First, monopoly advantage. According to the meaning of "monopoly" in economics, it means that a single seller or a few sellers control the production or sales of a certain industry. In my own words, this is an exclusive business. Or a little longer, it is exclusive operation, or the first launch and exclusive ownership of important products and services. The Hong Kong Stock Exchange and the Australian Stock Exchange are exclusive businesses, and there is no competition in the region. When Viagra from Pfizer was first introduced, it also ruled the world. Of course, in addition to exclusive operation, there is oligopoly. We often find that 80% of the market and profits are owned by two or three largest production organizations. Most bank credit cards have to go through the network of MasterCard or Visa, and the global carbonated beverage market is basically monopolized by Coca-Cola and Pepsi. The two largest milk markets in China are Mengniu and Yili. However, I prefer exclusive monopoly.
Second, resource advantages. Resources are factors related to the development of human society, which can be used to produce use value and affect labor productivity. Many companies have their own resources. The key to resources is scarcity, which can be divided into different grades according to the degree of scarcity. For example, Jiangxi Copper owns copper mines, but it does not have exclusive advantages, because many copper companies also own copper mines, which is not the highest level. China's oil grade is higher, South Africa's gold and diamond grade is higher, and the potash mine owned by Salt Lake Potash Fertilizer accounts for nearly 90% of the national total, so this resource advantage is unique. For example, Moutai can't be produced without Maotai Town, so the resource advantage of Maotai Distillery is exclusive. What I like best is the company with exclusive resource advantages.
Third, brand advantage. There are many enterprises with brands, and having brands does not mean having unique advantages. The uniqueness of brand advantage is simply that it is strong and strong to be the first in the industry. Maotai is called the national wine, Tongrentang is called the national medicine, and Nike's simple hook is the best sporting goods company and symbol in the world, which is deeply loved by the whole world, especially the younger generation of consumers. This advantage is also Buffett's favorite. He is called a consumer monopoly. I sometimes call it consumer psychology occupation, which is to hook the soul of consumers. For example, people will buy this brand for the same product, even if it is much more expensive.
Fourth, the ability and technical advantages. That's the most talked about core competitiveness. Ability refers to the skills of the company team in decision-making, R&D, production, management and marketing. For example, Vanke Company, before its brand became stronger, was the first in the real estate industry mainly because of its excellent management team and strong ability. The manufacturing technology of metered-dose inhalers in yantai wanhua is exclusive. Microsoft's technological advantage is simply the first in the world. If any software product doesn't apply to the WENDOWS system, you are in trouble. 1997 when I first came into contact with China Merchants Bank Card, I was deeply shocked by their professional ability, innovation ability and service ability. A card can actually contain all the local currency and foreign currency, and it is more convenient to carry than a passbook and will not reveal the deposit figures. This is the national leader at that time. Since then, they have continuously introduced innovative financial services and have been in the leading position in the industry. This is the most intuitive example of their technological advantage.
Fifth, policy advantages. Policy advantage mainly refers to the government's formulation of industrial policies and regulations conducive to development in order to strengthen the strategic position of related industries, so that related industries can form some restrictive advantages. In addition to the preferential policies of patent protection and tax reduction and exemption, there is also an interesting policy on the protection of origin. Like champagne. Champagne is a place in France. Only sparkling wine produced in this place can be called champagne, but not in other places. Policy advantage refers to this restrictive advantage. Yunnan Baiyao, Pien Tze Huang and Ma Yinglong are listed as national first-class protected varieties of traditional Chinese medicine. For a long time, no one else could produce them or even call them by this name. There are other wineries in Maotai Town, but only the liquor of Maotai Distillery can be called Maotai.
Finally, the industry advantage. Industry analysis is an important step for investors to make investment choices, and sometimes it is even a prerequisite for investment success. Because some industries have herds of bull stocks, investment has a high chance of winning; In some industries, bull stocks are scarce and the probability of winning investment is low. This is because the fundamentals are true: some industries have inherent advantages, and some industries are doomed to suffer. Some industries only grow steadily without periodicity, such as food and beverage industry; Some industries have high thresholds, and most enterprises can't get in, such as aerospace industry; Some industries just have the ability to raise prices. If you don't bargain, I will bargain, such as luxury goods industry. Products in some industries are not afraid of backlog, and even the more backlog, the more valuable it is, such as liquor and wine; Some industries are highly concentrated, and the advantage is that there are few competitors, such as banks and insurance, not to mention exchanges and bank card international organizations. Some experts like to argue with me with the economic theory that industry profits always tend to average, which means that when an industry has huge profits, it will inevitably attract more people and enterprises to enter, thus bringing about the final average of industry profits. In fact, this is just a general situation, and in many cases it is not, because industry barriers exist objectively.
Of course, having one of the unique competitive advantages does not constitute a sufficient condition for buying this company. With one of the unique competitive advantages, there is a premise of concern. The next thing to consider is whether this advantage can form a strong profitability? Such as tap water, electricity, gas, bridges, highways, railways and other public utilities. Although it has obvious monopoly advantages, it is subject to price control and has no independent pricing power, and few people can make big money. Among China companies listed in the United States, guangzhou-shenzhen railway performed poorly, and 1 1 only doubled. Railway is a highly monopolized industry, and business can't be better. You can't make much money because it is related to people's livelihood. Zhang Xiaoquan is a famous brand of scissors. When there is no competent management to continue to develop it, it will never win. Many companies have resource advantages, but when the prices of international commodity resources are at a low point, they are also helpless. When we invest in stocks, the most important thing is to see if it has a good return, and all the benefits must be implemented in the end.
So, what is the average annual profit growth rate of excellent companies? As I said before, I want to "swear forever." A good stock should have dozens of times the growth potential and prospects, with an average annual profit growth rate of not less than 20%. Of course, more than 30% is better. Maotai, China Merchants Bank and Vanke account for more than 30%. Mengniu even reached an astonishing 90% a few years ago.
Is it enough to have a unique competitive advantage and strong profitability? It is not enough, but also depends on whether its advantages and profitability can be maintained for a long time. Also known as sustainable competitive advantage. This is more difficult and more technical. Buying stocks means buying the future, and long-lived enterprises have high value. It is not difficult for a company to make money in one year, but it is difficult to make money all its life. When BB came out, the scenery was infinite, and it wouldn't work in a few years. Kodak, Le Kai and other film companies have become very passive due to the appearance of digital cameras. This requires us to have a longer-term vision and deeper thinking. This requires the company to "pamper itself", that is, to have multiple competitive advantages.
Some people may say that the company you are talking about is almost perfect and seems hard to find. In fact, there is more than one in my shareholding list, and interested readers may wish to use a set of conditions. Of course, "never give up" will not be an easy task. But you made a first-class wish, at least you can make a middle-class marriage. I mainly provide a rigorous way of thinking, and strive for perfection in stock selection, which is endless. This is the pursuit of Excellence, and this is impeccable.
Having said that, we have never talked about the price. Isn't the price too important? No, of course the price is important. The word "safe space" is simply the mantra of value investors. A good company and a good price are good stocks. I once summed up Buffett's investment strategy into twelve words: good stock, good price, long-term holding and appropriate diversification. It already includes a good price. But the main problem we are talking about is the problem of excellent companies. At the same time, I think, relative to the price, good stocks are the first. Good stocks first, then good prices; First qualitative, then quantitative. This is also an investment concept.
Buy stocks at any time.
Buying stocks at any time is to advocate "buying at any time". It must be noted that this is aimed at most people, especially the working class with stable follow-up funds.
People often ask me with a straight face: "Buy at any time, regardless of the price?" What if I buy a high-priced one? "In fact, the friend who asked the question didn't think it over carefully. The price problem is a complex problem, and even an unsatisfied and beyond the ability circle in practice. If you are lucky enough, you often encounter such a big opportunity as "9. 1 1" when you enter the market or after the financial crisis, that is certainly a beautiful thing. However, the stock market is unpredictable, and uncertainty is the mainstream, so we must deal with it "with constant changes". My experience is that efforts to seize opportunities will also lose opportunities, and giving up such efforts may seize more opportunities. Think more about methods, not too much about buying opportunities, and don't calculate the market winning rate all day. Different people have joined the work one after another, and sooner or later they will enter the market. Once you decide to invest, you will definitely buy high and buy low, but if you choose strictly and don't sell, even if you are not so lucky, you will eventually win.
Some stock friends quoted Mr. Buffett as sitting on tens of billions of dollars in cash, expressing their willingness to wait (until the right price) to refute my "buy at any time" and even accused me of being suspected of deviating from Buffett. However, after repeated thinking, I firmly believe that this is not a big mistake, especially after so many years. Seeing that many friends have been waiting for the prices of Kweichow Moutai, China Merchants Bank, Hong Kong Stock Exchange and other stocks to fall to their psychological prices, they have never been able to buy them, or they have lost patience and bought them higher. I can feel the importance of learning Buffett's dogma. Don't forget, in the survey of the status of millionaires and multimillionaires in the American investment community, although the top investors are often professional investors, the highest proportion is only ordinary investors who simply bought and held for a long time after World War II.
Sima Qian, a great historian, said in Historical Records-Biography of Huo Zhi: "Without money, there is no cleverness, which is a waste of time." It means "no money depends on physical strength, less money depends on intelligence, and more money depends on timing". Buffett, who has tens of billions of dollars in cash, has achieved great success and belongs to the world's top "rich" category. My "buy at any time" does not include investors and professional investment institutions with a large amount of funds, but only for most ordinary investors. Most people belong to the working class with "less money" and have a fixed salary and bonus income every month. "Buy at any time" means buying with the remaining salary and bonus every month. This fixed way of buying can eventually make the cost of buying stocks average, neither too high nor too low. However, due to strict selection, the stocks bought are basically excellent companies, and in the long run, the rate of return is still considerable. This is a sensible way to buy. As long as it is implemented, it can be said that everyone can become a billionaire. Do not believe this method I gave you:
If young people in Shenzhen earn about 3,000 yuan a month, then a couple with perseverance and perseverance will spend 20% of their income every month, that is, invest in 600 yuan every month and buy shares of companies whose average profit increases by more than 20% every month, and they will not sell them anyway. After 40 years, it's easy to become a billionaire. Interested friends may wish to calculate.
Of course, it is difficult to select outstanding stocks with an average annual growth rate of not less than 20%. However, wages and bonuses will continue to increase. Wouldn't it be easy if the 20% increase was further invested?
Be patient in holding shares.
The dialectics of investment lies in: the complex is complex and the simple is simple. "Strict stock selection" belongs to a complex scope, but "buying stocks at any time" and "holding shares patiently" are particularly simple, just like the sky is particularly blue after a storm.
In China's ancient philosophy, there are many words full of great wisdom, such as "winning without fighting", "governing by doing nothing" and "conquering the enemy without fighting". In particular, the words "the road is simple" and "the same should be changed". Using these to guide investment has become an easy learning to make money. In other words, after choosing a stock, just keep it. I once said: "Collect the company's stocks like stamp collecting", and I prefer to say: "Be a good stock collector".
People often ask me, are you a particularly patient person? Some of your stocks have not been touched for more than five years. How can you keep them? In fact, I am a very impatient person in life. It's just that investing in stocks is different from other things. If you don't hold it for a long time, it will be difficult to make a stable profit and make a career. Admittedly, getting rich requires patience. Casinos and lottery tickets can provide opportunities to get rich overnight, but what are the chances? The probability of making a fortune by collecting is higher than gambling and lottery, but there are not many real treasures, most of which are fake antiques or something; Futures and warrants are more likely to make a fortune than collections, but there are too few long-term successes; The probability of success in short-term stock trading is higher, but on the whole, there are many failures than successes. But looking around the world, how many people have become billionaires by holding stocks and real estate for a long time? These understandings have been said before, and they were also obtained through painful failure. This thing is called "determination", which I value very much, second only to "eyesight". I often advise my friends to delete the word "sell" from your investment dictionary.
Most people who don't have rich investment practice will think, if you combine short-term, don't you earn more? I didn't know you couldn't have it both ways. Investors with certain experience often ask: "Don't you sell if the price rises too high?" My answer is no. Because some things are easy to say, just like buying low and selling high, it is difficult to judge what is high and what is low in practice. Just like you can't tell whether tomorrow will go up or down. A lot of short-term profits are to be given up, because you can get more if you give up. Give up and you will get. This is dialectics. Many stock friends and I have fully proved that it is too complicated to judge the ups and downs of these things. This is something outside our own ability circle and harmful. It makes us see the trees instead of the forest, and only pick sesame seeds instead of watermelon. For example, when will Kweichow Moutai, China Merchants Bank and Vanke sell properly? It's not appropriate to sell it any day. From the long-term trend, any act of selling a good company is stupid and goes against the economic development trend. The result is not ideal. Win at most one local battle and lose in the overall situation. There are many specious things circulating in the stock market, some of which have great influence, such as "selling high and sucking low". What we see is that the vast majority of people are just the opposite, throwing low and sucking high, chasing up as soon as the market rises, and lightening their positions as soon as the market falls; When the Shanghai Composite Index fell to 1 000, the daily turnover was only several hundred million, which showed that most people did not "suck low". When the Shanghai Composite Index rose to 5000 points, the daily turnover was as high as 200 billion to 300 billion, which showed that most people did not "sell high". Besides, judgment level is also a technical thing, not an intellectual thing. Small profits depend on skill, while big profits depend on wisdom. Why are there always fewer people who finally make money in the stock market? This is related to excessive operation. Many people basically stare at the stock market every day, constantly catching so-called opportunities and constantly trying to suck low and sell high. But how many people really succeeded? Take the well-known example of Mr. Liu Yuansheng holding Vanke shares for a long time, that is, simply holding them and not selling them after buying them. In fact, Vanke's stock has fallen countless times in 18. If he keeps thinking about throwing high and sucking low, can he change from millions to hundreds of millions? Skill-level things, not only make people very hard, but also will not bring considerable benefits to many people, at least in the eyes of investors who speculate in the computer room. People often ignore that the best is often the simplest.
Having said that, some investors may question: "The company's fundamentals have deteriorated seriously, and you still insist on not selling?" My answer is as always. Even if you can't rule out this situation, you can still insist on not selling. This doesn't seem to be in line with Buffett's thinking. But I still think this is right, and it has been well thought out and practiced. I like Peter Lynch's point of view very much. If you have a long-term portfolio of ten stocks, and one of them has a problem, because the companies we choose are excellent, then the other nine stocks we hold are still making big money for you. Decades later, it's just the difference between 100 million and 90 million. Besides, that stock will not fall to zero. Even if you successfully sell after the fundamental problems of an excellent company, you are only strategically right and strategically wrong. You may lose a great opportunity to gain long-term benefits in the future, or you may become a speculator from a Tibetan family because you become too concerned psychologically. We should have a little philosophical thinking about this problem. Furthermore, if there is something wrong with the fundamentals of an excellent company, you may know it afterwards, and then the stock price has fallen a lot. At this time, it is hard to say that selling is the right action. Maybe, on the contrary, you have to keep buying. There are several examples to illustrate this problem. One is The Battle of Citigroup by Prince Alwaleed of Saudi Arabia. Around 1990, Citibank was in trouble because of mortgage and Latin American business. At that time, many people fled wildly, and the stock price fell in a mess. At this time, Avarid continuously increased the capital injection. Four years later, Citibank finally weathered the storm. Avalide, with firm belief, became the largest single shareholder, and became the biggest winner after more than ten years, harvesting nearly 10 billion dollars in one fell swoop! Half of his net worth. Avalid said that he has been looking for the same thing, that is, an internationally renowned company. They have a healthy and solid foundation, but they are in a temporary predicament. At the end of 2004, for example, Zheng Junhuai, the chairman of Yili Co., Ltd., was arrested, which had a fundamental problem. Share price fell from 14 yuan to 9 yuan. Some friends around me were a little scared, so I advised them to buy it when it was 9 yuan and keep it all the time. Now all my friends who have listened to my advice have made a lot of profits. The same is true of SDB. After 1997, its fundamentals are not good, but the people who have been holding it since 1990 are still big winners.
Some people may ask, "If I need money, don't I sell it?" This is strictly a problem other than investment. There are many situations where money is needed, unless it involves an extremely large family or personal upheaval, and a lot of money is needed to save the day. For example, if your family is sick and needs money badly, and you insist on not selling it, then you lose the meaning of investing. Investment is to make yourself and your family happy. Generally speaking, learn not to sell, otherwise it is easy to find various excuses to sell excellent stocks. When you earn a lot of money, you will realize that meaning. By then, it will be very simple and natural to make some adjustments to the asset structure. For investors, the primary consideration is how to earn, not how to spend. Always holding is the best way to make money.
Some people will also ask, "When we find a better company stock, can we sell it?" My answer is that this situation is not hawking, but stock exchange, because the total investment amount and investment amount have not changed, and the company's shares are still being collected. As long as it is not too frequent, this can be considered. For non-professional investors, I prefer not to sell my previous shares, but to buy them with my later income. Because there are not many thoughtful people, it is easy to turn stock trading into speculation.
Here I want to give another example that Shenzhen people have personal feelings to explain why they want to hold it for a long time. Most people in Shenzhen buy houses and stocks. Both the housing market and the stock market have been bull markets in recent years. It is said that the probability of winning or losing in the two markets should be similar. However, statistics show that more than 98% people make money by buying a house, and in May this year's statistics, when the stock market was bullish, 30% people actually lost money. What is the reason? People who buy houses rarely speculate frequently in the short term, while many people who speculate in stocks have "one's fingers itch" or "hyperactivity disorder".
In real life, there are indeed many people who care about selling, but not many people want to collect. In fact, selling the stock of a good company is the biggest risk. "Speculation" is the devil in speculators' hearts. Stanley Ho, the gambling king of Macao, said "no gambling" when answering a reporter's question about the secret of winning money by gambling. If someone asks me the secret of making money by speculating in stocks, my answer is "no speculation". We buy excellent enterprises. They are the most dynamic companies with the most valuable resources and the most promising products. They are in the best industry and have the most capable managers. You can sit back and enjoy success once and for all. The stock market is actually a place where turtles beat rabbits, lazy people beat busy people and fools beat smart people.