Recently, I have been reading the annual reports of listed companies. Through reading, I found that most of the excellent companies three years ago are still maintaining their excellence now. The difference is that their current stock prices are only equivalent to 60% or even 50% of what they were three years ago.
For example, there is a company that produces ceramic powder. Its core technology is still invincible in the country and second in the world, just like three years ago. It is still continuously developing and innovating, and continuously achieving domestic substitution, just like three years ago. Although the impact of the epidemic has caused its performance to decline, it is still a top player in its industry. Now its stock price is only half of the highest price two years ago.
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If we were optimistic about it two years ago, then its stock price is now only 50-60% of the original, should we be more optimistic about it now? Many retail investors do not think like me. They are keen on chasing hot spots and do not look at the company's fundamentals. When the market is booming, the higher the stock price, the more optimistic they are about the future. When the market is falling, the cheaper the stock price, the more bearish they are on the market.
At present, the vast majority of A-shares are only 40-50% of the stock price at the highest point in 2021. In the case where the fundamentals of most companies have not changed, most retail investors are bearish on the future. In the final analysis, the vast majority of people in A-shares are speculators. They do not look at the fundamentals, they only look at the stock price.
I have said before that stock investment should be like collecting antiques. Buy and collect the stocks of rare excellent companies in the market, and then wait for them to appreciate in the future. Especially when these excellent companies' stocks are neglected by the market and the stock price plummets, it should be the time to take advantage of the situation.
The stocks of excellent companies such as Tencent, Moutai, Yili, ICBC, and Yangtze River Power are definitely stocks with long-term collection value. Although these stocks cannot guarantee that each will give us substantial investment returns in the future, as long as 20-30% of the stocks can appreciate significantly in the future, it is enough for us to live a life that ordinary people cannot reach in the future.
I plan to start increasing my position in August. Keeping too much cash on hand will only depreciate over time. Only by collecting the stocks of many excellent companies can we achieve long-term preservation and appreciation.
The valuation of the vast majority of industry sectors in A-shares is very low. Although the current index is fluctuating around 3,200 points, in fact, the valuation of many sectors is around 2,800 points. Many sectors are in the low and extremely low historical valuation areas. The economy will definitely improve in the future, and the bull market of the stock market is getting closer and closer.
The current A-share market is at a historical bottom, and such a bottom is not something we ordinary people can encounter in our lives. With 27 years of investment experience, I tell my friends - if we seize such opportunities, it may change our life trajectory.Most friends at the moment either lack funds, or lack a true understanding of investment, or lack courage, and the vast majority are destined to miss the current life's wealth opportunities. Life is like this, sometimes you know it's an opportunity but you don't have the ability to grasp it.
When I was young, I once knew that the current market was at a low point, but I liquidated all my stocks in the low point! Because the family business needed funds. The day after I liquidated, the stock market started a new bull market. This is one of the unforgettable events in my life.
This matter made me understand that the basic condition for stock market investment is to have idle funds for five years, ten years, or even longer, and only this eliminates a lot of retail investors. The vast majority of families are unlikely to have a large amount of funds that can be idled for a long time.
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