Good people, good industry, good enterprises, good prices, one can not be less.
Hello, we need to judge whether the management is honest, enterprising and steady. Great companies are first run by great entrepreneurs.
The industry is good, we need to judge whether this is a good business, some business is relatively easy to make money, once occupying the first advantage, the latter is difficult to surpass.
For a good enterprise, it is necessary to judge its strategy, business model, market environment, changes in supply and demand, and so on, so as to have a relatively accurate judgment on its operation status and profit development in the next 5 to 10 years.
Good prices require an accurate valuation of the enterprise.
It's difficult to see people, to analyze industries and to value companies, but,
The most difficult thing is actually the change of mentality. Value investment can be summed up in one sentence: buying stocks is buying enterprises.
Only when you use the mentality of industrial investment to buy stocks can you really be regarded as a ship on the market.
Only when you buy stocks not to sell them to others at a higher price, are you making value investments. Otherwise, at best, it is a value speculation.
Value investors must change the only criterion for judging the success of their investments from the rise and fall of stock prices to whether the earnings growth of enterprises meets their own expectations.
Only when you change your investment success criteria to dividend expectations can you really have the opportunity to get rid of short-sightedness and discover really great enterprises, and have the patience to wait for at least a reasonable price.
You can also really do this: when you buy stocks and the price falls, you will be happy because you have the opportunity to buy more.
At this point, in fact, it is easy to know but difficult to do. In order to really have a value investor's mentality, we can do a simulation of industrial investment in mentality.
For example, you find a commercial street which is about to develop greatly. Now there is an excellent opportunity to invest in stores. You don't need to operate the stores. You invest 1 million yuan. After one year, you can earn 200,000 yuan a year, and it will grow rapidly. But you only have 5 million yuan and invest in 5 stores. At this time, do you want the stores in this street to increase their prices quickly? In fact, you want the best others. Don't find opportunities here, don't raise prices for 10 years, let you make money later and invest in new stores.
But when buying stocks, people's mentality immediately changed 180 degrees. Why?
Because,
First, there is not so much dividend in the short term.
You may not be able to get a lot of reinvested funds from the dividend in the short term.
Second, in the long run, the uncertainty is also relatively large.
The profit is uncertain and the dividend after profit is uncertain. The biggest weakness of stock investment is that you are passive. If the enterprise has money, it has the right to dividend or even spoil it. Therefore, it is very important for honest and reliable management to form a reasonable board of directors.
Nevertheless, it must be admitted that the principle is correct and that value investment must do so. So in order to achieve real value investment successfully, we have to go back to the first few points.
Good people, good industry, good enterprises, good prices, one can not be less.
There are two basic purposes:
First, accurately forecast profits.
Second, ensure that profits are dividend-paying or that profits are used for better investments.