Snowball Special Issue 050: "12 Ways to Make Money"

Chapter 4 My Hong Kong Stocks Stepping on Thunder

Rubato, individual investor, published time: 2014-12-28, download Xueqiu APP: http://xueqiu.com/r/2YviQn; original link:
http://xueqiu.com/9599205441/34584265
I wanted to write this article when Xueqiu had a miserable event before, and it has been delayed until now. It seems that I can only sit down and write something until the year-end summary every year.

Ports was first known to the company in 2006. It has sustained high dividends and high growth. The stock price has reached above 30 yuan. In 2008, when the Hong Kong stock market plummeted, it was about 7 yuan and it was a perfect bargain hunter. Clearance (although I have sold "wrongly" intermittently several times before, but basically I still pay attention to the whole process), and now the price is 2014 yuan, some key points in the middle are worth reviewing:

1.2008. Bought in [-].At that time, the global stock market plummeted, and I don’t know when we will see it again.The Hong Kong stock market is full of red negative numbers and down arrows, as if I heard the sound of rustling rain... And in this situation, I am holding cash, and I am faced with a question: what to buy?
At that time, I thought there were three choices: 1. Buy a company with stable performance but limited growth space; 2. Buy a company that is losing money/is likely to lose money or even go bankrupt; 3. Buy a company whose performance is less affected by the economic recession and has a large room for growth company.In the end, I gave up a lot of good opportunities and bought all the companies I think are the third type.Later, when the global stock market rebounded strongly in 2009, especially when many Hong Kong stocks rose several times, my overall rate of return that year was actually less than double, and I think the stocks of the second type of company have the highest rate of return, and the first type is also higher than the first type. Three types of high yield.

Although the current reflection has the feeling of hindsight, one thing is certain: my starting point for thinking at the time was wrong (these three classifications themselves and my own cognition and classification of various companies are also problematic, and many companies have been rejected. I classified it into the first and second categories, but it turned out to be the third category), the most fundamental point in deciding whether to buy or not should be the difference between price and value, not anything else.In the face of this problem, these three choices are false choices: the company to buy is the company with the largest difference between price and value, regardless of whether it has stable performance, loss of performance or growth in performance.This is very important, and it is actually another expression of value investing.No matter the bull market, bear market or monkey market, it is the only buying criterion.Why did the first two types of companies have high returns in 2009?Because they fell more in 2008, simple as that, but I just didn't understand the simple truth at the time.

2.2009. No dividend was announced in the annual report at the beginning of 60.Given the gloomy outlook for the entire world economy at the time, the rationale for the company to preserve cash to survive the winter may have been barely plausible, even though the company had a strong balance sheet and good cash flow.In short, I still listened to the weakest voice in my heart and sold all the treasures in my hand.Later, the company issued a communiqué, saying that it would continue to maintain a dividend payout ratio of about [-]% in the future, so it happily re-purchased.Personally, I think this twists and turns should be considered a proper operation.

3. After buying and planning to hold it for a long time, I invested a lot of time and energy in "researching" this company. In fact, it seems that doing so is just to make myself more familiar with and subconsciously accept this company more subconsciously, even unconsciously. I fell in love with this company, so much so that when the revenue and profit growth was sluggish and the inventory began to rise in 2010, I always believed the management's rhetoric consciously or unconsciously, and thought that the company was in a period of adjustment and would return to "normal" "Orbital.And when the company's performance and stock price continue to decline, it is still increasing its holdings.

The understanding of this aspect is very important, let me understand the appropriate distance that should be kept for a company in investment.If you know a company's historical origins, the latest developments in various business directions, changes in company loans, tax rates, etc., you can predict the company's performance for the next six months or a year (whether it is accurate or not is another matter), and even When considering the adjustment of the company's strategy and development direction for the management and the board of directors, perhaps, you have gone too far.An appropriate distance does not mean not paying attention to the above-mentioned things, but these things are only an aid and support for decision-making, and cannot be used as a basis for decision-making.The basis for decision-making is the irrefutable accuracy and solid margin of safety based on rough estimates, rather than the accumulation of trivial facts.

4. The company's financial scandal in 2013 and the announcement in early 2014 that it would not pay dividends. I still think the financial scandal in 2013 is not a big deal. Major shareholders obtained low-interest loans from high-quality companies to support their non-listed companies. Although this is not a sunny event, it is still considered a gray area.But at the beginning of 2014, it was announced that they would not pay dividends. I really couldn’t find a reason for the Chen Brothers that could barely get on the table. Clearance.Of course, at that time, I did not expect that it would fall like it is today (the price was 4.2 yuan before the suspension).

I can’t predict the future of Baozi Company and its stock price. Maybe one day the company’s stock price will reach a new high. Spend more energy on yourself.In addition to thinking about the key points mentioned above, there are a few more points I want to talk about:
Never take a heavy position in one stock.The only correct decision I have made on Ports over the years is to maintain its not too high position in the total position: at the highest point, it did not exceed 15%, although this is already the upper limit of the proportion that I can achieve for a single stock.This can also be regarded as a margin of safety, because no matter how much you know about the company and how many reasons to underestimate it, there may always be situations that you did not expect.

If a company looks flawless, don't buy it.Ports had a high gross profit margin, high growth, high dividends, and a perfect balance sheet cash flow statement.Looking back now, it feels a bit too good to be true, because why does such a perfect company need to go public?
The motivation and integrity of major shareholders are aspects that we and other small shareholders must pay attention to.Retail investors say they are shareholders, but they basically have no say in the company's operations and decision-making. It is equivalent to handing over the money to the big shareholder for you to take care of. What this person does with your money is basically out of your control or influence.Therefore, in deciding whether to give money to this person, in addition to the price/value ratio (stock valuation), the most important factor is the person's motivation and integrity.Motivation is the most important thing, because the game of money only talks about the law, not morality, so we must think about the motivation behind the decision-making of major shareholders.Integrity is just a matter of face, don't expect others to be honest, but if the major shareholder doesn't even care about face, then the backside behind him is unimaginable.

All in all, Baozi has witnessed many mistakes made in investment over the years. I write this article to record them and use them as a warning in the future. I also hope that friends who read this article can learn from them.

(End of this chapter)