The A Share Market Has Entered The Era Of Value Investment.

In contrast to the "stock expansion" mode that has been prevalent so far, underestimating the "buy back" mode of repurchase in the era of value will become more obvious.

The value of the stock market value investment is valuation. The foundation of the virtuous circle is cash return. Grasping the law of "stock expansion" and "shrinking stock" in mature period is the valuable experience accumulated by mature blue chips.

The so-called "stock reduction" mode is not a common stock reduction mode in the Hong Kong stock market, but a stock reduction model similar to that in the US stock market.

Before 2001, the share dividend preference of the US and A share markets was the same, that is, investors preferred the high pfer to the "stock expansion" mode.

Take Microsoft as an example, from 1986 to 2002, Microsoft never paid cash dividends, but accumulated 9 shares of equity, and the 100 shares at the beginning of the listing expanded to 28800 shares.

Not only Microsoft, but also Amason and other technology stocks, Amason's total capital stock expanded from about 70000000 shares to more than 300 million shares in a few years.

The turning point occurred in 2000 after the collapse of the tech stock bubble.

The impact is huge, as the blue chip dividend sharing mode is also mainly based on "expansion".

Comparing the A shares of Guangxia and Lantian shares in the same period, we will understand that the huge impact of Enron fraud on the global market lies in the trust crisis of the blue chips performance.

At that time, the real share price of Microsoft's stock dropped more than 70%, and Amazon's stock price, which was unsupported by performance, was a drop in the bucket, dropping from $more than 100 to about $3.

How to prove the authenticity and growth of the company's performance? Microsoft chose cash dividends and share buybacks. Since 2003, Microsoft has accumulated more than 100 billion dollars in cash dividends and stock repurchases, and the total share capital has shrunk by 25%, not only resolving the huge reduction pressure of major shareholder Bill Gate, but also the investors who have held shares since 2003.

Amazon, which was still unable to make profits, proved its growth by cash flow based sales rate. Since 2001, Amazon has not relied on equity financing to support its growth. Its total share capital has only increased from more than 300 million shares to more than 400 million shares due to convertible bonds.

Although Amazon has suffered long-term losses, its cash flow has been positive for a long time.

Climbed to $850 / share.

Stocks are the same.

After 2009, the bailout logic of the Fed's easing policy is also to catalyze the bull market through stock repurchase "stock reduction", that is, blue chips in the background of easing policy, to support capital expenditure with very low interest rate cost bonds, and to replace the remaining cash for stock buyback.

The real reason for the bull market to start.

Now that the Fed enters the cycle of raising interest rates, it can be predicted that the size of the overall stock repurchase in the US stock market will decrease in the future.

Then return to the familiar mode of high pfer to the stock market, assuming that enterprises can synchronize the scale of capital expansion in the period of rapid growth, that is, as Microsoft did before 2001, then the "stock expansion" mode is better than the "stock reduction" mode.

But history has proved that such a company is rare in the stock market, because data show that no enterprise in the world has been able to maintain an annual growth rate of over 30%.

If the company continues to slide after the company's "stock expansion", then the "expansion" is easy to turn into a bear market accelerator.

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