The simplest thing in investment
Qiu Guolu's the simplest thing in investment is an impressive book on investment and financial management that he has read in recent years, in which the framework of value investment and reverse investment is the most profound. The book is divided into five chapters: investment philosophy, investment method, investment risk, investment strategy, and investment psychology
The simplest thing in investment shares a simple investment method.
According to the author Qiu Guolu, stock market investment is not complicated. It is to do one thing well: find a good company with a cheap share price. This can be divided into two steps:
The first step is to find a good company; The second step is to buy it at a cheap price.
First step: find a good company.
Qiu Guolu has two strategies.
The first is to find companies in good industries.
His favorite industry has three characteristics.
First, the threshold is high. Not everyone in this industry can participate.
Industries with a high concentration of secondary industry.
The third technology iteration will not be too fast.
The second secret to finding a good company is to see whether a company has pricing power.
What is pricing power?
The key is to see if a company can raise prices. In fact, it is not easy to raise prices. Only good companies with high quality can keep raising the prices of their products. The reason behind this is that it has differentiated competitiveness. It doesn't worry about rising prices and is robbed of the market by other companies. The stock price of such a listed company will rise sharply sooner or later.
How to find such a company?
Qiuguolu summed up the signs of six good companies:
The first sign is a brand, preferably a brand that can entertain guests, give gifts or show off. The second sign is that there are repeat customers, that is to say, user viscosity is very important. The third sign is that the unit price of the product should not be too high. The fourth sign is that the conversion cost is high. The fifth sign is the service network. In the automobile and construction machinery industries, the huge service network established by leading enterprises is difficult for latecomers to catch up with, and the pricing power is relatively stable. The sixth sign is the first-mover advantage.
Step 2: how can I buy a good company at a cheap price?
There are two secrets to finding a bargain:
The first secret: buy when the overall valuation of the stock market is the lowest.
If the overall valuation of the stock market is very high, all stocks will be very expensive. At this time, there is little chance to find a good company that is cheap. On the contrary, when the stock market valuation is relatively low, a large number of good companies can happily pick up bargains when they are on sale.
So when is the market undervalued?
The P/E ratio is the most convincing indicator. The so-called P / E ratio refers to the ratio of stock price to earnings per share.
The long-term average p / E ratio of mature stock markets in Europe and the United States is about 15 times, so we might as well regard 15 times as a benchmark. If the P / E ratio significantly exceeds 15 times, the valuation will be very high at this time. For example, when the A-share Shanghai index reaches 5000 points and 6000 points, many companies' P / E ratios reach six or seven, and it is expensive to buy any stock. Conversely, if the average p / E ratio is less than 15 times, it may be at a low valuation level.
The second secret to picking up bargains is reverse operation.
When an industry encounters macro-control or a major accident, and people panic selling, the stock price of the whole industry will generally fall. At this time, the opportunity arises.
Foreign securities investors call this reverse operation "disastrous buying". For example, when American Airlines stocks fell sharply after the "9-11" incident, they bought such stocks; Or after the "7-23" Wenzhou bullet train accident, buying the shares of railway equipment companies and railway construction companies, the final gains are much richer than the positive trading.
However, the reverse operation should not be blind. You should first find out the preconditions. First, whether there are substitutes for this product. Some products whose market position is not firm are likely to be completely destroyed by one or two major accidents. For example, airships are inherently more complicated than aircraft operation and expensive maintenance. A major accident can completely pull this industry out of the historical stage; Second, it depends on whether your selected reverse operation target has technical advantages, strong brand influence, and market foundation.
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