Comparing the two pig farming stocks, Kong Shiyan found that the one she bought had better growth potential, but the one whose performance plummeted had also had bad financial statements in recent years.
If you ignore the latest financial statements, the ROE has been stable at over 25% for many years, and it can be considered a good company.
But it was this company that suddenly starved its own pigs to death.
So when other pig farming stocks were rising, the share price of the stocks that had gone bankrupt plummeted and continued to fall to the limit.
Kong Shiyan felt a chill in her heart, and her hands and feet were cold. She was frightened for a moment, "Luckily I bought the right stock."
Yun Luo: "Excellent companies can achieve spectacular performance even in a bear market."
Yun Luo: "But buying individual stocks carries the risk of performance changes or sudden collapse."
Yun Luo: "In order to prevent losing all your investment, I suggest that the host diversify his investments."
Kong Shiyan recalled the slow fluctuations of pig farming stocks while pharmaceutical stocks, technology stocks, and environmental protection stocks soared. A thoughtful look appeared in her eyes. "For example, half of the funds are used to buy pig farming stocks, and the other half is used to buy stocks in other industries?"
Yun Luo nodded, "55 or 333 is fine. One-third is used to buy pig farming stocks, one-third is used to buy stocks in other industries, and one-third is deposited in the bank. This is safer."
Yun Luo: "Now that we have found a way to get rich, all that remains is to reduce risk and keep our assets growing steadily."
"Understood!" Kong Shiyan responded solemnly.
**
The feeling of having money is completely different from having no money. I dare to order takeout when I am hungry and go shopping on weekends.
Kong Shiyan was doing the accounting with a small notebook all day long. "I sold the stocks and got 260,000 yuan. I have been frugal in the past few years and saved 50,000 yuan. Add to that the 10,000 yuan I had originally, a total of 320,000 yuan."
"Deposit 120,000 yuan in a fixed deposit and wait for the right opportunity to buy 200,000 yuan."
"If 200,000 yuan increases fivefold..."
The corners of Kong Shiyan's mouth curled up wildly, her heart filled with unconcealable joy.
**
Time flies.
Two months passed in a flash.
Kong Shiyan couldn't find any suitable stocks after searching for a long time. She couldn't help herself and asked, "Are you setting the standard too high? We will definitely make money anyway, how about relaxing the standard a little?"
Yun Luo: "Pig farming stocks are consolidating at a low level, and you can't bear a 10% price correction. If the standards are relaxed, the buying valuation will be higher. Are you sure you can hold on to it?"
Kong Shiyan wanted to say that she could, but thinking back on her past experiences, she felt that people should be honest, "...I can't."
Yun Luo: "So, just wait patiently."
Yun Luo: "Buying at a low price is not only because you can earn more money, but also because it is safer."
Yun Luo: "The valuation is low, so the downside is limited and the upside is unlimited. This is a smart investment."
Kong Shiyan had the money in her hand, but she couldn't find a suitable investment channel. She was secretly anxious, "What if there is no such opportunity in the future?"
Yun Luo: “Not likely.”
Yun Luo: "In the past, it was real estate and home appliances. Now it is medicine and breeding. In the future, technology and environmental protection all have good development prospects. As long as you are determined, you can always find the right one."
Yun Luo: "By the way, the food and beverage sector also often produces strong stocks. No matter how technology develops, people's requirements for food and drink will only get higher and higher."
Hearing this, Kong Shiyan fell into deep thought.
The next second, Yun Luo changed the subject, "I've said before that you should either buy mature dividend stocks or buy fast-growing companies in the growth stage."
“If one day in the future, you really can’t find a good growth company, you can invest your money in a stable industry.”
“Although it’s not as lucrative as investing in growth stocks, there is always a 10% return every year.”
"You mean the bank?" Kong Shiyan immediately remembered.
"Yeah." Yun Luo responded and reported a string of codes.
Kong Shiyan entered the code and found out that it was a bank.
Looking up the PB (price-to-book ratio) and PE (price-to-earnings ratio), the valuations seven years ago and seven years later were almost the same. However, the stock price was 6 yuan seven years ago and 18 yuan seven years later. Calculating the annualized return, it is about 17%.
"What's going on? Why are investment banking returns so high?" Kong Shiyan was surprised.
Yun Luo: "Once upon a time, there was a bank with assets of 1 million yuan, which made profits by absorbing savings and making loans. Assuming the ROE is fixed at 16%, that is, with an investment of 1 million yuan, it can earn 160,000 yuan a year."
"160,000 a year, 160,000 a year, it will take 6.25 years to earn back the principal. (pe=100/16=6.25)"
"Many people are not optimistic about this deal. Some people say, how about I pay 800,000 yuan and transfer all the shares to me?"
"Because he was not optimistic about the future of the banking industry and believed that ROE would decline significantly, the boss planned to use the money to develop other industries, so he agreed to the deal. So the 1 million assets were sold for 800,000. (pb=80/100=0.8)"
"The assets are still the same assets, and they still earn 160,000 yuan a year. For the receiver, he only paid 800,000 yuan in principal, so the annual interest rate is 16/80=20%."
"That's called 'buying cheap'."
Kong Shiyan suddenly realized, "Even if I can't find a growth-stage company, I can still make money by choosing a mature-stage company."
Yun Luo: "The pig farming stocks I bought before happened to be hyped up, so the stock price rose particularly high."
“In other industries, even if you are unlucky and there is no hot spot, when the bull market comes, all sectors will be hyped.”
“Sell when the valuation is high and buy when the valuation is low, you can always make money.”
"I understand." After thinking for a while, Kong Shiyan added, "This time I really understand."
Yun Luo was very pleased.
After learning the methods and having practical experience, the host should be able to live a good life on his own in the future without her.
"I'm leaving now."
One stone can cause a thousand ripples.
Kong Shiyan was surprised, "Where are you going?!"
"By the side of the next host." Yun Luo said.
She hasn’t gotten rich yet!!
Kong Shiyan moved her lips, wanting to keep him, but the words didn't come out - if it weren't for Yun Luo, her savings would have been swindled away when they first met.
I was saved because of this, how could I have the nerve to stop the system from helping others?
In the end, Kong Shiyan sighed and said goodbye dejectedly.
Yun Luo: "Investing is not as difficult as you think."
Yun Luo: "Keep doing the right things over and over again, and you will become richer and richer."
Yun Luo: "I have said all that I can say. It is up to you to decide how to proceed from now on."
As soon as she finished speaking, she disappeared.
Kong Shiyan tightly grasped the small notebook filled with the secrets of getting rich and whispered, "Leave with peace of mind. I can do it myself."
**
【Extra】
When investing alone for the first time, I am always very nervous.
Kong Shiyan did not act rashly. She deposited two-thirds of her funds in the bank and used the remaining one-third for stock investment.
She would take time every night to look through the industries with good prospects mentioned by the system, checking whether the stock prices of the excellent companies in them had fallen low enough.
day to day.
After more than half a year, the opportunity finally came.
The liquor industry has emerged from the trough, profits have improved, and some stocks are of great investment value.
Kong Shiyan selected stocks carefully according to what the system taught her.
Frightened by the stocks with poor performance, she even divided her funds into two parts and bought two different liquor stocks.
Buy at the bottom, and then all you need to do is wait.
Kong Shiyan kept the system's teachings in mind and only transferred equity when the fundamentals deteriorated (the company lost its growth potential), performance plummeted, or valuation was obviously overvalued.
From then on, her life seemed to be on the rise.
Every 3-5 years, assets double or triple.
The deposit is 300,000, 500,000, 1 million, and it keeps rising. Maybe there will be a loss in a certain year, but if you look at it over a long period of time and review it every three years, you will find that the assets are growing steadily and outperforming inflation by a lot.
This is value investing. Kong Shiyan suddenly realized something.
As her investment success increased, she became more and more adept at analyzing the pros and cons of various companies. Sometimes she could even proactively explore emerging industries, buy them at low prices before most people realized they were emerging, and finally leave with a profit of ten times.
Gradually, there was no need to do the work in the veterinary hospital anymore.
As long as she takes out part of the funds to invest, buys at a low price, and waits three to five years to sell at a high price, the money she earns is equivalent to her salary for more than 20 years of hard work!
And as the amount of funds increased, the data became more and more terrifying. That was the amount of money that she could not earn in her entire life even if she worked diligently.
"No wonder the financial management book says that investment is the last career in life." Kong Shiyan reacted.
By this time, her investment style had basically taken shape. If there was an opportunity, she would take action. If there was no opportunity, she would put all her money in the bank or buy financial products. Everything was very simple.
**
Decades have passed.
Kong Shiyan strictly followed the standards to select stocks and invest, and her net worth soared ten thousand times. Later, every time she closed an investment (buy low and sell high), the money she earned was enough to buy a building in full!
Life is abundant, worries are gone, and days are quiet and peaceful.
The only regret is that some good companies are simply unwilling to go public.
Sometimes Kong Shiyan knew that this was a good industry and a good company, and that it would surely develop rapidly in the future and had a bright future, but the company was unwilling to go public, and investors just couldn't buy its shares!
When she was young, Kong Shiyan was always melancholy and regretful, because she felt that if these companies were listed, there would be more opportunities and more choices, and she would definitely have more wealth.
Later, when she got older, she finally came to her senses - if she didn't want to go public, then she didn't. For her, she now had a lot of assets, which she couldn't spend in a lifetime. A little more or a little less didn't really make much difference.
Looking back at the past, Kong Shiyan felt dazed.
Sometimes she couldn't help wondering if all this was just a dream. When she woke up, she would become a poor young woman from an ordinary family who scrimped and saved money every day.
How come her life changed so drastically just by following the system's instructions meticulously and insisting on repeating the same steps countless times?
Suddenly, Kong Shiyan remembered what Yun Luo had said.
“Master a money-making model, repeat it over and over again, and you will naturally become rich.”
“Having found a way to get rich, all that’s left is to reduce risk and keep your assets growing steadily.”
“Investing is not as difficult as you think.”
“If you keep doing the right thing over and over again, you will get richer and richer.”
…
It sounded lightly, but it took her most of her life to verify its authenticity and correctness.
"I am so lucky to meet you in such a vast sea of people." Kong Shiyan sighed.
The author has something to say:
Take Industrial Bank as an example
pb0.8 in December 2013, pb0.8 in January 2020.
The valuation is similar, and it took 7 years to increase from 6 yuan to 18.5 yuan (including dividends and bonus shares), an annualized rate of 17%.
In recent years, banks' ROE has been declining year by year, with Industrial Bank's ROE falling from 18% to 13%.
Some banks even fell to 10%-12%.
With such an ROE, it is generally believed that it is only worth investing if purchased at a discount.
**
There are many examples of companies that are developing well but are unwilling to go public.
For example, Lao Gan Ma.
For example, Wahaha.
For example, Huawei.
For example, Nongfu Spring.
Ant Financial, a subsidiary of Alibaba, is being urged to go public every day. Many investors want to buy but have no channels.
**
Some people also do value investing, so why don’t they become billionaires?
A. Bad luck. I have stepped on landmines more than once and my vitality has been seriously damaged.
B. Earned tens of millions, quit and retired
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