Learn to invest with Buffett

Chapter 48

Chapter 7 Section 5 Market adjustment is also an important buying opportunity
If you want to achieve better results in investment, you must wait for the best investment opportunity.

--Warren Buffett
Many investors underperform because, like baseball, they tend to swing when the bat is out of place.Maybe it's not that investors can't recognize a good ball (a good company), but they just can't help it, and swinging bats indiscriminately is the main reason for poor performance.

When Buffett bought Coca-Cola stock for the first time in 1988, people asked him: "Where is the value of Coca-Cola?" 15% market premium.Buffett paid 12 times the book price for a company with only 30% net profit return. The reason is that Coca-Cola's economic goodwill is guaranteed, so he is happy to invest.

In June 1988, Coca-Cola was worth about $6 a share.In the following 10 months, Buffett had acquired 10 million shares, with a total investment of US$9340 billion. His average cost was US$10.23 per share. By the end of 10.96, Coca-Cola accounted for 1989% of Berkshire’s common stock portfolio. It's a pretty bold move.

Since Ge Suda took control of Coca-Cola in 1980, the company's stock price has risen every year.In the five years before Buffett bought his first Coca-Cola stock, Coca-Cola stock rose 18% annually.The company's economics are in good shape, so Buffett has an important buying opportunity.During this period, the S&P Industrial Average also rose.Neither Coca-Cola nor the stock market had the opportunity for him to buy stocks at a low price, but Buffett still bought them at market prices.

在1988年和1989年巴菲特购买可口可乐期间，可口可乐在股票市场上的价值平均为151亿美元。但是巴菲特通过以上分析知道，可口可乐公司的实值大约是从207亿美元（假设股东盈余以5%的比例增长）、324亿美元（假设股东盈余以10%的比例增长）、381亿美元（假设股东盈余以12%的比例增长），到483亿美元。

Buffett seized an important buying opportunity and bought at a low price. This "low price" is compared with the real value.When the price is far below its real value, Buffett will not hesitate to buy.

Buffett is the most astute investor with a deep understanding of the investment market, and he is able to seize buying opportunities.

Similarly, in investment, investors can also grasp very important buying opportunities.Regarding the current trend of China's stock market, China's securities market is facing an unprecedented favorable development environment, and China's capital market has entered a golden period of development.The specific performance is as follows:
1. There is no direct systemic factor to support the continuous huge decline in the market.The fundamental reason for the decline is that after the stock index reaches a relatively high level, the mentality of investors becomes very fragile. Once there is a disturbance in the market, it is easy to kill more and more.Therefore, there will always be sharp rises and falls with large fluctuations. The farther the bull market goes, the greater the volatility and shock of the market will be.For this reason, long-term investors should make sufficient psychological preparations.

To guard against the risk of such huge fluctuations, one should first maintain a calm mind, avoid chasing ups and downs, don’t panic when it plummets, and don’t rush to catch up when it’s skyrocketing, especially for those stocks with relatively high valuations. varieties.Many volatility risks can be avoided through a suitable portfolio of holdings.What is more important is to follow the concept of value investment. In the current market that is optimistic for a long time but fluctuates sharply in the short term, choose varieties with good resilience as investment allocation objects.

2. The sharp drop in the stock market provides an opportunity for the market to wash away the sand in a big wave.For stocks with falsely high stock prices, their halo can be washed away and their original shapes can be reproduced; while for stocks with real value, themes, and potential, it is a major and important event of "seeing gold only after washing out the floating sand". of baptism.The adjustment of the stock market will present real golden investment opportunities in front of investors, and it depends on whether investors can grasp them.

The stock market crash also presents a major buying opportunity for market investors.Compared with the huge upside in the future, any adjustment at this stage is just a small twist in the long bull market of China's stock market, and it will provide investors with an opportunity to increase their holdings of high-quality assets at low prices.It is absolutely not advisable to continue to panic sell after the sharp drop, or even adopt a strategy of exiting the market; too much consideration of the 10% stop loss range may cause investors to lose the opportunity to hold stocks that will rise by 3% in the next 100 years. Firm belief in the bull market For investors, the adjustment will provide a very good opportunity to buy high-quality assets at a low price.

3. In the current situation of abundant liquidity in the domestic market, as long as there is no major negative policy introduced, the bull market will not stop.By the middle of 2007, as the company's profits grow, more high-quality companies will be added to the market, which will reduce the overall price-earnings ratio. This accumulated energy will usher in a bigger bull market for the A-share market.

4. The market rotation will be balanced between blue chips and growth stocks, funds will rotate between relative valuation bubbles and valuation depressions, and the stock market will also appear in the process of alternately increasing the valuations of growth stocks and blue chips Spiral upward trend.When the valuation of growth stocks increases faster than the growth rate of performance, market funds turn to favor blue-chip stocks; once the blue-chip stocks bubble, market funds will gradually flow to industries and sectors with low valuations.

In view of the above favorable factors, investment should start from the following aspects:

1. "Strategic layout, trend investment, insist on growth, and actively adjust positions."The starting point of the strategic layout idea is: one is to invest in strategic varieties, and the other is to hold them for a longer period of time.In a bull market, choosing the right variety and holding it for a long time is definitely the most profitable strategy.

2. Be a firm "trend investor" in the bull market.As long as there is no substantial change in the overall trend of the market, a high-ratio position holding strategy should be adhered to. In principle, it is a proactive position adjustment not to be made due to short-term market fluctuations.

3. Adopt a balanced strategy in the stock allocation to improve the anti-risk ability of the investment portfolio.For example, adjust the shareholding structure, but do not focus too much on specific investment hotspots; appropriately increase holdings of small and medium-cap growth stocks in style and avoid some overvalued large-cap blue-chip stocks.In order to further increase the margin of safety of the portfolio, selecting individual stocks and steadily building positions is the way to win.

4. Investors may wish to pay attention to those boutique funds with long-term performance reference.To examine the performance of a fund, we should not only look at the short-term performance of the fund, but also comprehensively examine the comprehensive performance of the fund in the bull market, bear market and adjustment market to judge whether it has the ability to obtain sustainable and stable returns.

In any case, investors can win in the ever-changing stock market only if they grasp the rare buying opportunities.

Investment motto:

The basic point of value investing is not price, but value.Buffett believes that there is only one definition of value investing, which is to invest in the stocks of companies whose intrinsic value is seriously underestimated by the market.Calculate the intrinsic value per share from the company's overall intrinsic value to determine whether the stock price is seriously undervalued.As long as it is too undervalued, buy it, regardless of whether the stock price will rise or fall in the future, only buy these high-quality and cheap companies.There are many investment opportunities in the market, and investors should learn to grasp the rare buying opportunities in a timely manner according to the adjustment of market conditions and the stocks of the companies they are concerned about.

(End of this chapter)