Most of the investors are just following some method or instinct, chasing short, fast, and drifting. In the age of speed, everyone is looking for the magic weapon of quick success. After dinner, the most discussed is how to catch a short - term outbreak of stocks, but often explosion into an explosion: bought on the set, cut. In the end, I have nothing to do. Indulge in such a deep frustration, many have forgotten that nature of the investment, the rule of wisdom and time redemption. A good investment is a reward for wisdom and patience.
Philip l. Carret, founder of Carret Asset Management, is an investment guru through 31 bull markets, 30 bear markets and 20 recessions and one great crash. One of his most important words of advice to posterity is: Patience can produce commonprofits. He interprets himself in only three words, The Patient Investor. We all know that Benjamin graham has a bestseller called The Intelligent Investor. Countless smart investors in the stock market, spends a lot of time to study a variety of fundamentals, technical and financing area, however, see a pile of method still can’t do it well. People thought that “smart” + “diligent” can do things well, but in the stock market it is not good. I’m not denying the importance of hard work, intelligence, and methods, but investing is a highly integrated thing, and when almost all of us have put almost all of our energy into the outside world, “patience” is a more important, more easily overlooked quality.
Philip Carey thinks patience is the most important quality of a successful investor, and he thinks it’s good to “re-analyze” the company every six months, rather than more often. If you’re too diligent, you’re likely to develop the fatal habit of regularly changing your commitments. For stocks that are worth far more than the market price, it often takes years to reflect the value they have accumulated as they wait for a bull market and policies to provide upward momentum. Even in a bull market, some stocks will be frustratingly weeks or months to lag behind the market up. Investors who have always wanted to do something usually move money from one stock to another during a bull market, but end up making far less money than if they had been holding a select few.
If you don’t consciously develop patience, it can be painful to wait just a few days, let alone a few years. What I’m talking about here is patience. A little different from patience, patience emphasizes not only the length of the wait, but also the qualities of being patient and not impatient.
2. Patience is a kind of scarce resources
In this turbulent time, every man has an alarm clock that refuses to wait, every minute, every five minutes to push people faster and faster. We don’t care that everything develops according to its own laws – the earth turns on its own once a day, and a woman needs a year to have a baby. We are anxious to get everything right away, to do everything right at once, to become billionaires tomorrow. The lack of patience became the universal universality of the world.
A little patience is a good thing, but we can’t be patient about everything. So we need to cut out the distractions and get rid of the boring, unimportant, and wasteful stuff. If you’re not disciplined, you don’t subtract, you don’t quit something, it’s hard to be patient when it comes to stocks. Staying up is a habit, like staying up all night, and staying up is a long-term loss, not just for your health, but also for making people irritable, and the stock in your hand is getting impatient for a few days.
Buffett thought about it for more than a decade before he first bought apple shares in 2016. He had been tracking for over 30 years before he bought heinz for 3G in 2013; Buffett had watched Coca-Cola for half a century before he brought it into the fold in 1988. ‘if you’re reluctant to own a stock for 10 years, don’t think about it, even if you just hold them for 10 minutes,’ he says.
It is also known to many that that benefit is directly proportional to tolerance, the more impatient, the more difficult to make, but still make a poor investment. People have long struggled along the muddy road known as the bull bear, often falling before dawn before dawn. Why? Because do not grasp investment rules, do not know where the bottom of the bear market.
3. The main characteristic of the bottom of the bear market
PEB is the valuation index I created by combining PE and PB. There are three layers of logic: one, PE, and PB’s median is more than the average and the total value of the “A” stock market. Second, the city net rate PB is a more effective long-term value indicator than the PE ratio PE. Thirdly, PE*PB is better than pure PB. I’ve been using PEB = PE * PB to look at the bottom of every bear market, and I find the following: the Shanghai index PEB = 25 * 2 = 50/2008, the PEB = 18, 2008, and the PEB = 36,905, and the PEB = 30, and the PEB = 30, 1996, and the PEB = 18, and the month of July, 1996, the PEB = 18 *, and the PEB = 18 *, and the PEB = 1, and the PEB = 1, and the PEB = 1, and the PEB = 1, and the PEB = 1, and the PEB = 1, and the PEB = 1, and the PEB = 2, and the PEB = 20, and the PEB = 40, and the PEB = 20, and the PEB = 40, and the PEB = 40, and the PEB = 40, and the PEB = 40, and the PEB = 40, and the PEB = 40, and In that case, at the bottom of a bear market is an important feature is the PEB to 30 ~ 50 that range.
The bottom is an area that lasts about a year on either side of the bottom. I’m writing this on October 21, 2018, when PEB = 15 * 2 = 30, from this point of view, it’s going to the limit of the valuation, and it’s actually at the bottom of the bear market. It is likely that that 2449 point in the Shanghai stock market will be the starting point of a mid-level rebound, but not necessarily the lowest point of the current bear market in the next two or three years.
4. The valuation floor preceded the policy floor
Valuations are in historically low territory, but that doesn’t mean they can be reaveraged in the short term. First, the stock market is not always a “barometer” of the economy, and intervention becomes necessary when the government thinks the two are so far apart. The stock market is largely a “” policy market” “. Secondly, valuations are structured, and they refuse to be average. Small ticket relative valuation low but absolute valuation high, large ticket absolute valuation low but relative valuation high, cycle in the downward cycle is often the most undervalued variety. Lower valuations, therefore, provide a margin of safety, but not as a sufficient condition for a bottom, which at least contains a clear “policy signal”.
So, there’s a valuation base, there’s a policy base, and the policy is often that the valuation drops to a very low level to get out of the way. On oct 19, vice-premier liu he said the government attaches great importance to the healthy and stable development of the stock market. After the formation of the valuation bottom, the management said that they would issue a series of policies to save the market, so as to avoid the negative impact of continued market weakness on the economy and society. This is a clear “policy signal”.
5. Policy floor appears before market floor
With the stock market in the doldrums, the intense talk of management has been very helpful for investors to restore confidence. However, the recovery of confidence is a long process that often takes months or more than a year. In addition, from the policy goals of management, to the policy, to the policy, and to the policy, there is a gradual process of implementation, and the policy base, which we’re talking about, is often the time when management has to make a statement or suggest a policy, and not the time when the follow-up policy works
On the right side of the policy curve, markets often suddenly stop going up and down, then panic again in the downturn. It is true that bulls never short. If there is a lot of power to buy the bottom and go long because you hear about policy, that means that the last line of defense for the bulls hasn’t broken and the stock market hasn’t seen a real bottom. And every time the bottom of the market comes, it is a process of heartbreak, heart strangulation, desperate for the earth, a process of destruction and destruction, dialing the sun, regenerating from the fire, all of which is a process of early intervention by a prophet and then followed by the latter, unconsciously the process of cutting the meat to make way. The distance between the market and policy background, often after a couple of quarters. So investors will have to ask themselves if they can get out of the market.
6. The key to investing is to control the pattern
In fact, the core of human ability is to grasp the law of things. What are the rules? Law is the necessary, essential, stable, and recurring relationship between natural and social phenomena. Discipline is the most wonderful thing that human intelligence can touch.
And that leads to the question, is there a rule in the stock market? What are the laws of the stock market? However, there are still many people think that the stock market has no rule, but this recognition can not deny the existence of the rule. These people are actually outside the rules, they don’t see the rules. In addition to the value investment law and the law of growth and investment, there are trend investment laws and periodic investment laws, which are space and time domain, and possibly even closer to regular inner core, that is to say the true essence of investment.
Through the right thinking, through the use of rational analysis tools, it is possible to take a trend, including the direction, strength and length of the trend. The trend is like a snowball from the top of the mountain, and as long as the slope of the hill is tilted, the ground has plenty of wet snow, and there’s not a big obstacle in the middle, and the snowball can keep rolling down, until the bottom of the hill ends.
And the idea of cycles is something that I really want to emphasize, because a lot of people know very little about cycles. What’s the difference between “goggle shrimp” and turning a blind eye to the regularity of cycles? How is it possible to find patterns without generalizing multiple dimensions? If you don’t want to spend the energy and cost to try, or even make repeated mistakes, why grasp the opportunity behind the rule? If you don’t plan your own funding, how can you be targeted at the critical stage? If you make the wrong investment decisions at the wrong time, you could make a serious loss.
No matter where the market is and where valuations are, there are reasons for optimism and pessimism. You should be more concerned with the change in relative quantities at each time point, rather than in absolute quantities. In other words, we should pay more attention to marginal expectations and marginal transactions, as this is the formation mechanism of real-time prices. Today’s low valuations suggest only that the Shanghai and shenzhen markets have good value, but not that the bear market has ended and should rise immediately. Still, for a patient investor, the emergence of a policy floor and low absolute valuations are a rare opportunity to get in before the market bottoms.
Drawing patterns from the stock market to predict future trends and timing trading takes a lot of insight. It can’t be done automatically without action, like laziness or poverty. Every investor should learn, reflect, and deepen his understanding of himself and his environment. To sum up, if you want to gain investment income, you must cultivate patience consciously and pay close attention to the rules. There is no alternative.