Investing in Xiaohongshu - Issue 171
Dusty and scarred, but we still have to believe.
The Shanghai Composite Index fell below 3,000 points again this week, and investors have been tormented by the weak trend of A-shares in the past three years, but if the time is slightly extended, investors see a completely different result.
The evaluation of investment performance with a period of less than 3 years is of little significance, and the objective evaluation criteria for investment should include at least one complete round of bulls and bears. In the past three years, A-shares have been in a serious downward trend, and if investors zoom in on the horizon above five years, they will get a more objective and rational conclusion.
Statistics show that in the past five years, nearly seventy percent of Shenwan's high-performance constituent stocks have doubled, which means that investors who invest in it and hold shares have obtained an annualized investment return of more than 15%. However, from the perspective of 3 years, more than 40% of the high-performing stocks are in a state of loss or only a slight increase, which means that since February 2021, investors in core assets have not gained or even suffered serious losses in the past 3 years.
Time irons out valuation fluctuations, and investing requires a lot of patience, not a lot of action. Investing requires objective evaluation, not selective blindness. People's financial memory tends to be short-term, but short-term evaluation is often followed by the most unfavorable for investors. Even if you have experienced **, the high-quality ** of A-shares can still cross the bull and bear for a long time, defeat the vast majority of major types of assets, and is the best long-term choice for investors to manage their finances.
Seventh, the excellent stock has doubled in 5 years.
In a three-year period, the experience of some high-performing stock investors is miserable, but in a five-year period that includes a round of bulls and bears, high-performing stocks have given patient investors rich returns.
Liquor listed companies have undoubtedly been in a storm in the past 3 years, but from a 5-year perspective, liquor listed companies have provided investors with rich returns. Since February 18, 2021, Wuliangye's share price has fallen by 54%, Luzhou Laojiao has fallen by 30%, Yanghe has fallen by 46%, and Shanxi Fenjiu has fallen by 23%. Kweichow Moutai fell 28%. However, if the evaluation period is extended for a long time, with a five-year evaluation cycle, Kweichow Moutai increased by 250%, Wuliangye increased by 219%, Luzhou Laojiao increased by 460%, and Shanxi Fenjiu increased by 930%.
Pharmaceutical listed companies have also fallen heavily in the past three years, but from a five-year perspective, some listed companies still provide good positive returns. Since February 18, 2021, Pien Tze Huang has fallen by 35%, Zhifei Biotech has fallen by 53%, and Dashenlin has fallen by 51%. However, in the longer 5 years, these companies still bring considerable returns to investors, Pien Tze Huang rose by 221%, and Zhifei Biotech rose by 136%.
Among the basic chemical companies, many ** have also seen a sharp drawdown in the past three years, but from the past five years, high-quality companies still provide good returns. For example, Yangnong Chemical has fallen by 47% since February 18, 2021, but in five years, the company has risen by nearly 130%.
After nearly three years of valuation digestion, the valuation of sixty percent of Shenwan's high-performance stocks fell below the historical valuation of 20%. As of November 30, among the 100 Shenwan high-performing constituent stocks, 64** were valued within 20% of the historical valuation, which is in the historical extremely low valuation range. Bulls and bears are often converted into each other, and the long bear market lays the foundation for the future, while the crazy bull market is often followed by a tragic correction. There is no market that goes up and doesn't go down, and there is no market that goes down and doesn't go up. In fact, no matter how serious the ** is, it will eventually regain the lost ground, and the scenery should be long-term.
Investing is about long-term success.
Although the performance of the A** market in the past three years has disappointed many investors, what is needed for investment is the final and overall victory, rather than the gains and losses of one city and one pool. As Duan Yongping said, "Investment is a bit like playing golf, 18 holes, it doesn't matter if you play a certain hole well." Because golf is ultimately about the whole score, not the score of a single hole. ”
Investment requires relatively objective evaluation criteria, a round of data containing bulls and bears is relatively convincing, and emotional catharsis can only bring unfavorable chasing up and down. To give time to invest, there is no point in performing less than a three-year period.
In fact, since 2000, the Shenwan Top Performance Index has been 371 times, an annualized increase of about 7% (this yield does not include the annual dividends of these companies). Although in the past 23 years, A-shares have experienced three rounds of serious bear markets and two rounds of short-term bull markets, but the magnitude of some high-performing stocks is shocking, liquor companies have risen more than 100 times, and basic chemical and pharmaceutical and biological leading stocks have also risen more than 10 times.
As John Borg, the founder of Pioneer, said, the goal of long-term investors is not to hold capital in the short term, but to obtain real, inflation-adjusted long-term returns.
In the past 200 years, the short term can bring heavy short-term losses, but the long-term yield is about 7%, which is more than twice the yield of fixed income products such as bonds.
Charlie Munger's returns in 1973 and 1974 were -319% and -315%, but in 1975 it achieved 732% performance, recovering the losses of the previous two years. Over the 13 years of the partnership's existence, Munger has achieved an annualized rate of 243% performance.
Munger once said, "To invest, you need to be a little affordable." Investing is a long-term thing. Now that you are ready for long-term investment, when you encounter 50% of the **, you have to resolutely resist it, don't be scared. With my personal experience, I will tell you, cultivate yourself well, and when you encounter 50% of the **, you must make sure that Mount Tai collapses in front of you and the color remains unchanged. ”
Investors often say not to waste any crisis, but when the market really breaks through the bottom line of investors' psychology again and again, the vast majority of investors will be scared to flee the market, and when the market recovers for a long time, they will still be attracted back to the market again. Getting in and out of the market at an inopportune time is also one of the reasons why investors struggle to make money for a long time.
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