Remarks: The following content is extracted from the CCTV Finance's 2021 Bull Year Investment Trends interview with Kang Xiaoyang's live broadcast on investment.
- Staring at stocks every day is the most meaningless thing in life, just like watching others gambling for a lifetime in a casino
- Why is it said that most people's investment losses are caused by the bull market? Because 90% of bull stocks end up being fake bull stocks. The fantasies and habits you have established in the bull market will eventually be punished doubled in the bear market. And my favorite market is the latter. Only in the snowy winter can you find the true buried hope.
- Investment is not to predict the future by the present, but to evaluate the present by the future. The perception of the future depends on common sense rather than fantasy. To evaluate the present in the future, the most important thing is the business model. The most important thing about the cognition of the business model is not to see who can make the most money or have more advantages at the moment, but to see what kind of value the model really creates. This is the core of long-term investment.
- When the market falls, pessimists are calculating how much they have lost; optimistic people are counting how much opportunities they can make in the future. The purpose of fundamental research is not only to estimate the room for future rises, but more to overcome the fear of falling.
- The biggest change of the Internet is to allow the people at the bottom to truly unite and have the right to speak. Various social media and self-media are emerging in endlessly. This is an era when the elites retreat and the people rise, and sports politics and economics prevail. This is true in the United States, and so is the world. This is an age where voice can conceal the truth, and position determines cognition, an age where wisdom and knowledge are lost. Life is like this, and so is the stock market.
- A new life will start offline.
- Whether you have the ability and habit of independent thinking is actually a good judgment, which is to see if your own ideas are consistent with most people. I am not saying that it is correct as long as it is different from the majority, but the opinions of the majority must not be obtained by independent thinking.
- People often argue because of different opinions. Whenever the argument is unclear, they always like to blame the difference in values. In fact, many differences have nothing to do with values. The real reason is that the point of view of the problem is different from what you see, and the other is that many opinions are actually self-substitution of previous opinions, rather than re-judgments based on facts. This is also a manifestation of no self-denial ability. There are many examples in life where an idea goes black. People who lack independent thinking always choose and stand in line habitually, and always unconsciously take the opinions of most people as their own opinions, and once such opinions are formed, they will become deeply rooted. Coupled with the courage not to deny oneself, all subsequent arguments and expressions surrounding this point of view are just an instinctive self-defense.
- Many people's losses are ultimately caused by the bull market. The bad habits cultivated in the bull market will damage you for life.
- The most important investment is not what you buy, but how much you buy.
- It took 6 years for Tesla's market value to go from 20 billion to 50 billion, and it took only a few months to go from 50 billion to 250 billion. Another case where 10% of the time contributed 90% of the increase. This again explains the importance of long-term investment.
- The core of machine learning is to simulate human thinking logic, not just to learn from human experience. The human thinking process is similar to a decision tree, and the decision process is actually a voting mechanism.
- The most important thing in investment is always the position. How much to buy is the core of the investment decision, and it is also the focus of all thinking and analysis. I heard a story a long time ago that someone on Wall Street made a 100-fold investment in stocks and jumped off the building. Because he only bought 100 shares.
- In fact, the reasons for the rise and fall are there. It's just that when it rises, it starts to talk about the reasons for the rise, and when it falls, it starts to discuss the reasons for the fall.
- Long-term investment research is not about catalysts, market sentiment, quarterly earnings and other short-term factors. It is about the company's direction and overall value. Among them, there are two most important points: one is the upward space, and the other is the worst-case scenario analysis. The upward space is easier to understand, that is, what kind of reasonable range do you think the company's market value will reach under the most optimistic situation. 10 billion? 50 billion? 100 billion? Or 500 billion? As far as any company is concerned, whether it is products, consumer groups, or per capita consumption and market area boundaries, it is impossible to expand indefinitely. In response to the company's market value, there is a rough ceiling. For example, many people are optimistic about Ali, but how much space does Ali have? To me, Alibaba is not a company worth studying. The reason is very simple, the company went public to 250 billion, and it only tripled to one trillion. Common sense tells you, is it possible? Sometimes, if you are not sure where the ceiling is, you can use the reverse method. For another example, when Tencent is in full swing, where is its market value ceiling? Is a trillion dollars possible? If your answer is "don't know", what are the conditions for the market value to reach one trillion? My conclusion is: If it reaches one trillion, Tencent must be a global company. But is it possible? The answer is obvious. What's more, even if it is really one trillion, isn't it double the space? This is also the main reason why I chose to sell near the 500 billion market value. In fact, for investment, it is not only the upward space that makes you make up your mind in the end. The worst-case scenario analysis is the more crucial factor. Although you can prepare for the loss to zero before investing, you don't really want this. You need a better and worst result than this to help you make up your mind. Relative to the upward space, worst-case scenario analysis requires more professional knowledge and rich experience, among which cash flow analysis is an important part. Sometimes, the analysis of cash flow can not just simply look at the figures on the statement, the true and continuous operating cash flow is the company's hematopoietic ability. In the unlikely event that the company encounters operating difficulties, will the worst result be bankruptcy or acquisition? If your answer is the latter, it is a good investment target. There is enough room up, and the worst scenario is to be acquired.
- Investment reflects your views on the company, and stock prices express the views of the market. It's not about who is more powerful, but it depends on what differences you see. The essence of investment is to look for the difference in expectations, that is, the difference between your expectations and market expectations. But the question is: what kind of expected difference will be larger? What kind of expected difference is easier to grasp? Short-term or long-term? In the same direction as the market or in the opposite direction? These are completely different from person to person, and there is no standard answer. For me, the long-term and reverse expectations are relatively large and relatively easy to grasp. As long as you remain relatively independent and objectively look at the problem. To achieve this, the difficulty is not to look at the problem itself, but to avoid interference from the market and others.
- All my successful investments are bought when the market is not optimistic, without exception. Companies that are not favored are that the price is cheap, which is very important; at the same time, buying when the market is not favoring requires sufficient reasons, and the reasons at this time will be more independent, objective and farsighted. This point is equally important. Generally speaking, companies that are generally optimistic from the beginning are mostly not big bull stocks.
- I have two investments and I haven't made any money in the past 5 years. Some people who know me often say behind my back that my abilities are no longer good. Although, from a five-year perspective, I may be wrong, but what you may not know is that one of my two investments has been held for 15 years, and the other has been held for 7 years. From the overall perspective after holding, the return is still acceptable. I have no ability to judge the rise and fall of stocks over a year or several years, nor can I judge the opinions of others in the market. The only thing I know is that I know why I want to buy, and when I buy, I have already set the conditions for revaluation or selling. When I make long-term investments, I usually use the market value estimation method, and I am prepared to be either 0 or 20 times. The conditions for selling are also very simple: that is, the room for upward market value may be less than doubled. As long as the general direction remains the same, I don't care much about the stock price fluctuations before this. Since you don’t sell when it rises and don’t sell when it falls, what is the point of caring about and discussing the fluctuation of stock prices? Choosing such an investment method was influenced by Buffett's book in his early years. He said that a person only has 20 opportunities to punch in his life, and they are gone. I think that since there are only 20 opportunities, investment should be like planting a tree. Before planting, seedlings should be selected, but since it is planted, it should not be planted again. I know that this kind of investment behavior is an alternative in the market, and many people do not believe it, let alone accept it. This is why I feel that it is very difficult and painful to help others make money based on their own ability.
- In this life, who you are with is sometimes more important than who you are. Because a lot of our enlightenment is achieved through education, and the best education is the people and things around us. This is the so-called red near Zhu and black near Mo. Three people must have my teacher, and this is the truth. But three different people may bring you completely different thinking patterns or behavior habits. Be with the good and walk with the wise. The same should be true for investment. Your circle determines your horizons and radius of ability.
- The stock market is an amplifier. Good things amplify and bad things amplify. In fact, you need to use a telescope, not a microscope, to see the company. You can see clearly by standing far away.
- No matter what method you use to invest, the logic of buying and selling needs to match and be consistent. You cannot buy for one reason, but sell for another irrelevant reason. For example, what you obviously care about is the fundamentals, but what you care about is always the stock price. Or, you obviously bought because of short-term factors, but ended up in the long-term. You are obviously a long-term investor, but you always like to use short-term ups and downs to verify right and wrong. These are manifestations of inconsistent buying and selling logic. For another example, buying with a trend and selling without a trend is a way to make money, but we always suffer from gains and losses during the operation. For a while, the buying is high, and the other is complaining about the low selling. If the trend comes, don't believe it, chase after it is high. The trend disappeared, and it fell to the point that it couldn't stand it and cut again. These are also logically inconsistent behaviors. There are many logics and methods to make money, and there is no need to entangle which one is better. But the high degree of matching and consistency of the buying and selling logic is the most important investment logic. This is also the most important summary of my many years of experience and lessons, not one of them.
- Investment is not just a simple money-making game, it can also become a respected and envied profession. First of all, investment can fully enjoy freedom. Enjoy the freedom of choice and behavior, especially, you can fully enjoy the freedom of thought and spirit. Secondly, you can also achieve freedom of wealth. There is no need to ask for help. Furthermore, you can also have a certain sense of accomplishment. Because almost all the greatest companies in the world are listed companies, even if you are just one of the small shareholders, you still have a lot of honor. More importantly, when you can no longer work hard for money, you can still have a little dream. Although you don't necessarily have the ability to change the world or realize your dreams, you can choose to invest in people with such extraordinary abilities. Although still investing, you no longer only care about the return of capital. You are willing to take greater risks for the people or things you admire, and the rewards are no longer just the wealth itself. Of course, using your accumulated investment ability to help more people achieve wealth freedom and wealth appreciation is also a great achievement.
- Everyone is waiting for their own opportunity. If the opportunity does not wait, it is not your fault. If you blindly strike out because you can't wait for an opportunity, the mistake must be your own. The bigger mistake may be that when the opportunity arises, you have doubts and can't believe yourself. Investment is a game in which patience and courage are indispensable.
- Investors have two most troublesome and thankless things: first, recommending stocks to people from different paths; second, arguing with people who are unclear about their opinions.
- Investment is a mountain. Different people, different experiences, and different angles will see different scenery. Many investment disputes actually stem from different experiences. Only fellow travelers on the same road can understand and share what you see, think and think.
- The right or wrong of investment ultimately depends on the market to prove it. But the crux of the problem is, what method should you use to prove whether your investment made a mistake. Different investment logic should be tested in different methods or time periods. Many people like to watch the market every day, which is a very bad habit for long-term investment. Because short-term trends cannot verify your long-term logic, watching the stock price every day will only make you more anxious or blindly following, and eventually lose your judgment. People who pursue the right every day, perhaps only short-term visitors or gods can do it. If you want to use short-term trends to verify whether a long-term investment is correct, the person who invested in Tesla has already made a thousand mistakes in the past few years.
- Value investing is just looking for relatively cheap opportunities with a certain margin of safety when the market is generally not optimistic or panic. It is not the same concept as the logic of looking for super bull stocks.
- Super big bull stocks are either companies that have come back to life or are revolutionary companies.
- Long-term investment is the simplest and most effective way to gain wealth and freedom. Because, just one big opportunity of heavy storage is enough. The standard worthy of heavy storage may be different for everyone. Some people value certainty, but I am more concerned about the size of opportunity. So what kind of opportunity is a big opportunity? Everyone's thoughts may be quite different. For long-term investment, I think it takes at least 20 times to be a big opportunity. If it is a growth stock, even if the stock price is discounted, a 20-fold increase requires at least 10 to 15 times the business growth space. If it is a pure value stock that does not consider growth factors, the stock price has to fall at least 95% to have the possibility of 20 times. Simply put, if a company's revenue does not have 15 times the room for growth, or if its stock price does not fall by 95%, it cannot be a big opportunity. Although there are not many such opportunities, once you encounter it, don't let it go easily. It’s no good not to dare to take a heavy position in the face of big opportunities, let alone a big chance. Shigekura requires courage, but big opportunities require patience and a different vision.
- It’s either a full blue chip or a value investment, or holding it still or a value investment. The essence of value investing is to take advantage, buy when the value is sufficiently discounted, and sell when it is normal or overvalued. It's like buying straw hats in winter and selling them in summer. Value discounting is not simply to see whether the stock price falls, because it is difficult to evaluate the value from the value itself. Whether the value is discounted must first be observed from the behavior of investors, mainly to see if there is a fire sale or large-scale shorting. Without continued pessimism, there can be no real cheapness. Secondly, when it is generally not optimistic, we will study whether it is worth the investment. In my opinion, in the past five years, there have been very few valuable targets on the market.
- BA (Boeing) has fallen by nearly 80%, and if it is possible to fall by 90%, there is still room for a 50% drop instead of 10%. The reason for considering whether to buy is whether the current market value of more than 50 billion is worth holding for a long time. We must first assess whether there is a risk of bankruptcy, and second, we must look at the market value after normality, rather than the amount of bearishness to buy the bottom. If you buy bottoms when it drops 50%, you have already lost 60%.
- The spring of value investment is coming again, and I seem to have smelled the fragrance of flowers in the snow. As far as investment is concerned, only when most people lose their helmets, disarm and flee in panic, will there be real cheapness at all. What we need to do now is to live well. Don't make yourself bruised or exhausted for petty gain. When the market returns to silence, the busy season begins.
- If the high point did not sell, it would be wrong. If you bought and held Tesla from 2013 to now, only 55 trades are correct, and the remaining 1,700 trading days will be spent in the pain of regret.