"Others panic when they are greedy", this is the well-known Buffett quote. So what are the returns of investors who buy and hold when they are panic? What is the inspiration for the current situation?
Affected by the foreign market on March 23, A shares suffered a heavy drop on March 23, with the three major indexes falling by more than 3%. The number of listed companies in the two markets fell by as high as 3,537, and the number of rising companies was only 326.
However, professional research shows that when the market panics, "stay calm and stick to it" is the best strategy for the current environment.
Although it seems contrary to human nature to remain calm when the stock market falls rapidly and sharply, history has proved that the opportunities for stock market to make money often come from anti-human opportunities!
U.S. stock : "Putting the bar" return rate when panic is 14962%
First look at the US stock market.
Bank of America latest research shows that after counting data from the US stock market from 1930 to the present, it is found that if investors miss the 10 best-performing trading days of the S&P 500 index in every decade, the total return rate is only 91%, far lower than the return rate of investors who still insist on unwavering in the ups and downs of the stock market - 14962%!
The bank urged investors to "avoid panic selling", saying that "the best days are usually right after the worst days in the stock market."
is currently the worst month since 1931, and the S&P has performed the worst month since 1940.
Goldman Sachs research shows that retail investors and some hedge fund professionals have sold stocks during each bear market since 1950. This is contrary to the investment philosophy of "buy low and sell high". Time and time again, the bear market has proven to be a good buying opportunity, but it takes several years to realize the gains.
Some professionals said that retail investors are trying to sell at present. Although they can lock in losses, they may also make them miss the best days. "Those who didn't need to sell are selling out, which is a very bad time for them," said David Bahnsen, chief investment officer of Bahnsen Group, who manages $2.25 billion in assets.
A shares: The valuation of Shanghai and Shenzhen 300 has entered a low probability range
So what about the A-share market? At present, when the global market is panic, what will happen if we buy and hold the Shanghai and Shenzhen 300?
E Fund research shows that the current PB (price-to-book ratio) of the Shanghai and Shenzhen 300 Index is less than 1.3, which is a rare low-probability event. You should buy and hold it instead of panic selling!
CSI Index 300 Index was released by CSI Index on April 8, 2005. It has been around for nearly 15 years and has a total of 3,635 trading days.
E Fund statistics show that the trading days with PB ≤1.3 were only 184 days, accounting for only 5%, mainly concentrated before the market started in 2014 and at the end of 2018. In other words, it is a rare low-probability event to drop to 1.3 times in Shanghai and Shenzhen 300 PB!
So what happens after PB drops to 1.3 times?
E Fund counts the yield rate of purchase and holding when the PB of Shanghai and Shenzhen 300 fell to 1.3 times or below in history. The result is as follows:
1. After holding for half a year, the probability of positive returns is 93.99%, the maximum yield is 98.94%, the average yield is 25.37%, and the minimum yield is -4.16%.
2. After holding for 1 year, the probability of positive returns is 97.81%, the maximum return is 147.77%, the average return is 74.54%, and the minimum return is -1.71%.
3. After holding for 2 years, the probability of positive returns is 100.00%, the maximum rate of return is 127.09%, the average rate of return is 46.81%, and the minimum rate of return is 28.98%.
4. After holding for 3 years, the probability of positive returns is 100.00%, the maximum rate of return is 71.67%, the average rate of return is 59.88%, and the minimum rate of return is 43.36%
It can be seen that in a panic, if you buy the Shanghai and Shenzhen 300 index and hold it patiently, you will have a higher possibility of getting a considerable return in the future.
And many investment celebrities speak out together, which also means that it may be time to be greedy now.
Chongyang Investment stated that compared with the huge turbulence in overseas markets, A-shares have fallen less this year, thanks to China's strong epidemic prevention and control measures, and also due to my country's insistence on doing difficult but correct things in recent years, namely, preventing and resolving major financial risks. We believe that once the epidemic and overseas financial markets stabilize, Chinese assets, including Hong Kong stocks, are expected to achieve better absolute returns.
CICC also stated that the Chinese market will also enter the end of valuation compression, and future profits will become a more important factor. The Chinese market has a bottom valuation, relatively sufficient policy space, and relatively leading epidemic control, so overall it will still be relatively resilient.
Oriental Harbor Chairman Danbin said that the capital market has been spiraling in the long run, so it is important to overcome fear. At this moment, we should think about the questions of whether our companies can emerge from the crisis and become better, and whether their market share will be higher. If nothing is wrong, then patiently stand the test!
Why is Buffett not panic? Position management
Of course, it should be pointed out that the above is just historical big data and does not represent the future.
In fact, when others are afraid, greedy is not only strong psychological quality, but also position control is very important. An important sign that professional investors distinguish between ordinary retail investors is their complete capital management model.
In one sentence, " can buy the bottom , but never shoot all the bullets." The so-called "only you don't panic when you have food in your hands." What is the confidence of the stock god Buffett, who has a floating loss of more than 90 billion US dollars? Because he still has more than 120 billion US dollars in cash!
Previously, Berkshire Hathaway disclosed in a 13F document submitted on February 14, 2020 that as of December 31, 2019, Buffett currently holds a total of 50 stocks and 2 large-cap ETFs.
Among them, 2 stocks were disclosed because of their recent position adjustment: Delta Air Lines holding time as of February 27, 2020, and Davita Air Lines till March 16, 2020.
Therefore, according to public statistics, according to public data, Buffett's cumulative market value of the portfolio is US$158.6 billion, while on February 20, the market value of the portfolio is US$249.3 billion.
This means that in this round of US stock market crash, Buffett's holdings lost a total of US$90.78 billion, and his holding portfolio fell by 36%.
Of course, if you think Buffett is old, then you are still too young.
In fact, since last year, Buffett has been half a position to avoid risks. Currently, the stock god is holding 120 billion US dollars in cash and is waiting for the time to buy at the bottom...
is for investors' reference only and does not constitute investment advice
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