How do ordinary people invest? There are some key points worth considering
Radish school, old beams from the stock exchange, 2020-02-25 12:04
First, we have neither Buffett's condition, nor Duan Yongping as the understanding of enterprise profound, how did the "experts" point of view as they invest?
My view is, why should we like them as investments. Since we do not have their conditions and capabilities that may come out of the exercise and cognitive effort can not reach their height, so why force yourself to like them. Learning concept can, but only if they have a lot of ideas based on their understanding of this door "business". So the premise is actually attributed to the ability and conditions. But also the practical application of the concept, if not the premise of stable, then the use is not go wrong.
Cognitive logic chain (receiving information - analysis, reflection - derived theory), their ideas and abilities are from their own experience and knowledge of the market. Talk about their own experience, market knowledge should also be right. But the market is not only understanding the only one? Or the correct understanding of the market is not unique. Successful investors to vote not only price, but the price is relatively vote "simple" somewhat.
Premise (a) market awareness is what we want to earn money?
Earn money growth and underestimate the value of mismatches are actually earn money. Focus on the reasons for mismatches, in fact, focused on value judgments and market irrationality. In fact, the market experienced irrational thinking game - irrational market investors relatively rational. Game of the stock market can see very intuitively tend to depart from the stock price and value.
Focus on value is the simplest approach. Whether it is to make money or to underestimate the growth of the money need to focus on value. But here there is a premise, how to prove that judgments of value must be right. And the value itself is not a static concept, especially business is the development of enterprise value over time changing.
Value judgments generally require in-depth study, but the depth of study is only one way, and there is no absolute depth. More often the depth is a relative concept, that is, the depth relative to other market participants. So, relative to the market's irrational depth study was not able to see the game of the market.
(B) in-depth study must be right? How to treat and deal with the game of the market?
Limitations 1, depth of research
First, the depth of the research it is difficult to do as they did duanyongping understanding of the industry. Pidgeon said water birds, he spent a couple of years time to study the automotive industry. I also said something I work hard to do at the Institute of the automotive industry in the three tests in. The results in the past several articles over the years have shown. However, guidance on the specific practice is very general. Including a high reputation in the industry some fund managers, if we look back a few years ago looking through their research and conclusions on the automotive industry, will find that is not very correct. Other industry broadly similar.
Secondly, a lot of people do in-depth research routine is actually closer to Jim Collins. You read his book, you know that he was in search of excellence and excellence in business research and analysis of what had been done. These companies can not say that it is not a good company. The results of these companies share price performance in more than a decade after the book, most are very general.
Finally, in fact, the management or the founder of many successful companies for their business is not very understanding. Mr. Ma to sell the stock early Terrier, surely we all remember. Many other industries have similar examples.
So, is it sank into agnosticism, come to a "retail investors should not be considered in-depth research to make money, unless you are an expert in the industry itself, but you can make a simple judgment of money." Point of view? I do not think so. Indeed the vast majority of individual investors, should not even make a simple judgment of money. The index should buy, I believe that the growth of the economy. But for individuals who are not. The premise is that you should have a correct understanding of their own and the infinite love of investment.
2, how to deal with the limitations of the depth of research?
Ad valorem long-term investment success stories over the years that we can find in-depth research is absolutely the role. However, this effect is not absolute, I believe that in-depth research to only increase the probability of more profitable investor. Game of the economic growth of the market determines the stock market may be a positive-sum game market. But all of our actions return to the most primitive starting point is to increase the probability of our earnings.
Limitations depth study of fact, one of the drawbacks of fundamental research. Out of this framework, perhaps we will see more clearly, from the intuitive market transactions, but is to buy and sell. Participants are "people." Depth is also a cognitive difference. So-called "depth" must understand that in addition to industry and enterprise development to run the "depth" is relative to the core logic of others. Game of the market determines if you go beyond 99% of the people, then the probability of you making money is very substantial. So depth fundamental research is relative.
Depth study on how to do me to be a year-long "experiment", I have a simple criterion depth primary research capacity;
1, read the stock pages all popular posts, you find that 99.9% of them say you know, you also know that some of them did not speak about.
2, read all the relative levels of the market can find a good research report, you can see some of them do not know the focus of research than they can find themselves are a little more depth.
After 3, through research to find out the core logic and data possible focus for the next operating cycle (quarterly and annual) evolution, which is the fundamental development, your prediction will be more accurate than the market ahead of all the research report.
We do research must be based on their own conditions, but also depth study of our armed one of their own way. Learn in-depth study of the defect and the importance of it. First study on this point for more than 95% of the participants on the market beyond, and then rely on other efforts to increase their winning percentage in depth. For me, I try in their own capabilities through efforts to strive to do their own research depth limit. Then a lot of efforts in other areas. Other efforts include two points: 1, understand the value of what is reflected in the market. 2, exercise their minds. Logic of the strongest, most weak to make the effort, these two complement each other.
Second, we rely on what to do better than the rest of the market?
(A) understand the value of evolution in the market
Depth study is a value judgment. But the value is dynamic, and value is reflected in the market to go. Many times we realize the value of the enterprise powerless. I can not be like Buffett, bought directly across the enterprise liquidation or otherwise realize the value of using. Like the market has long held a number of commercial retail enterprises are far more than the market value of the property, but the value can not be reflected to me makes no sense.
More often the value is an interval, the interval but there is always scope. The scope of this interval there are many disturbing factors. Restricting price cast easily, resulting in their own confrontation with the market, the deterioration is confrontation. Many failed investments from there. As one of many market participants, what qualifications to contempt market. Market gurus say contempt is more on the mind, but in behavior very seriously. We do not have master's level and ability, of course, to be more in awe the market. The argument seems to give us a lot of value is static impression. So few people noticed reflect the value in the market. This is one of the drawbacks of fundamental research. So we have to understand the valuation logic and evolution of the enterprise.
Understand this point, not only affect the industry, changes in the valuation of companies may do know the answer to more emphasis on rational behavior, the face of market volatility, the mind will be more relaxed than others.
(B) exercise the mind
Human face of market fluctuations biggest fear comes from the unknown. So we are doing all efforts to make their own have more information than other participants. This includes preliminary and thinking through information analysis. Then take some practical ways or means, this is to exercise the mind.
Use of reverse investment in the outcome of fundamental research and the face of the market, the market is irrational, etc., in specific investment behavior relative to other participants occupy a better position. This part I do not say, basically my views and he wrote about the same. Most of the core means is that - understand other people's mistakes so that they make fewer mistakes.
He said that on the basis of reverse investment I have a little different view. I think the reverse investment foundation that can exclude the worst case, you are out of the price is still well below the company now and in the short term - value (13 years). In particular there is a great probability that the market will reflect this value in the short term. Other trends are invested. Of course, our foundation is based on the premise that the system we said earlier, others still as he was told to do good.
These instruments are also to protect the emotional advantage, it is more rational than the other participants. By a rational talent, and on the exercise. The process of training the mind is also important to note that own stupidity and arrogance. How to overcome these two defects each have their own methods, but this is a topic of foreign investment, whether here.
Finally, talk about other types of investors. In fact, Soros fundamental research capabilities than most investors. Long live well quantified, there are many investors. Many investors have long-term trends like living good. Technology category of investors, too. Of course, many people will be attributed to the characteristics of the market, such as invalidity stock market. But I think this is not important, they know how to deal with. Do their own stuff, to keep an open learning attitude. If the market is a positive-sum game market, then you will live better than others. If the market is a zero sum game market, you will be better than others. After all, one of our purposes is to get market returns. So to think about the use of all means to arm themselves. Logical strongest and do the most weak effort.