Category: Money tips Release Date: 2006-02-25
Institutions, professional investors, the consensus is that investment should only be done by a professional person. They gave the recommendations of individual investors also have a common focus, and that is to become the professional point.
This seems to be common sense, but most individual investors may not agree to this. As previously revealed in the text, in a hurry before the stock market, you can have a real in-depth study of stock market? Are they really understand why the hands of the stock to buy? Why does it let you make money?
If your answer is "No", that is doing purely speculative, or gambling, rather than investment; likely to fall into hell as that of shareholders in general, as Rousseau said, as died of ignorance. Investment, is the proceeds of the stock market to give you reasons, because it uses your money to create wealth for society, and give you back a part of.
"Value investment" the word is superfluous, if the investment is not to find the value of the behavior, then what is the investment?
The biggest risk is to not understand what they are doing. In a choice between the two, must be clear, is to do speculation, or do investment? If it is to be speculative, it does not require "has knowledge" because the gambling do not need "to know"; if it is to invest, it must learn how to choose the right stocks, study clearly want to buy the company, study clearly shares the laws of study clearly the point of buying and selling. Whether individual investors, institutions, must walk the road of professionalism.
Retail price on the market impact on the fundamentals of information and access to inside information on the Quotes of the steering capabilities are not as good as institutions. Retail investors to institutional investors to learn the basic principles, but also can make use of agencies some of the information, but, as Peter �Lynch said, the retail sector should not follow blindly any investment proposal should be different from the retail sector to survive.
Select Industry
Except in certain special investment funds industry, the subject investment regimes and risk control requirements (such as single-stock funds have a 10% shareholding ceiling), institutional investors usually tend to invest in diversified industries. Such as brokerages, which have a strong industry-research forces to accomplish all this.
Individual investors do not trade diversification constraints, in the industry, the natural choice to suit all abilities. A career in the stock market for decades, or life experiences rich in the old shareholders, may be able to have some of the accumulation of various industries. But this is too costly for most individual investors do not necessarily need to. If a bowl of rice will be able to let you eat right, Why must every bowl of rice that are moving a chopsticks do?
Buffett said that every investor will make mistakes, but through their own limited to a relatively small, easy to understand the industry, which can be quite the precision to determine investment risk. Of course, everyone's easy to understand different industries, which can be used to work in industry or research sector has been a long time, or simply because this industry is everywhere in life, easy to understand.
For many small shareholders, some of the industry even spend a lot of years to study, it is difficult to understand. Example, highly specialized, high precision high-tech industries, or new, hard to sum up its own rules and industries with higher risks, such as Warren Buffett never touch the Internet industry.
Select Stock
Institutional investors choose stocks, often also forced to invest in systems and risk control requirements, net to make A shares more than 1,400 listed companies, from stock selection to build the stock pool.
Individual investors need to get rid of a misunderstanding that a number of select some stock investments, you can circumvent the wrong and performance fluctuations. But the stock selection more easily study does not thorough, or timely follow-up. Retail long as the election of the few big Niugu he can understand, such as Vanke shares such as 10 times, you can overcome a lot of investment experts.
According to "the world's best stock picker," Peter Lynch �summary of law, individual investors can choose to growth in corporate profits equal to its price-earnings ratio of stocks, to build their own stock pond, and then further refined. Lynch has made, as long as individual investors in visiting the workplace, shopping malls, car exhibition hall, hotel, enough to pay attention, he is likely as early as professional investors to find the next big Niugu huge profits. Individual investors who do not have to in order to price fluctuations, such as the beta value is the basis for decision-making; sometimes the correct approximation is better than the precise error.
Many of the investments based on two old masters of the stock selection criteria: to open up new markets, and profitability of companies has also risen; one is now in deep trouble, but will tend to improve future operating company. The latter, such as building a letter to Mr. Wu Jianfei fund a "buy defective company" is to attack the market blind spots, which requires individual with a reverse thinking, and more need to be patient. The market may be ignored for some time business success, but will eventually be recognized.
Individual investors may not be suitable for investment in the Internet industry so obscure, but as Lynch has said, they can benefit by investing in related sectors: (1) invest in the transaction to benefit from the network of non-Internet companies, or network switches and related equipment device manufacturer; (2) investing in Internet businesses and traditional businesses can closely integrated with each other to promote the company, such as real-time information updates the website has the authority of media company; (3) investing in businesses through the use of the network to cut costs, improve efficiency , increase the income of industrial companies, such as installation of scanners in supermarkets chains.
When individual investors in the stock selection should be noted:
(1) Do not think of himself as statistical analysts, macroeconomic analysts, nor securities analysts, but should see themselves as business analyst or a businessman. Buffett once said that his industry-based, there are controlled investment, and general securities investment and no real difference. In other words, not do investment bank, but have a sense of investment bank;
(2) not too keen on going through changes in the company. For individual investors, the stock selection certainty is very important. The company's rapid transformation might be possible to bear great fruit, but also more likely to become a fallen woman storm.
(3) is too high a price to buy outstanding shares, will become a high-risk investments. The world's most outstanding companies, most experienced stock price plummeted. Buy a high absolute earnings, low price-earnings ratio of the outstanding companies, remains an important criteria;
(4) a low-priced stock's share price, always fell to a lower price, if its performance is not ideal. So, bearing in mind, there is no performance support, even if the low price and then not necessarily have adequate margin of safety.
(5) funds like big blue-chip blue-chip company or as a defensive portfolio, but they are not necessarily on the defensive. 1973 ~ 1974, a beautiful 50 once experienced a 30% to 50% of the fall, until 20 years later to recover lost ground.
(6) Do not overlook some of those on a regular basis to distribute dividends of companies, these companies may have a more honest quality and sense of responsibility to shareholders.
Operation methods
There is no best, only for his own. This statement makes it very applicable to practices in operation on the individual choice. After selecting stocks, when to buy, when to sell, how to trade, individual investors who each has its advantages, the following are some common rules.
Bid
In high-earnings-growth, low price-earnings ratio when buying, this is the most commonly found in textbooks, the "safety margin" rule. This is not disgraced, Buffett and Peter Lynch have to admit that �buy.
The study of the prospects for rapid growth after the excellent company, even upon closer scrutiny, come later bought, there was no question his wife.
For a unique, non-monopoly of the brand to copy high-quality companies can be bought at any price.
Hold
For individual investors, this may get the most successful method is to dig out their big Niugu, long-term firm hold.
In the short term the stock's intrinsic value is fixed, the price can fluctuate around the value, when the stock market is a speculative market. People often say that China's stock market is "28 City", or 80% of the people's money flows into the pockets of 20% of the people. If you do speculation, individual investors need to ask yourself honestly, you are more likely to be the 20% or 80% that do?
However, a good company, long-term intrinsic value of the stock of growth, stock prices can also be raised accordingly, when the stock market may be considered until the investment market. Think about why the successful bar master. Lynch said that no more than he firmly believes in long-term investment; he has always stressed that if you want to beat institutional investors, individual investors, it would only be through long-term holding. Buffett said that he was willing to hold a stock indefinitely so long as this enterprise can improve its desired rate of intrinsic value. Graham also said that in the short term, the market is a voting machine, but in the long run, it is a weighing machine.
Is not only a master of their own experiences of the two earlier in the success of the old shareholders are also representative of the long-term holdings. A long-held monopoly of brand equity such as Guizhou Maotai, another key combination is also constituted by the stability of blue chip stocks.
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