareholders.
I remember correctly. Saul Price, who created the Price membership store, sat down and first figured out who was not his target customers. He established a system that could exclude non-target customers.
(Note: Saul Price founded the Price member store and merged with Costco in 1993, gradually forming the business territory of Costco today.)
Which customers are they not want? He doesn't want customers who only buy a box of milk because they will increase the queue time for customers with $200 in the basket, so he charges membership fees to get all the customers who "join the fun" to 7-11.
We want Berkshire to exclude those who have different expectations of the company than us. This is for them, and I sincerely hope that they can find the right company.
If you run a church, you will definitely want to be full of people, at least they are people who want to listen to your preaching.
You don't want to change people every week, saying "God, I have to find a new group of followers", "I have to go out and talk to investors and let them come to my church this Sunday", because there are only so many seats in the church.
Berkshire only has about 1.645 million Class A shares, and these shares are seats, and I want people who agree with me to sit on it.
Use trend to defeat details in the upward market
. Follow the trend to
The so-called use trend to defeat details in the upward market tide refers to the mentality of following the trend and formulating a certain disciplined operation mode. This is the main trick in the stock market's upward trend.
In the upward trend, investors should abandon all subjective analysis. Regardless of whether these indicators or technical tools are given qualitatively or quantitatively, they should resolutely abandon the practice of superstitious technical indicators or tools, promptly recognize the market trends they are in, and follow the trend.
sells against the trend during the upward trend or buys in the opposite theoretically in the downward trend, which often fails due to different market conditions and conditions, because no one can accurately predict the end time of the market rise and fall. The blind and subjective escape from the top or buy at the bottom afterwards proved that in the end, either sell too late or buy too early. Only by recognizing the market trend and following the trend can the risk be minimized.
2. Follow the trend
Before entering a speculative market, you must recognize whether the market trend is an upward trend or a downward trend. After confirming the trend, you will start a specific layout, that is, in the upward trend, is mainly long , and in the downward trend market, it is mainly selling. Remember: Don’t make mistakes in buying and selling directions. Just look for high points in the rising market and short . It is the stupidest and quite dangerous to just buy the bottom in the falling market.
If you encounter a decline after buying and rise after selling, you should be vigilant about whether you misjudgment the general trend. If you misjudgment, you should admit your mistakes and surrender early, and do not be enemies of the general trend. Don’t be stubborn, admit that you are looking at the wrong direction, and knowing the mistake early can reduce the loss to a smaller level.
Before there is no operation, you must try to formulate stop loss bits, and do not change the set stop loss position at will. Never find various reasons to defend your wrong views, because that will only make you make mistakes again and again and enter a vicious cycle.
Do not rely on technical analysis indicators. All technical analysis and technical indicators are flawed. Relying too much on the so-called buying and selling signals of these technical analysis indicators may cause funds to encounter the risk of being trapped. We will never do such extreme operations as buying more and more the decline.
In life, we often encounter situations where we can go with half the effort. Investors should always keep in mind the connotation of following the trend, follow the trend of the market, and regard it as an important trading direction and indicator, so as to reduce personal subjective views on the trend. After confirming the market trend, enter the market when there is a pullback in the upward market.
Our view on the future market is determined by the general trend, reducing the one-sidedness in personal investment decisions, following the market trend, and paying attention to the entry time and investment strategy while following the trend.
3. Trend Top and Bottom (QSDD) Formula
converts the trend into indicators and modularizes it. It will help investors compare the development status of the market. It is the most important to judge what trend the market is in. The QSDD indicator will intuitively reflect the state of the market trend.
4. Basic usage of trend top and bottom
Long, medium and short-term trend display, which facilitates users to clarify the current trend of the stock price. The red area at the top and the blue-green area at the bottom are used to identify the stock price trend and the situation of overbought and oversold . The green square at the bottom shows the stage bottom, and the red dots appearing mean a short-term bottom-buying signal; and the red box at the top indicates the stage head area, reminding users to be cautious.
When using it, use the yellow medium-term trend line as the main basis for judgment, combine the gray short-term line and the red long-term line to grasp the buying and selling points. When the long-term trend line is upward, try to choose a short-term line to enter the market when it pulls back. Otherwise, pay attention to high selling to stop winning and stop loss. It can be used as an effective auxiliary judgment tool for the trading line. The specific usage method of
is not complicated. As an auxiliary indicator, it should be used in combination with the trading line. The key points of usage are as follows:
three curves of multiple short arrangement , similar to the moving average system, which can confirm the BS point buying and selling signal. The directions of the three curves of
indicate the short, medium and long-term trends of the current stock price respectively. The position of the three curves of
, overbought and oversold phenomenon is similar to the swing indicator (below 20 is oversold, overbought and overbought above 80).In some cases, there are signal prompts at the bottom, bottom buying point and risk area to facilitate users to understand the current stock price status. The top and bottom deviation characteristics of the medium and long-term curves in
are similar to traditional indicators.
5. Trend top and bottom use in actual combat
Trend top and bottom indicator respects the principle of market trends in practical applications. Therefore, when using trend top and bottom, everything must be based on rules. In short, the top and bottom of the trend contain three lines and two areas. Three lines, namely short-term lines, medium-term lines and long-term lines; two areas, namely high-level strong areas (also called risk areas) and low-level weak areas (also called safe areas). As shown in the figure, is a trend analysis of Danhua Technology .
The trend evolution process of Danhua Technology has been from RMB 14.36 to RMB 19.93.
Among them, starting from 14.36 yuan, we found that the QSDD indicator shows that the short-term, medium-term and long-term lines are all in the weak zone, which means that the stock is in a weak state at this price and has not shown a turning point; but this also means that the stock is on a relatively safe margin. The QSDD indicator moves upward with the fluctuation of the stock price, which drives the medium-term lines to also move upward until the long-term lines gradually move upward, eventually leading the overall three trend lines to break away from the bottom weak zone together. This trend of the three-line separation tells the stock to change from the weak state to strengthen. In terms of operation, this is also a good opportunity to buy.
When the three cycle trend lines of short, medium and long gradually move upward, the short-term line touches the strong risk zone, and then the medium-term line and long-term line also enter the strong risk zone one after another. When all three lines enter the high-level strong risk zone, it means that the stock is in a strong position and the stock price may be rising strongly. But we need to understand one truth: high-level risks are most likely to occur when the rise and rise are the most intense, and this is also when the risk is the greatest. As a criterion for determining the top, for QSDD, we can also use the three lines to break down from the strong zone as a reference. When the stock approached its highest point of 19.93 yuan, we found that the short-term weakening and downward movement drive the medium and long-term lines to move downward, and eventually leave the strong risk zone. This is defined as the stock starting from a strong state to weaken. In terms of operation, this is also the best time to sell at high prices.
If we take the trend as our combat strategy to defeat everything with trends, then the QSDD indicator will play a leading role in the judgment of trends. In this way, you won’t be overwhelmed by judging what trends are now and what strategies should you adopt. When everything has standards, what is left is execution, knowledge and action are united, and the ending is only victory.
defeat the ending with details in the downward market
Detailed operation
In the downward trend, in most opportunities, how can the stocks being trapped be unconstrained? Or how to conduct profitable operations under such a market situation?
There are only two answers: either wait short positions, which is the so-called follow-up trend, and you must also respect the trend under this trend; or use detailed operations to capture those rebound opportunities after the decline is too strong.
It is impossible to eat a fat person every time in the seemingly inconspicuous rebound, and often after multiple rebounds, the accumulated returns will change the ultimate tragic decline tragedy.
Therefore, we will see that there are also trading opportunities in the downward trend, and what we need to grasp these trading opportunities is technology and mentality. Excellent short-term operation skills and non-greedy mentality will determine the success or failure of these rebound operations.
Fund reset method for unsettling
The most common thing most investors do is wait and wait for their stock price to return to the price they bought at the time. Reality is cruel, and it often blindly keeps you covered up, which will only get deeper and deeper. If the stock is activated through band operations, although the stock price does not return to the original buying price, the overall amount of funds can be restored and even made profits, thus achieving the goal of unblocking.
Fund reset method emphasizes special funds, no new funds are added, and funds in the condom are used to unpack. Based on the principle of making strong money and weak stocks, when the condom is trapped, the condom is unpacked by earning stocks first and then making money.
Fund reset method is to intervene when the trend band ends, and when a short-term opportunity occurs again, the full position will be intervened. In this way, repeated band operations can be carried out and the losses can be recovered soon.
For example, if the stock price drops from 10 yuan to 5 yuan, what will be done as a normal investor? Either hold it tightly and wait until the price returns to 10 yuan. This is very unlikely. From the perspective of many stocks, it is even necessary to double before uncondom is uncondom; or you should take the initiative to uncondom and use active and detailed operations to achieve the final uncondom. Of course, the method of fund reset unblocking mentioned here is to actively unblocking and operate actively.
For the principle of the fund reset method, let’s look at the fund reset schematic diagram as shown in the figure.
Fund Reset Schematic diagram
Through the above theoretical operation simulation diagram, we might as well assume that an investor fell from 10 yuan to 5 yuan after buying. If he holds it, the stock price will continue to plummet from 10 yuan to 5 yuan, until it reaches 2 yuan, and the final loss is 80%.
, and the fund reset unsetting method is to continuously perform band operations, among which, 7-5=2, 6-4=2, 5-3=2, and finally three operations were achieved, each time earning 2 yuan, and finally making a profit of 2+2+2=6 yuan, which is to achieve the final unsetting. Unset mode such as
is an active operation, rather than waiting without a target. Therefore, in the cruel stock market, for some investors who are dull and trapped in the market, this kind of active unraveling method is worth learning.
. There are only three problems that need to be solved in stock investment
First when to buy it?
Second what stocks to buy?
When will the third be sold?
If you do all these three steps correctly, then you will succeed. When will I buy
? From the perspective of statistical data. The answer is simple. Buy when the price-to-earnings ratio of market and stock is between 10-15 times. Because of this range, the valuation of the stock market is at a low level.
What stocks to buy? It's still based on statistical data. We should buy great companies with high growth, high stability, high certainty, good reputation and economic franchise, and the leading companies in the consumer industry. Everyone does not need to envy the United States' Coca-Cola, Gillette, Walmart , Microsoft , Cisco , Apple... China also has Kweichow Moutai , Yunnan Baiyao , Pianzihuang, Tongrentang , Baosteel Rare Earth, Gree Electric …
When will it be sold? First of all, we have discovered a great enterprise with better, better and more certainty. (Generally speaking, it is very difficult.) Secondly, if you find that the company's fundamental changes have occurred, or if you make a principled mistake, you have to sell it. third. The stock price is overvalued.
For a long time, too many people have regarded long-term holding as the essence of value investment. In fact, "value investment" means buying when it is too cheap and selling when it is too overvalued. When the price significantly exceeds the value, the best stocks have no value to hold! It all depends on the valuation. It is recommended to keep a part of the position as the bottom position. In addition to urgently using money and overvalued stock prices, basically, they will not be sold. The rest, when the price-to-earnings ratio of your favorite stocks and market exceeds 30 times, start selling. Clear the position before 35 times. Wait patiently for the next cycle. Perhaps this operation is more conservative and safe. Because A-share market has a serious surge and plummeting phenomenon, and even Kweichow Moutai has fallen from more than 200 yuan to more than 80 yuan. When the valuation is super high, what you hold is not gold, but a time bomb.
Of course, different market conditions and different stocks also provide different valuation standards.The reason is very simple. If you buy a piece of clothing worth 100 yuan for 40 yuan, it is a value investment. When the price of a clothes worth 100 yuan rises to 150 yuan, is it still a value investment if you hold it? When investing, you must always learn to control risks. Of course, the possibility of an accident in a great company is very small. But it is not entirely impossible. Pay more attention to news every day, understand the company's strategies and dynamics, and be clear about it. Long-term holding does not mean that you don’t care about the company’s trends you like.
In recent years, there have been two very fashionable words in the Chinese stock market, "selling high and buying low", and " band operation ". These two sentences are very harmful. The broker likes you to do this so that he can earn your handling fee. In fact, these two ideas are very wrong. Too many little friends died in these two sentences. For example, we are sure that Kweichow Moutai will rise from 170 yuan at the beginning of this year to 300 yuan at the end of the year. Then, just hold it. The valuation is only 25 times the most. Stock prices always rise and fall, so don't mind. But as long as the big trend is, you can grasp it. I know that no one can grasp the short-term fluctuations of stock prices. History and common sense have repeatedly told us that the long-term upward trend of high-quality stocks is obvious. Unfortunately, too many people can't understand this truth. They always try to grasp every wave of stock price rise and fall. As a result, they always chase the rise and sell the fall. "Selling high and buying low" is transformed into "selling low and buying high".
has been discussing, is it better to hold for a long time, or is it better to operate bands? In fact, the two are not contradictory. Instead, they should complement each other and combine with each other. Long-term holding is a strategy, and band operation is a tactic. Everything needs to consider the stock market conditions of the year and the next year, whether it is a bull market, a volatile market or a bear market. If the valuation is super low, you should naturally buy it. If it is super high, if you don’t sell it in time, you will be waiting to die. The judgment of valuation requires experience, market sense, and historical data analysis. Valuation is also dynamic. For example, Kweichow Moutai has a minimum valuation of more than 11 times. The highest valuation is more than 70 times.
Investment should be rational. The emotional component should not be too heavy, and investment should be mainly rational. History is not definitely repeated, but it often repeats itself! All we have to do is make high-probability choices and then stay calm. Of course, the situation has changed, and we must change as well.
In the stock market, certainty is far more important than growth. white horse stock is far more precious than dark horse stock , and choice is far more important than hard work! A bull market is not so easy to look forward to, but we can choose high-monopoly and good-quality companies, which can allow them to accompany us through bull and bear and help us reach the other side of wealth freedom.
Thank you for reading, follow me to learn more about stock trading.
