Read the first book to understand investment and financial management

Chapter 21 Investing in stocks, high risk and high return coexist (2)
Therefore, when choosing stocks, you should first consider the stock nature, and do not touch weak stocks that are behind the general trend, while popular index stocks are the first choice. Some unpopular stocks may suddenly explode after a long period of consolidation, and you can consider choosing.

[-]. Choose low-priced stocks with potential

Low stock prices are an advantage in themselves.Low prices often mean low risk.The reason why the price of a certain stock is low shows that the various unfavorable factors of the stock have been known to the public, and a characteristic of the stock market is that things that everyone already knows often no longer have an effect on the market, just like the good news that everyone already knows Announcement will not make the market rise again.So, if a stock is cheap, it must be for some well-known reason, and everyone has accepted it.

Yet things are not set in stone.In a batch of low-priced stocks, there are often hidden a few stocks that may become better, which is the most worthy of speculation.At the same time, the low price feature makes the hype cost low, easy to attract the attention of the main force, and easy to control the chips.Due to the proportional effect, the profit ratio of low-priced stocks will be greater, and the profit space and imagination space will be wider.Coupled with the reasons for the good mass base, low-priced stocks often become big dark horses.

Of course, low prices are not necessarily good. Some listed companies have been weak for many years, have no chance of turning around, and even suffer heavy losses. It is better to avoid such low-priced stocks.The most important thing is to find out the good stocks and stocks with good potential among low-priced stocks.

[-]. Special attention should be paid to newly listed stocks
Now, more and more stocks are newly listed, and some investors have become numb and turn a blind eye to the new stocks.This instead provides opportunities for ordinary or new investors.There are good and bad among the new stocks, but in general, they all have a common advantage, that is, there is no lock-up at the top.Generally, when new shares are listed, the original shareholders will make a profit. As long as they are willing to sell, they can make money.At the same time, the new stocks do not have any complicated history, which also makes it easy for the main force to grasp the distribution of chips and concentrate on absorbing goods, so as to completely control the chips of the stock.In particular, new stocks that have fallen below the issue price after listing are rare targets for speculation.Below the issue price, there are often institutions that absorb a large number of stocks, so there will be good performance in the future.The chips of this kind of stock are highly concentrated, and the main force of the institution can do as high a price as they like.

In the market, there are countless examples of new stocks being frantically speculated, so that it finally reached the point where every new stock must be speculated.This fully proves that when it is difficult for major institutions to find targets for speculation in the market, new stocks become the best choice.The hype of new shares can be played purely as a numbers game, and the essence of its performance can be completely ignored.As long as the main force has the courage to take all the low selling orders, the future stock price is just a number.

In addition, due to the underwriter system for stock listings, the listing of new shares is directly related to the face of the underwriters and listed companies. Therefore, even if the market is unfavorable, securities companies must do their best to protect the market and maintain their image.The result of this is often that there are more and more stocks in hand, and finally they have to do some hype.

[-]. Choose stocks in strong industries

Stocks in strong industries are often the protagonists leading the market, especially the leaders in the industry, which often play the role of index stocks.Therefore, stock selection must choose leading stocks in strong industries, so that they can often lead the general trend and make profits.Usually, a leading stock in a bull market will become a good stock to resist falling when the market reverses.

Investors should understand the economic situation and industrial policies of the entire country, which are sunset industries and which are strong industries, so as to know what they are.For listed companies supported by the national industrial policy, there will be less operational resistance and greater profitability.In addition, from the perspective of industrial development trends around the world, we can also see which industries are promising and which industries are facing difficulties.Investors should have the concept that buying stocks is buying the future, so they should have a long-term vision for cutting-edge industries with promising prospects, and pay special attention to high-tech and high value-added industries.

Investors should always check the performance of stocks in various industries, which will help to get rid of the current stocks of weak industries and replace them with stocks of strong industries.Stocks in a certain industry often have some kind of linkage.If a leading stock in an industry performs weakly, it will often affect other stocks in the industry.Similarly, if several index stocks in a certain industry show a strong momentum, it will drive other similar stocks.

Choosing potential stocks with outstanding market performance is the secret to earning wealth and making you a big winner in the stock market.

There are risks in the stock market, but there are principles in stock trading

Many stockholder friends buy stocks very casually.As long as there is a stock commentator recommending it, or there are good rumors, someone will buy it.For these investors, buying stocks is more casual than buying vegetables, and buying vegetables is even more picky.The random result can be imagined. After buying, most of them are locked up, and then take them home to sleep, waiting for the unwinding.

If you can master some effective principles and strictly follow them when buying stocks, you can greatly reduce mistakes and increase your chances of profit.Here are a few effective buying principles:

[-]. Trend principle

Before preparing to buy stocks, you should first have a clear judgment on the operating trend of the market.Generally speaking, the vast majority of stocks follow the trend of the market.Buying stocks when the market is on an upward trend is easier to make a profit, but buying at the top is like pulling out a tooth from a tiger's mouth. Buying in a downward trend is hard to survive, and there are not many buying opportunities in the market.It is also necessary to formulate investment strategies based on one's own financial strength, whether to prepare for medium- and long-term investment or short-term speculation, so as to clarify one's own operational behavior and achieve a targeted goal.The selected stocks should also be strong stocks in an upward trend.

Second, the principle of batching

In the case of not being fully sure, investors can adopt the method of batch buying and scattered buying, which can greatly reduce the risk of buying.However, there should not be too many types of stocks to buy in a scattered manner, and it is generally advisable to have less than 5 stocks.In addition, buying in batches should be carried out in a planned way according to your own investment strategy and capital situation.

[-]. Bottom principle

The best time to buy stocks in the medium and long term should be in the bottom area or the initial stage when the stock price just breaks through the bottom and rises. It should be said that this is the time with the least risk.Although there are opportunities for short-term operations every day, we should try our best to take into account the short-term bottom and short-term trend changes, and we must fast in and fast out, and at the same time, the amount of funds invested should not be too large.

[-]. Risk principles

The stock market is a high-risk high-yield investment place.It can be said that risks are everywhere and all the time in the stock market, and there is no way to completely avoid them.As an investor, you should be aware of risks at all times and minimize risks as much as possible. The timing of buying stocks is the first and important step in controlling risks.When buying stocks, in addition to considering the trend of the broader market, you should also focus on analyzing whether the stock you want to buy has a large upside or downside, where the upper-level resistance level and the lower-level support level are, and the reason for buying is What, what to do if it does not rise but falls after buying, and so on.These factors should have a clear understanding when buying stocks, so that the risk can be reduced as much as possible.

Five, strong principle

"The strong will always be strong, and the weak will always be weak", this is an important rule in the stock investment market.This rule will guide us when buying stocks.According to this principle, we should participate more in the strong market and invest less or not in the weak market. Among the stocks in the same plate or at the same price or we have chosen to buy, we should buy strong stocks and leading stocks instead of weak stocks Or think that it will make up for the rise and the price of the stock is low.

[-]. Subject matter principles

In order to obtain more profits in the stock market, especially in a short period of time, it is very important to pay attention to the hype of market themes and the conversion of themes.Although various themes emerge in endlessly and change quickly, they still have relative stability and certain regularity. As long as they can be grasped properly, there will be rich returns.When we buy stocks, we should buy stocks with themes and give up stocks without themes among the selected stocks, and we must distinguish between mainstream themes and short-term themes.In addition, some themes are often stir-fried and often new, while some themes are just smoke and clouds, which is over after one speculation. The hype time is short, and it will be difficult to be attractive in the future.

Seven, the principle of stop loss

When investors buy stocks, they think that the stock price will rise before buying.But what should we do if we buy stocks that do not rise as expected but fall?If you just hold shares and wait for the unraveling, it is quite passive. It not only takes up funds and misses other profit opportunities, but more importantly, it will affect the future operation mentality after carrying the burden of being locked up, and you don’t know when you can unravel.Instead of being passively locked in, it is better to take the initiative to stop the loss, temporarily admit the loss and wait and see.For short-term operation is more so, stop loss can be said to be the magic weapon of short-term operation.The best way to avoid risks in stock investment is to stop loss, stop loss, and stop loss again. There is no other way.Therefore, when we buy stocks, we should set up a good stop loss position and implement it resolutely.The stop loss level of short-term operation can be set at about 5%, and that of medium and long-term investment can be set at about 10%.Only stockholders who have learned how to cut meat and stop losses are mature investors and will become the real winners of the stock market.

The stock market is complicated, it is difficult to distinguish true and false information, and it is highly professional and technical. Stock trading requires solid professional skills.Before stock trading, you must learn relevant knowledge and technology, so that you can analyze the information by removing the dross and extracting the essential, eliminating the false and preserving the true, and screening out true and reliable information to obtain profits from the market.

Follow the trend and use the overall view to speculate in stocks
From the battles between China and Qatar and China and Ukraine in the Asian region of the World Cup Top Ten in 21, we can see that, as a magical coach, Milu has a strong overall perspective.Show weakness when it is time to show weakness, and show strength when it is time to show strength. In short, as long as the process of the game can move towards the goal that is conducive to the Chinese team's World Cup, it will be fine.Looking back now, this is probably the reason why Milu is full of magic and can be successful.

For the majority of stock investors, Milu's overall view is also worth learning.It can be said that stocks must also have an overall perspective, and only those investors who are aware of the overall perspective can truly become winners in the stock market.

Stock trading must have an overall perspective. In actual operation, it is mainly reflected in two aspects:
[-]. Focus on individual stocks, but also on major trends
In recent years, there has been a very popular saying in the stock market, which is: lighten the market and emphasize individual stocks; it also says: put aside the market and speculate in individual stocks.

In fact, this statement is very one-sided.Although this statement is feasible when the market is in a relatively stable or steadily rising market, it is undoubtedly very absurd in a unilateral decline, especially a sharp decline.For example, in a general market decline in the market, how many stocks can really rise against the trend?Not to mention that such a stock is hard to find, even if you find it, you dare not buy it, because you are still worried that it will continue to make up for the decline!Therefore, when the market is unstable, if you want to take risks, you should first pay more attention to the trend of the market while focusing on individual stocks.

[-]. Emphasis on the timing, but more importantly on the process
In the stock market, investors pay more attention to the price of the stock at a certain time, such as the lowest point and the highest point, support level and pressure level, etc.These points are of course very important, but compared with the whole process of stock index or stock price operation, these are not the most important.

Maybe in a strong rising market, there is a highest point above the highest point, and there is no pressure at that pressure level, but in a weak falling market, the situation is just the opposite.For another example, once the stock index was below 18 points, it was regarded as a bear trap. If it fell below 18 points, the market would rebound.However, since it is only a rebound, there is no need for investors to have too much hope, and there is no need to attack heavily.On the contrary, if it is a reversal, it will be very different. Investors can intervene with full positions, and they will never withdraw unless they make a lot of money.

Go with the trend, spend all your time researching the right trends in the stock market, and if you stay consistent, the profits will roll in.

Stock operation, there is always a chance tomorrow
Soros, the investment master, once said: "If you are not ready to bear the pain, then leave. Don't expect to become a constant victor. If you want to succeed, you must be ruthless!" The investment of will and skill is doomed to be a simple and easy task.

There are quite a few people who do not gain any benefits from operating stocks. In most cases, they are willing to chase the rise and kill the fall, making themselves miss good selling points and buying points time and time again, and finally make themselves a trapped "little stock market". Stupid pig" and feel sorry for yourself.Many retail investors often cannot bear the psychological pressure of long-term loss after the stocks are locked up, and they admit their losses and exit the market at the end of the decline.

It is not the fate of every stock investor to be an eternal loser in the stock market. Therefore, even if you lose in the stock market today, you don’t need to be discouraged, because there is still tomorrow and next year. Investors who invest in stocks must have a good attitude.

Even if stock investors miss the lowest point of a certain stock that they think today, it doesn't matter at all. The stock market is fluctuating up and down. Maybe today's low point is tomorrow's high point. Tomorrow's sharp drop will make you regret it.The stock market is a marathon, you need to be calm and take your time.Maybe they maintained a good strength before, and maybe they will win in the end.

The stock market can be regarded as everyone's lifelong career, because he will not be subject to certain restrictions due to his physical strength and related regulations like the legitimate work that people do, and finally let himself say goodbye and will not return .Stocks will not be subject to any restrictions. From the time you open an account to entering the market to fight, they can accompany you until you die.The operation of stocks will not be limited by physical strength, nor will it be limited by time and space.If you like it, you can choose it for life without complaint or regret.The stock market can be regarded as everyone's lifelong career, but you must not get the direction wrong, and you cannot touch it every day. If you don't trade stocks every day, you will feel uncomfortable, and you must do routine work.Investing in stocks requires constant and close attention from investors, not the need to move stocks in and out every day.Having to go in and out every day does not necessarily make money, but if you sell at the right time after constant attention, it may just bring good returns.

Investors generally have a clear purpose of entering the stock market, in order to make a lot of money from investment, but they must not put the cart before the horse, because of the burden of stock investment. "Winning or losing is not instant, and the stock market will always have opportunities." Investors must invest in stocks in moderation and within their means.

It needs to be emphasized that the purpose of investing to get rich is to bring happiness to yourself and your family. Don’t fail to make money and bring pain to yourself and your family with the volatility of profit and loss. If this is the case, it is better to be an honest person. Just live an ordinary life.

Stock trading is a long-term and tortuous process, which requires a good attitude and requires you to have a detached heart in the stock market where speculation and deceit coexist. Only by prolonging the investment time can you get investment returns.

(End of this chapter)