Stock Picking Can Win The Market.

First strokes

Over the past 100 years, people have created various methods of stock selection, but the value investing theory is the most traditional investment method of Wall Street, which has been recognized by Chinese investors in recent years.

The basic idea of value investing is to find undervalued stocks through basic analysis and some basic indicators such as price earnings ratio and market rate. This theory emphasizes that smart investors always buy stocks at a price lower than the intrinsic value of the company itself.

Warren Buffett, a contemporary investment guru, later became the most successful practitioner of value investing in the world. His annual average interest rate in personal investment for 46 years was 23.5%, creating a miracle of personal wealth from $100 to $36 billion.

Buffett later said, "margin of safety" is the most important word in investment. It is certain that the value of the stock you buy is far greater than your investment in the stock market.

Lin Yuan, a well-known career investor, also said that when he talked about his investment experience, in 2003, Wuliangye (market information) was only 9 yuan a share, and the P / E ratio was about 20 times, and the average price earnings ratio of the market at that time was more than 40 times.

"I think there are big opportunities for such a good brand company to drop its stock at such a low price."

From Lin Yuan's successful investment in many stocks, the concept of value investment runs through it.

The second option is to choose high.

The choice of high growth stocks has become more and more popular at home and abroad in recent years. It is concerned about the high growth of the company's future profits, and the traditional value judgment criteria such as price earnings ratio are not so important.

There are two simple numbers. Let's look at the charm of growth stocks: a company that keeps 30% growth every year, 10 years later, the profit is 14.7 times the original.

Suppose we buy 30 times the price earnings ratio, and then sell it 20 times earnings after 10 years. Then we can make a profit of 9.21 times. The original investment is nearly 1 times the profit each year. Another company that keeps 5% growth every year is 1.63 times the profit after 10 years.

Suppose that we bought at 10 times the price earnings ratio and sold 10 times later, using a very high 20 times price earnings ratio. Our profit is only 3.2 times.

Since the beginning of this year, many fund companies have applied the concept of "growth" to investment, and explored potential high growth stocks through multi-party research.

The third way is to select the leading enterprises in the industry.

Since last year, the stock selection concept of QFII has been widely recognized by the market. From its heavy stocks such as Shandong pharmaceutical glass, Fuyao Glass, Nanning sugar industry, conch cement, Baosteel, Zhongji group, Rebecca and other stocks, it is common for both Baoshan Iron and Steel Group to represent the large cap stocks and the small cap stocks, which are all the leading enterprises in the industry.

The leading strategy coincides with our Oriental thinking of "catching the thief first".

Zhang Xinfan, deputy general manager of CITIC Securities brokerage management headquarters, has also guided some new stock investors to select leading enterprises in the hot industry in recent financial lectures.

He pointed out that for the beginner of stock market, we should first choose the stocks of good companies around us, "because many things around us are very certain, especially the leading enterprises in the industry, and do not choose the five or six ones."

As for why we should choose the best companies in the industry, Zhang Xinfan said, "at present, there is a strong and strong trend in China. Because of the excellent management and excellent brand, the dominant enterprises will continue to move forward."

"For example, one of the most famous British fund managers, Tao Bu, said that I invested very easily, and that it would do the best for Britain to do the best of those in the world.

Among his portfolios were 35 cigarettes, Scotch whisky, Unilever, Heathrow airport and Prudential Co, which made him double 54 times in 25 years.

Fourth skills analysis

Technical analysis is a statistical field and can not predict the market.

Some people have evaluated the technology analysis stock selection method: "it gives only a probability of analysis, that is to say, technical indicators can only give us a buying and selling signal, and it is impossible to tell us where or whether to rise or fall.

Technical analysis is not omnipotent, but without it, it is absolutely impossible.

Technical analysis is based on three major assumptions: first, market behavior covers all information; secondly, prices fluctuate along the trend; finally, history repeats itself.

Under the above assumptions, it is generally not necessary to pay much attention to the basic situation of the company's operation and financial status, but instead use the technical analysis theory or technical analysis index to select stocks through the analysis of charts.

In addition, the basis of this method is stock price volatility, that is, no matter what the value of the stock is, the price of stock always fluctuates periodically.

For traders who use technical analysis, Gann and Eliot are two masters who can not be ignored.

Gann has done a lot of statistical work in his book, including the most easy to see in a few months, the easiest months to see the bottom, and how many months of continuous rise or fall. These statistics seem to be stupid, but with a lot of data accumulated, a lot of regular things are easy to appear.

Although such statistics do not guarantee you victory, you can at least stand on the side of big probability events.

The fifth move is to eliminate below 5 yuan low price stocks.

The above is a relatively mature stock selection theory, which has reference value for new shareholders or old shareholders. However, there are other ways to help investors broaden their stock selection ideas in the bull market.

Since the current round of market share, the major sectors have risen to push the market index to a new high. At the end of last year, low price stocks also started to soar. Gradually, one yuan, two yuan and three yuan shares were eliminated by the market. The market seemed to have the intention to eliminate below 5 yuan.

Therefore, some people also put forward a fanatical slogan of eliminating 5 yuan and eliminating 10 yuan shares.

However, experts pointed out that due to the low cost of the money making effect, small and medium-sized retail holders have many, in specific operations, do not hold the view of the middle line, "low price stocks after all are low price stocks, of course, there are reasons for low prices, there is no basic support things will not be long, and can only be treated in a short way, in the short term boldly fried low price shares is desirable."

Sixth strokes of high priced stocks open up space

High priced stocks are a benchmark for bull market. In big bull market, it seems inevitable that a new record of high priced stocks will happen.

During the bull market in 2000, an important event was the emergence of a hundred shares.

In the current market, Guizhou Moutai, Chi hung Zn Ge, Hudong heavy machinery, small commodity city and other stocks have stood at 100 yuan mark, and now the share price has fallen below 100 yuan due to the distribution of annual reports and so on. But judging from the trend, it is only a matter of time before breaking through 100 yuan.

In the future, the direction of the domestic market and international integration is very clear, which means that the difference between stock prices will be bigger and bigger. A few cents or even a few shares will appear. Similarly, hundreds of dollars or even thousands of dollars will not be too surprising.