Source: Zhihu Inc. user @ whole stock expert

Niuniu knocks on the blackboard:

His personal experience is also legendary. He is a computer doctor from Wuhan University. He began to invest in 2001 and has studied A shares, Hong Kong stocks and US stocks. By 2016, his personal stock assets had already exceeded eight figures. The Baichuang Capital he founded is also doing very well. In less than five years now, the scale has exceeded 2 billion, and its own capital has invested more than 100 million yuan.

He gets up at 4: 00 a. M. for ten years. He likes to sort out his thoughts after the close and take a walk on the beach in the evening. He is a father who proudly praises his child's award certificate in moments, and is also a stock market experiencer who has been in the stock market for 20 years. A professional stock investor who has made money in the stock market for 20 years in a row, here are some of his thoughts on investment over the years to share with you.

1. Do not predict the big market

I estimate that many people have knowledge and some do not necessarily have knowledge. I quoted an article by Li Jian in my column. He has a "three noes". That is, do not predict the market, do not look at technical analysis, do not make predictions.

This means that you should not choose the time. We have been established for four years this year, 2017, 2018, 2019, and this year, in fact, there are ups and downs every year. If you predict the market, assuming that I think this year will be better, I may take a big position to do it. I think it is not good. I may do it lightly. Sometimes you may avoid some big falls, but you will also miss some big gains.

We say that everyone may be pessimistic from 2018 to the end of the year, so stock valuations are cheaper at the beginning of 2019, but are you bullish on the market? The fluctuations in Sino-US relations continue, but if you do not have a heavy position at the beginning of the year, the best increase in 2019 is at the beginning of the year, such as the period from January to May. If your position is relatively low, it will be more difficult for you to make more money in 2019.

This year is a very effective example. If you think that the epidemic is very serious this year, the whole stock market will certainly not perform well, and if you have a relatively low position, then you will not be able to make more money this year, so this market is difficult to predict.

This year, we don't see a big increase in the market, that is, 14%, but you can see that the increase of individual stocks varies greatly. Many companies may have reached record highs, and some companies may have fallen since the beginning of the year. It is a differentiated market. So what about this market? let's take every day, shorter time as an example. For example, on the last Friday in October, the whole market plummeted. But you see, there are still a lot of stocks that are up, that is to say, if your prediction is right, you think the whole market is not performing well, you sell your stock, but you sell the stock, if it is a high-quality company, it is possible that the market is down, but individual stocks are up. If you predict that this stock market is better, you go to the full position, if the stock you choose is not good, the market is good, but your stock performance is not good, so it is of no guiding significance for your investment to look at the market.

There are also very distinct examples on the Internet. For those big Vs or funds, we can see that some of them have performed well in the past few years, but they have not performed well in a certain year, such as some of them have not performed well this year, and many of them may have chosen the time. I think there is an epidemic this year. I'm in a very low position. In terms of the performance of the fund, this year is another big year. Many funds have earned 40% or 50% this year, and many of these funds have invested.

For example, personal investment, if you choose a better company this year, if you stick to a high position, your earnings will certainly be good this year, so don't predict the market. You have to become a deep-rooted understanding. If you are always thinking about predicting the market, I think the stock market is good. I think the stock market is bad. I think the stock market is bad. Even if I am optimistic about this company, I think it may fall next. I'll sell some first. I've made this mistake countless times.

In my 20 years, I originally thought that all kinds of stock market might not be good in terms of macro, economic situation, and external environment. You think you should lower your position first. You sell some companies, and you expect them to fall and then buy them. The mistake I often make is to sell it from a low position, buy it back from a high position, and buy it back at a higher price. In this case, your friction cost is actually very high.?. So this is my first feeling, do not predict the market.

2. The market is effective for a long time.

Although I used to write relatively few articles, and frankly recently, I have also written some articles, but I am still observing the performance of many other funds and their investment strategies. My prediction is contrary to the market, always engage in reverse investment, my view is that reverse investment requires deep research, most people do reverse investment is very difficult to succeed. I said that if you want to invest for ordinary investors, it will be better for you to conform to the trend. This market is very effective in the long run.

For example, we count which companies in China have grown the best since 2000. You can take a look. The best companies are the best. Every time you think it is expensive, after a few years, it has reached a new high. On the contrary, you think that a cheap company, if the company is not of high quality, its long-term performance is relatively poor, even if it doubles in a certain year, but in the long run, if you pull it for three or five years, the performance of this company is not good.

So for both professional and amateur investors, I think we need to study those companies that have a good long-term trend, you will have a greater chance of success, that is to say, these companies prove that they are excellent from the high probability. For those companies that have a poor long-term trend, you look for treasure inside. In fact, your probability of finding treasure is relatively low. There are many smart people in this market, because the trend of a company is determined by the combined force of a lot of capital. If it is done well, everyone will buy it and push up the price. Everyone felt bad, and the company was gradually abandoned by the market.

In particular, the trend of A-shares and Hong Kong stocks is even more serious. You see, for some companies, if you use the price-to-earnings ratio to evaluate A-shares, even if they are A-shares, many valuations are actually not expensive at all, so they do not rise because their companies are relatively average. Their long-term competitiveness may be relatively general, and their upward ceiling is also relatively general, so mainstream funds do not pay attention to it.

Here, I would also like to talk about a misunderstanding in the Hong Kong market. Lao Yu knows that, for example, I started to work in Hong Kong stocks in 2009, and it has been 11 years since we started to do small and medium-sized votes in Hong Kong stocks. For example, when we work as a fund, we have become some large-scale votes. The liquidity of many votes has been polarized. The liquidity of good companies may be getting better and better, while that of poor companies is getting lower and lower. This kind of company is very difficult for you to trade. If a company loses liquidity and you invest, it is actually very difficult for you to quit.

Lao Yu may have some different investment methods, but it doesn't matter. Let's discuss it together. Some people look for cigarette butts. If you have a deep understanding of this company, you may still be able to do this, but you have to be very experienced or have a very deep study of this company before you can find objects of investment value from cigarette butts. However, I suggest that we try our best to look for relatively large targets in the Hong Kong stock market. For example, we are basically more than 100 billion in Hong Kong stocks now. We basically don't see much of the younger ones.

In the Hong Kong stock market, if you become a leading company, it gives you a premium, so the valuation of the company in the Hong Kong stock market is not lower than that of A shares at all, but for some relatively small and illiquid companies in the Hong Kong market, it gives you a very low valuation, because if there is something wrong with your company or its performance does not live up to expectations, he cannot invest some large funds at all, and he cannot quit. This kind of companies that do not have mainstream capital attention will eventually be marginalized. This is why I say that the market has been very effective for a long time, whether it is A shares or Hong Kong stocks. So what we should pay attention to, for example, if I am not familiar with an industry, if I study this industry, first of all, I will look at the companies that have risen best in this industry in the past three or five years, and I will find my own investment target from this. You must be much more likely to find a good company than if you look at companies that have been doing badly or cheaply for a long time. So I would like to say the second point of view, the market is long-term effective, it is recommended to start with those companies that study the long-term trend.

3. Women are afraid of marrying the wrong man, while men are afraid of joining the wrong profession.

Choose the industry first, then the company. If you choose the wrong industry and your industry is not good, the probability of finding a good company and getting a good return on investment is relatively low. We have to go to places where there is a lot of gold to dig for gold. From the point of view of probability, it is also easy for you to find gold. If there are barren mountains and the probability of gold is very low, it is very difficult for you to find it. So we say that the choice of direction is the first important thing. First, choose the track, then choose the best companies in this track, and then I will evaluate and analyze it, so choose the industry first, and then the company.

4. Study more white horses and less black horses

It is estimated that many people will have different views in the process of investing and want to find a dark horse. Our view is to study more white horses and find less dark horses. Others asked me whether we should follow the trend or not, "do you just follow the trend and do not have your own research?" if you can just follow the trend to make a good investment, then the investment is too easy.

My point of view is to study more white horses and less dark horses, which means that you should look for investors from companies that have proved themselves to be good, rather than those that are likely to be good, that is, they have proved themselves. Our investment is the icing on the cake, not that he may or may not succeed. If you invest heavily in such a company, this is called venture capital. There are ten companies that I may invest in. Some people may succeed and some may fail, but as long as there is one success, my investment will not fail, so I will OK.

But as we make this kind of stock investment ourselves, we can't do this. We need to find a target with high certainty and hold it in a heavy position. Only in this way can you have a higher degree of certainty.

Our point of view here, for example, if a company rises from 50 billion to 100 billion, what does it mean if a listed company achieves 50 billion? It shows that it already has a relatively high industry status in this industry, of course, it has something to do with this industry. 50 billion of some companies may also be a relatively small company in this industry.

In an industry, the companies with the highest market capitalization on his track usually have relatively high certainty. He has established its core competitive advantage in this industry. For example, it has risen from 50 billion to 100 billion, compared with 5 billion to 10 billion. Its certainty is much higher. When we start to invest, we may always want me to find a 5 billion company. It rises to 50 billion and I increase tenfold. But if you want to find this kind of company, it is actually very difficult to find. It is very difficult to judge when it is in 5 billion. On the contrary, this company has reached 50 billion. In fact, it has established its core competitive advantage in this industry. Maybe it is already a leading company, with the development of this industry. The industry itself is growing, its market share is getting higher and higher, its certainty is getting higher and higher, and the market is valuing it more and more higher. if it ranges from 50 billion to 100 billion, it will be much more certain.

For companies in this market, we have recently seen a phenomenon, such as Ayre Ophthalmology, such as Haitian Flavor Industry, where its valuation is rising. Some people may think that this is abnormal, saying that it is too expensive. But have you ever thought that its valuation is gradually rising, and there are some reasons for it? one of the very important reasons is that its competitive advantage is becoming more and more obvious. For example, there are almost no competitors in the seasoning track, such as Haitian. Like Ayre Ophthalmology, it was successful in the hospital, and the extracorporeal companies it acquired are gradually becoming profitable, some of which have been gradually successful, and its entire system model and business model have been confirmed, so its valuation is getting higher and higher.

In the afternoon, we have researchers to discuss whether the valuation of all white horse companies is reasonable, and how we should value it. For some companies, we should not simply think that they are too expensive, and some people may not go to see this company, just like Haitian. I'm not going to see it. There are also companies like Ningde era, like Tesla, Inc., our first intuition is too expensive, I will not study, but have you ever thought about the underlying reasons, the market capitalization of these companies is getting higher and higher, what is the reason? It has two factors, such as Tesla, Inc.. From last year to this year, its valuation has grown very fast. There is a very simple reason. In fact, its cash flow is not good, and the risk of cash flow is often exposed in the middle. There may be the risk of bankruptcy, so its valuation is relatively low. After the mass production of its Shanghai factory, we can see a great increase in certainty, and we can also see that the trend of electric cars is becoming more and more obvious now, that is to say, the certainty of Tesla, Inc. 's success has become higher and higher. Basically, no one is worried about the risk of its closure, so its valuation has gradually increased.

After it determines this competitive advantage, which investment do you think is better to buy the company after its valuation, or to buy it before it goes into mass production? If you buy in front, Tesla, Inc. fluctuates greatly up and down. After a period of time, it may expose the danger of cash flow breaking. It fluctuates sharply, sometimes it rises sharply, and sometimes it falls sharply. In fact, its certainty was not so high at that time. But if you study deep enough there, you think it has a competitive advantage, and when it comes to tide over the difficulties, if you bet again, your return is very high, but you are actually taking a big risk.

This point of view is to study more white horses and less dark horses. I think this is actually very important and it is also my experience and lesson.

5. Keep pace with the times and pay attention to those new and good tracks

You have to have an open mind, you can't rest on your laurels, many people like finance and real estate, for example, a man named Yunmeng said, "I only do banks." I think this is very narrow. You must keep pace with the times. You have to keep expanding your circle of abilities and pay attention to those emerging good tracks. Some tracks are very good, and the world is changing too fast.

We can see that the performance of many established star private placements in recent years is very mediocre, why? Their founders are old, fund managers are old, stuck in industries they were once familiar with, and lack awareness of changes in the market and industry. We can see that many funds are still heavily positioned in finance and real estate, moving around here every day, or TMT all day long. If they do not pay attention to and research on medicine, the Internet, and some emerging industries, such as new energy, it is impossible for you to achieve good performance.

We see a lot of established private placement, some of the bigger private placement, frankly speaking, except for some, many other performance is not good, but the performance is later some relatively new private placement.

6. Maintain a high valuation tolerance for companies with high ceilings and strong core competitiveness

. This is too important, we are also exploring this direction, this point of view is bound to be controversial, I have made too many mistakes in this respect. Frankly speaking, we are very sensitive to good companies. In fact, we have found a lot of A shares and Hong Kong stocks, not one, two, or a batch of good companies. We think that many of the best companies in these two markets are within our coverage. But over the years, many bull stocks were finally lost by us, such as Haitian, Aier, Tongze, and Wuxi Biologics. In Shenzhen, we should have put forward Tongshi earlier. In public, we published an article on Tongshi in 2018. At that time, Tongshi was not actually a white horse in the A-share market, but you can see how many times it has risen in the two years from 2018 to now. This is a company like Tongshi Healthcare.

Like property, for example, the original Greentown service, and later Country Garden Services Holdings, this track, our intermediate research also found that this track is very good. We found a lot of bull stocks, but we lost a lot of cattle stocks in the middle. Like the example I gave just now, Haitian, Aier, Tongze and Wuxi Biologics used to be my heavy positions. The standard for my heavy positions was 10%. But frankly speaking, now I don't have any more. If we keep holding these companies, then our performance will be much better than it is now. Is this a mistake, or is it not a mistake?. It can only be said that it reflects that our knowledge at that time is not enough. Will there be a day when I can buy these companies back at a higher price? It's also possible that I can buy it back one day when I figure it out. Later, we have a special researcher to talk about the valuation of the Ningde era. Everyone thinks that the Ningde era is very expensive, so we will make a quantitative discussion on it.

If a company is now 100 billion, its core competitiveness is very strong, you think it is very likely to reach 1 trillion in the future, it is very likely that it is wrong to sell most of the time in the middle, and good companies are rare. For example, Eye Ophthalmology, it was originally possible to reach 1000 billion yuan. I think this company must have reached 500 billion yuan. Now I also think that it will come to 700 billion to 800 billion yuan is a very high probability. Frankly speaking, its ceiling is very high. It used to be a hospital inside me, but now external hospitals have been bought in. Now we see that it has acquired eye clinics in Southeast Asia, Europe and the United States. We think about whether it can become a general hospital in the future after it enlarges this eye hospital, so its ceiling is actually very high. After I have figured out the management system of the hospital, it can actually do it, so there is a good chance that the market capitalization of this company will be very high in the future.

When we say that it is expensive, we only say that from our short-term perspective, its valuation this year is 200 times, and its market value now, I see, is 270 billion. If it can reach 700 to 800 billion in the future, you sell it now, only that it has gone up too much in a short time. I hope to sell it. I hope to make a wave of this money elsewhere. It may fall a little. I will buy it back then. Many people judge based on this. It is the so-called low performance-to-price ratio.

I wrote a special article, I do not know if you are concerned about it, called "reasonable valuation of stocks", but the valuation of stocks is not linear. Like Eyre ophthalmology, if you think it is 100 billion to 800 billion, will it rise evenly? It rises from 100 billion, for example, 50% this year to 150 billion, next year to 200 billion, and the year after that to 250 billion. It is not like this, it does not rise at a uniform rate. Therefore, there are market factors, and there are also factors in which the market brings cognition. If you think there is a good chance that the company will reach a large market capitalization, in fact, it may be a better choice for you to hold it for a long time.

I like Li Jian very much, and I also reprint two of his articles. The experience he got later is that a good company should never sell it, but this is also controversial. What reflects is that if you think that this company is likely to grow into a company with a high market capitalization, then you will not sell it unless you think it has a high bubble in the short term. Otherwise, we say that we should have a higher tolerance for its valuation. You cannot say that it is a little bit more expensive in the short term. You sell it, the key is whether this is a really good company. Now, we have made many investments in A shares and Hong Kong stocks for several years. You can see that. How many really good companies are there? In fact, there are not many. I have made too many mistakes in this respect.

Some friends may also ask that this year's medicine is a big year, our performance this year can only be said to be qualified, not very outstanding, why? For companies like Kangtai Biology and Changchun Hi-Tech, we also have General Strategy Healthcare this year. We sold it when we thought it was too expensive, and after selling it, it rose a lot, but companies like Kangtai Biology and Aosheng Biology have now fallen back below the price we sold at that time, which is a fact, that is to say, our valuation is relatively sensitive, so there is a degree problem here. You say your company valuation should be sold, how expensive should be sold, this is that you need to have a deeper understanding of the ceiling of this company, you can know to measure this degree. There is no definite answer, but you should maintain a higher valuation tolerance for those really good companies, and don't sell them if you think they are too expensive, which is probably wrong.

7. Looking for companies of unique value

This is what Wu Jun said in that book. I don't know if you have read that book. I forgot the title. He had a friend who made an investment. He said that when he chose stocks, he had a standard. He said that the company I was looking for had unique value. You can't get around this company in a certain industry, for example, you study condiments, you can't avoid the Haitian flavor industry, you study liquor, you can't avoid Maotai, you study batteries, and the Ningde era is unavoidable. usually these companies have high long-term investment value, you can not replace, it has established a very core competitive position.

For some mediocre companies, others can easily replace you, you study this company, even if it is cheap, what is the value? not essential.

As we said in a company, if an employee has an irreplaceable position in a company, and if his departure has a great impact on the operation of your company, then the salary of this person can be quite high. If you say you want to leave, your boss will give you approval immediately, and find someone who can do the same job in a day, then your value must be relatively low. This is the same truth, to be a unique, indispensable person, while looking for the kind of company with unique value.

This problem is a deep one. For example, researchers and people in research companies often see that some companies may not have any obvious technical barriers, but this company can do it, but another company cannot do it. For example, where is the barrier to the Haitian flavor industry? Of course, its brand is formed for a long time, but you say its channel management is very good. But like Zhongtorch high-tech, like Qianhe flavor industry, can I manage the channel like Haitian flavor industry? Are there many secrets in its channels that no one knows? No, no.

For example, I share all my investment experience with you today, can another person make the same company as Baichuang Capital? It's also hard, you can learn to imitate it, so it ultimately depends on the perception of the company's executives or founders. Zhongju's high-tech management team, for example, we investors think that Haitian is better than Zhongju, but Zhongju is now also carrying out channel reform. He may think that I can do better than Haitian, or I am already better than it in some aspects. So everyone knows that there are some reasons that you may look shallow, but you have to agree, and your execution should be very strong, and it is not easy to be able to do it. So the company's barrier is not just a technical barrier, it has many other barriers.

8. To study a company is to study people

If we want to invest in a fund, in fact, you should finally go to the fund manager to see what the fund manager knows. We now study people. In addition to studying his financial statements and his performance, in the end, you have to study the vision of his management team, such as whether his speech and some of his actions are consistent with him. Finally, you have to study this person. The difference between people is actually the essential difference behind a company.

9. Expand the circle of ability and have the courage to admit mistakes

Open mind, there are two dimensions, one is to continue to expand their own circle of ability. One is the courage to admit mistakes. We originally wrote about medicine and consumption, which are our two main tracks. You can see that our new PPT is called consumption, medicine, technology, like the electronics industry chain. We used to research, but recently we have extended it to photovoltaic, new energy vehicles, building materials, chemicals, electronic chips, and now we have all covered it, that is, if you want to do a good job of investment. You have to continue to expand your circle of capabilities. I said earlier that the world keeps pace with the times. at a certain stage or in a certain era, some industries we call enterprises of this era, like these industries, if you do not invest, you may miss a good opportunity.

You can't stick in this kind of industry that I think I am most familiar with, of course, it would be good if you do a good job in consumption and medicine, but we should realize that other industries may also have good investment opportunities. If you have a wider circle of abilities, you can choose more investment opportunities.

10. Keep an optimistic attitude

No matter to life, to the stock market, optimism is very important, stay away from those who are pessimistic. When you are in a sharp fall in the stock market, you have to think that the stock market will not collapse. usually, when the stock market falls sharply, we see that there have been times of poor performance in the past few years, no matter in the external environment or in the stock market. But we can see that in the past few years, take our own fund as an example, our fund was set up at 3100 points, and now the Shanghai Composite Index is 3200 points. Four years later, the index has not moved much, but our fund has risen by more than 200%.

That is to say, no matter how turbulent the environment is, whether it is the external environment or the internal environment, or even if the external environment is not good, we also have a point of view that there are always industries and companies that are less affected by this bad environment, and there are still some benefits. for example, we said this year that the epidemic, property, e-commerce, medicine, and online education have all benefited, and we can see that these are all beneficial. If you invest in these enterprises under these circumstances, does the epidemic affect you? There is no impact, from here we also said that there are actually investment opportunities at every stage, even when the stock market plummets, there are also some investment opportunities, in the end, you still find specific enterprises.

Edit / Viola, Isaac