Learn to invest with Buffett

Chapter 99

Chapter No.16 Section 4 Do not believe in authority and believe in yourself
Instead of looking for investment advice from brokers or investment professionals who only care about the stock market and don't pay much attention to research and research, you should look for stocks of great companies in your own life.

--Warren Buffett
In the stock market, many authorities make different analyzes and predictions every day.There are many investors who always like to read stock reviews, but they can't believe them, but in fact they are still influenced by stock reviews.

In fact, in stock trading, the opinions of experts are very important, because experts have studied the financial structure, upstream material supply, downstream product distribution, peer competitiveness, impact of the world economic boom, and domestic economic development of each listed company after a long period of time. As well as the future development potential of various industries, the analysis made on this basis is often relatively correct.By choosing who to invest in and when to invest based on their advice, there is much less chance of making a mistake.

But for the opinions of experts, the masters believe that investors should still show a certain sense of discrimination and critical spirit.

Among the overwhelming stock reviews, stock critics often say that the stock market or a certain stock has upward momentum, downward pressure, etc., and many investors believe it.Buffett said: "I have never seen anyone who can predict market trends." It is an impossible fantasy to make money with options and stocks. If it could be realized, they would never tell investors that they would have made enough money long ago.”

There is often such an explanation on TV: "Affected by the rumors that the Federal Reserve raised interest rates, Wall Street stocks fell sharply." By analogy, such rumors and news often affect the trend of the stock market, and may even change the trend of the stock market, turning the bull market into a bull market. into a bear market.And vice versa, a bear market can also turn into a bull market, stimulated by some kind of news.The market has its own laws of operation, but the market often appears to be very fragile, and a sudden news or insider or even groundless rumors can also make it fluctuate up and down.Because there are many "investors" who speculate on news in the stock market, their psychology is actually very fragile.

Therefore, believing rumors and so-called insider information can lead to irrationality and turmoil in the stock market.To some extent, this seems to confirm the reliability of the news and the veracity of the rumors, which is a wrong view.

In the long run, the so-called news and rumors cannot influence the operation of the stock market. The operation of the stock market is fundamentally affected by the operating performance of the company. That is to say, the operating performance of the enterprise affects the operation of the stock market.Therefore, investors must grasp that the operating laws of the stock market must exclude the influence of so-called rumors and insider information, and base themselves on the company's operating performance and profitability.No matter how the market operates, there will always be times when it correctly reflects the company's operating performance. Therefore, based on the company's intrinsic value, choose an appropriate buying price, and then wait for the stock price to rise, regardless of the short-term ups and downs of the stock market, let alone listen to so-called rumors and rumors. Insider information.Buffett often said proudly: "Even if the chairman of the Federal Reserve secretly tells me the monetary policy for the next two years, I will not change any of my actions." Commendable, is an important condition for investment success.

So, how do we read the analysis of authoritative Chinese stock critics?
1. Check its basis.There are many ways to analyze the stock market. As a stock commentator, you should take your own views seriously, so you must use a variety of analysis methods comprehensively.If a conclusion is drawn based on a certain method or certain indicators of a certain method, the basis is insufficient and the conclusion is doubtful.

2. Determine motivation.Stock analysts have different purposes due to different status and circumstances: some independent stock analysts rely on the accuracy of stock reviews for a living; some want to be famous and go to institutions to trade or do research; , Defrauding the organization.Generally speaking, independent stock commentators and those who want to be famous place more emphasis on reputation and achievements, have high credibility, speak more cautiously, analyze more, and often have unspecific conclusions and fewer suggestions.

3. Aftertaste hints.Stock analysts are in the stock market. They have an early understanding of policy information and individual stock information, and they have studied deeply, but they will not make it public immediately. There are also institutions that sit on the bank, and fundraising and shipments are commercial secrets, so it is inconvenient to talk about them. , investors should ask a few more why.Some stock commentators often give hints, and investors can feel their good intentions from the lines, tone of language, expressions, eyes, and tiny movements.Of course, such well-meaning stock commentators can only be identified if they pay more attention.

4. Focus on performance.Continuous observation of the forecast accuracy of several stock commentators is the main identification method.It is a good strategy to find more successful stock critics and follow their guidance.

5. Reference conclusion.The conclusions of stock reviews are for reference only, which is the consensus of everyone, but the methods and methods of reference are also learned.Focusing only on the prediction of ups and downs is a sign of relying too much on stock reviews. At most, you can know who is bullish and who is bearish, but you are still not sure when you operate.The use of stock review conclusions should also be based on your own analysis. When you are undecided on certain issues, you can read various stock review articles.

6. Learn its methods.Stock commentators always use some methods when analyzing and forecasting. Investors can use stock review articles as teaching materials while judging the correctness of their conclusions.Strive to master the analytical methods of stock analysts to carry out independent thinking and form their own conclusions and opinions.

In short, investors should completely correct their reliance on authority and inside information in their investment.Based on your own independent analysis and research, you should discuss with the stock review point of view to improve your own analysis ability.Remember Lynch's advice: As an investor, your advantage is not to get some so-called investment advice from Wall Street experts.It's some common sense of life that you already have.When you invest in companies or industries you are familiar with, use your advantage, and your investment can be better than those experts.

It is impossible for even masters to make accurate judgments on market trends, and even oppose forecasting the market. One can only imagine the credibility of experts who publish stock reviews and recommend stocks in the media all day long.

In fact, the process of rising and falling in the stock market is also a process in which authority and inside information are transformed into a common understanding. In this process, there is no absolute certainty for ordinary investors.Don't go after inside information if you can't get solid inside information, don't look for certainty that you can't grasp.

Investment motto:

Investors don't know how the stock market will fluctuate tomorrow, next week, or next year, but in the next 10 or even 20 years, there will definitely be two situations: up or down.The key is that investors must take advantage of the market, not be used by the market, and never let the market mislead investors into taking wrong actions.

(End of this chapter)