Chapter 357: Cycle Pricing Enterprise Quantification
Monday, June 23, 2025
The road of investment is endless and there is always new learning.
We have shared many times before the process of establishing the blogger's investment system, which is the macro trend - industry cycle - corporate development, step by step, three parts.
Among them, the blogger has focused his main energy on the analysis of macro trends and industry cycles.
The former mainly refers to domestic and foreign macroeconomic data, which simply means domestic and foreign economic and financial policies.
This determines the level of "water level" (capital) in domestic and foreign markets.
When the macroeconomic situation is unfavorable, you must be conservative and even stay away from the market.
Only when the macro trend is favorable should we consider investing.
This is the first prerequisite for investment.
The latter mainly focuses on the study of industry cycles.
For example, the real estate cycle is 20 years, the pig cycle is about five years, the liquor cycle is about ten years, and so on.
When an industry is in an upward cycle and product prices continue to rise, it means that the wind is coming and even pigs will make money.
For example, during the golden age of real estate over the past 20 years, even the worst-performing real estate companies made a lot of money, so naturally, there were many bull stocks and stock gods.
For example, the new energy industry, liquor industry, pig industry, etc.
After the cycle comes, everyone is flying high.
It's not about how well these companies are run, but that they stand on the shoulders of the cycle.
Many people don't recognize this fact.
Mistakenly believe that the company you like is so great and so excellent that it will continue to be brilliant and excellent even in the future downturn.
Totally wrong.
Because countless facts tell us that once the cycle goes down, all the pigs will fall from the wind and from the sky.
Without exception,
If you don't believe it, please look at the current share prices of Vanke, Poly, and Gemdale, look at the once-popular Evergrande and Country Garden, and many more companies that have been delisted, bankrupted, or closed down...
It's not that they're not excellent.
Rather, the cycle falls, and we have no choice but to do it. The trend cannot be defied.
We must respect the cycle, recognize the cycle, and make good use of the power of the cycle.
Finally, it is business management.
This seems very empty,
However, when combined again, the quantity and price theory we proposed some time ago became lively.
The best and most ideal situation for a company to achieve rapid growth in performance is that both the quantity and price of its products will rise simultaneously.
For example, Kweichow Moutai around 2015, the real estate market in 2017, Zijin Mining and Yunnan Aluminum in 2021, etc.
The list goes on.
This is Davis' double click.
in,
The main determinant of price is the market, which is fundamentally determined by the cycle. This is why we study the cycle in depth.
Therefore, when the cycle is going up, you can choose the right industry and reap the dividends of the times.
The main determinant of quantity is the enterprise. Fundamentally, it is determined by the enterprise's development strategy. This is why we conduct in-depth research on enterprises.
In this way, when the cycle is on the rise, you can choose the right industry, and further choose the companies whose production capacity and output will further expand in this industry cycle, so as to reap the dividends of corporate development.
(Many companies often cannot see the future clearly, and their expansion at the bottom of the cycle is also a gamble. If they succeed, they will become a dragon, but if they fail, they will go bankrupt.)
In this way, we can select companies with high quantity and price from top to bottom.
Many times, knowing is easy but doing is difficult.
Looking back, when the commodity cycle arrived in 2021, among the many non-ferrous stocks, Zijin and Yunlu are good targets with rising volume and price.
But how many people can hold on for several months?
rare,
Very rarely.
It takes at least several months for a seed to grow into a crop, from flowering to fruiting and finally to harvest.
A project, from planning to production and then to reaching full production, takes time and a process, ranging from several months to several years.
We must be patient enough to wait for the seedlings to grow and for the company to grow.
Many people clearly know that the harvest time will come in a few months.
But, I just can't hold it.
From this point of view, his patience and determination are not as good as those of the farmers.
Looking back further, in the real estate industry, Country Garden and Evergrande were the two kings of land grabbing, and the two expansionists were competing for supremacy.
Looking back further, in the banking industry, during the period of 2013-2014, Minsheng Bank was the king of small and micro financial services and was at its peak.
In summary, the best target for selecting a target is to increase both quantity and price.
The middle target is that the volume is flat and the price is rising, such as the aluminum and tin industries in the past few years.
The second is that the quantity decreases and the price increases, or the quantity increases and the price decreases. For example, the current situation of banks is that the quantity increases and the price decreases.
The worst target is one with reduced volume and falling prices, just like the current real estate and liquor industries, which must be avoided.
Therefore, when studying a company, the main focus is on the industry in which the company is located, that is, whether it has a "moat" as traditional value investors call it.
Instead of just studying corporate management,
Because, no matter how excellent the company's management is, it cannot defy the industry's trend. Even some companies' "masterstrokes" in development are derived from some inexplicable "bets" on the future.
This is also why many people like businesses that can be run by pigs.
Recent news:
1. Nezha filed for bankruptcy.
In the past two years, many companies, not only traditional fuel vehicles, but also many new energy vehicle companies will eliminate a large number of them.
In the end, there were at least five or six, and at most seven or eight, automakers left in China.
There are too many car manufacturers nowadays.
Among them, there is fierce "involution", price war, value war,
Therefore, if you choose to invest in one of these companies, you must choose a company with a certain "moat".
Otherwise, the price will keep going up.
In the end, there will be losses or even elimination.
2. Iran threatens to block the Strait of Hormuz.
The United States "joins the war", Iran threatens to block the Strait of Hormuz, and shipping stocks soar. If the price of oil, the king of inflation, soars, coupled with the global flood of money,
Then, a new round of global inflation is about to break out.
3. Ping An raises its stake in China Merchants Bank
Ping An raised its stake in China Merchants H three times this year.
In a low-interest environment, the "asset shortage" forces insurance funds to invest heavily in bank stocks with high dividends and low PE.
As a result, the banking sector took a step of not recognizing relatives.
Coincidentally, similar to the banking sector,
Traditional high-dividend sectors, such as highway, hydropower, telecommunications, and even the coal sector, have all experienced a round of market fluctuations in the past one or two years.
The market, our market, has finally matured.
Similarly, many years ago, many foreign investors preferred this type of monopoly high-yield stocks. The root cause was the low cost of capital.
In other words, the capital of the mother country is no longer scarce, but assets are becoming relatively scarce.
This is a round of market movement caused purely by changes in asset allocation.
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