used to know only two types of investment methods , namely value investment method and technical analysis method. Until I learned Cao Renchao's investment experience, I realized that there was a third type, that is, trend investment method.
Cao Renchao is from Hong Kong. He was born in 1947. Although he only has a middle school degree, he is unwilling to live a poor and difficult life, so he embarked on the road of investment.
He entered the stock market in the late 1960s and early 1970s. Because he happened to catch up with the good market, the initial investment of HK$5,000 quickly rose to hundreds of thousands of Hong Kong dollars. Because he did not master the systematic and scientific investment methods, he soon lost to only 100,000 Hong Kong dollars.
Starting from 1975, Cao Renchao decided to systematically study investment strategy so that he could obtain guaranteed returns, after all, having a wife and children has to support him. Finally, Cao Renchao summarized a unique and effective investment method - the trend investment method.
Since then, he has maintained relatively stable returns every year. In 2015, his total assets reached 4.2 billion. It has achieved a 40,000-fold return in 40 years, with an annualized rate of return of 30%, which should be said to be no less than Buffett . Unfortunately, Cao Renchao died of lymphoma cancer in 2016, otherwise his investment legend might have continued.
Cao Renchao's investment experience has been compiled into a book, and his representative works include "Must be rich", " on the momentum ", "Discuss on the War" and "Discuss on the Sex". It can be seen from the lines that he does not agree with value investment. He believes that the value of a company is often incalculable and may have potential value, but the realization of value depends on the right time, place, and people. In the short term, value and trends often appear inverted. In comparison, Cao Renchao believes more in the power of trends. When the trend comes, related companies will definitely rise.
Cao Renchao believes that only by watching more, listening more, discussing and analyzing with experienced people can we see the trend clearly. Before investing, you must have a clear understanding of the policies and environment and fully analyze the situation. He gave an example. In 2010, Shanghai's per capita annual income was US$5,000, and Hong Kong was more than US$20,000. If Shanghai wants to catch up with Hong Kong, it will increase by 4 times. He believes that Shanghai can catch up with Hong Kong. Based on this judgment, he believed that the performance of the banking industry would definitely have a big increase in and , so he bought bank stocks. His idea is that residents' income comes from companies from all walks of life. Residents' income has increased significantly, and the company's performance is definitely increasing significantly. If the company's performance wants to increase significantly, it must borrow money from the bank to expand production.
Cao Renchao believes that 70% of the judgments on trends are wrong, and 30% are right, that is, no one is a god, they are all ordinary people, and when they are wrong, they account for the majority. But this is not terrible. Just do a good job of " stop loss not stop rising", that is to say, the increase can reach 100%, 200%, or 300%. Do not stop the rise easily, and the decline must be controlled between 15% and 20%. If you exceed this range, stop loss immediately. In this way, you can make sure that you make sure you make sure you don’t lose money. Not only that, the cash obtained from selling weak stocks is then used to buy strong stocks, that is, "chasing the rise but not the fall", further expanding returns.
I agree with many of Cao Renchao's investment strategy, but we also need to see the risk points:
1. His strategy includes "chasing the rise and selling the fall", which is very worrying. If you chase the rise and fall and sells the fall and rise, will investors suffer losses at both ends?
2. He advocates long-term operations and agrees with short-term operations, which has caused many investors to worry - trend analysis may be effective when applied to long-term operations, and short-term may fail when applied to ? !
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