In the face of my big A-shares, which are constantly falling and falling, an investment friend once asked me if the investment philosophy of being a good stock collector has changed? Not only has it not changed, but I am more determined than ever!
I used an analogy to say to this friend, for example, if you and your friend have invested in a kindergarten as a shareholder, the economic income will be very good in a year, and the future income will be very good, but at this time, you only have a small share, in this case, do you want to reduce its holdings, or do you want to continue to increase its shares?
Common sense tells you that it is natural to continue to invest in increasing shares. Investing on ** is actually the same thing, because this is common sense, but as soon as you enter**, many smart people make stupid mistakes and no longer understand this common sense.
Munger said that the standard condition of human beings is ignorance and ignorance, although this is harsh, but I think it is very reasonable, because whether in the market or in daily life, there are very few people who really understand common sense.
Some people say that my big A has been in "hell mode" for three years, and we don't know how long this mode will last. But based on the above common sense, I think we should seize this opportunity to start the "good stock collection mode" (if we don't go to "hell", how will we go to "heaven" in the future?). Hehe), because in this ** market, we only need to understand the following fundamental principles (or fundamental logic):
1. We know it's going to happen, but we don't know when it's going to happen, and I think that's enough because we're long-termists. How long is this long-term?
We must look at the companies we invest in for at least ten years, and if you don't want to hold them for ten years, don't hold them for a minute.
2. Whose money do we make in this market? Answer: We not only make money from the market, but also make money from corporate growth, but in the final analysis, we still make money from corporate growth, because the return on capital we invest in a company will be infinitely close to its long-term ROE level.
3. In the ultra-long term, Mr. Market underestimates a truly excellent growth enterprise, or in other words, Mr. Market is not able to "estimate" the intrinsic value of a truly excellent growth enterprise (at least it cannot "estimate" the intrinsic value of an enterprise ten years later). Of course, such investment varieties are extremely rare, which requires your own business insight.
So, what principles should be followed to open the good stock collection mode? In my opinion, the following three principles are still followed (which have been discussed many times before, but repetition is at the heart of teaching):
1. According to the "five sexes" standard I said, longevity should be the priority, that is, the business model with sustainable operation and sustainable growth should be collected as treasures. Such objects are very rare, and once found, they must be firmly clung to, and even treated as collectibles and not for sale.
2. It is best to have a certain percentage of dividends. Dividends are not the only parameter of our investment, but when there are valuable and growing varieties in the portfolio to keep themselves without cash flow, dividends can be reinvested.
Note: It's important to think about reinvesting dividends, especially in a bearish market.
3. The margin of safety is to be talked about, but when the margin of safety and the business model are encountered together, the business model takes precedence.
My own approach is to swing as long as I think I fall into a reasonable or underestimated area, which may easily lead to **premature, but in the long run, the important "amount", rather than the "price" of a few points, always want to ** at the bottom is also a kind of greed.