Investment is simple, complex for the human mind. In fact, true value investing can be described in just one sentence. Some people say this is a bit bragging.
Don't be impatient yet, just listen to it and see if it suits your needs. This sentence is: buy good stocks at low prices and hold
for a long time.
This sentence seems bland and short. First, let’s explain what low price is. Low price means the price is lower than the value. The price is very simple. How many yuan does this stock cost? This is its price. Value You have to learn how to value something in order to know its value. For example, if a stock is worth 100, and the current price is 50, then it is undervalued by 50 yuan. This 50 yuan is called the margin of safety, or in layman's terms, it is a safety cushion.
then explain what buying is. Buying involves whether it is a one-time purchase or multiple purchases. To put it bluntly, it involves fund management. What does money management involve? That's a matter of odds and probability.
Let me explain again what a good stock is. There are two criteria. One is that the industry is good, and the criterion for a good industry is that the growth of the industry is relatively good. The second is that the company must be good, regardless of whether the industry is good. The company must have a competitive advantage in the industry. This competitive advantage comes from the company having a generous moat.
Buy good stocks at low prices and hold them for the long term? So what is the long term, and how long is the long term? Everyone's understanding is different. Generally speaking, until the company no longer has growth potential and the moat no longer exists, this is called long-term. For example, Buffett bought Apple. Why did he buy it for so long and still hold it after more than ten years? Because Apple is still a good company, its growth potential is still very good, and its moat is still wide, so I still hold it. It is very simple logic. He did not sell Apple because Apple has increased ten times or 50 times.
has a long-term understanding that you will get out when you achieve the goal. For example, if I want to double my income, how long will it take to double my income? Three years later, if you really have doubled your earnings in three years, or you have doubled your earnings in one and a half years, then you can just come out. If the stock price of and increases tenfold after you say it, it has nothing to do with you, because you have achieved your goal, so this is long-term.
What is holding? This is the most difficult thing. What is persistence? Holding something in your hand is the state of persistence. What's behind it? Behind it is your mentality. If you can hold this stock, it means you have a good mentality. So what does it mean to have? You only have it if you hold it, but you don't have it if you sell it, so once you change positions, you may sell them out.
Something that really works. It is often very simple, it depends on whether you understand it or not. Talking about an stock, , or talking about the industry is actually time-sensitive, but we still need to talk about these conceptual things, I hope it will be helpful to everyone.
