How To Find Big Bull Strands In Big Fluctuations

The stock market is different from the casino.

After understanding the importance of fundamentals, the next thing to do is to find out companies with investment value and find out those listed companies with increasing value. This highlights the importance of research.

The task of investment is through in-depth research, forward-looking, independent and creative to find companies with investment value. Good corporate governance structure, standardized information disclosure, excellent management, unique business models, high entry barriers, pricing power, good past records, and good integrity are all factors to be considered.

After identifying excellent listed companies, you should also consider the price you need to pay.

Under normal circumstances, a good company's stock also has a good price. In many cases, the price of these stocks will have a very high growth expectation, and the price will overdraw the future growth to a certain extent. At this time, we need to have a good and basic judgement on the value of the enterprise.

If you pay too high a price, even if you correctly judge the enterprise, it will take time to keep up with the value of the business you buy, and you will not have a reasonable return on the process. That is to say, a good company is not necessarily a good stock.

Price fluctuations around value are economic laws, and stock markets are more so.

Buffett's tutor Graham said that the market is a voting machine in the short term, and a weighing machine in the long run.

That is to say, in the short run, the stock price is determined by the opinions of the majority and the majority of the funds. A large amount of funds chasing part of the stock will inevitably lead to the rise of the stock price. But in the long run, the stock price is determined by the intrinsic value of the company, that is, the stock market is a weighing machine weighing the stock price of the company.

The sharp fluctuation of stock prices will have a huge impact on people's psychology and behavior. In order to avoid or reduce the harm caused by this huge price change, Graham put forward the concept of margin of safety, that is to say, investors should try to find those companies whose shares are far below their value, so that the possibility of a sharp fall in share prices will be relatively small, even if the stock price falls is also temporary. The law of value and market mechanism will soon return the stock price to a relatively reasonable level.

After in-depth research, and buying a good listed company at a reasonable and safe price, the next thing to do is to maintain a continuous track to ensure that the changes of the enterprise meet their expectations.

At this time, another important task is to maintain a good investment attitude and not be fluctuated by stock prices.

Buffett said that investment education only needs two courses: how to evaluate an enterprise and how to think about the market.

Investors do not need to know how to evaluate all enterprises, but should start with enterprises that you can understand, look for enterprises that sell far below their value, forget the enterprises you can not understand, you need to know what is lasting competitive advantage and what is short term competitive advantage.

In the investment world, if you own 150 of your IQ and sell 30 to others, you don't need to be a genius. You need stable emotions, inner calmness and independent thinking.

Investment is simple, but not easy.