In fact, as a student of finance, often high-profile shouting investment, do not be a speculator. However, how many people can really do the investment, how many people are clear about what is the real investment. Unfortunately, I am one of them; but thankfully, I can read this book and understand it.
Zhang Lei mentioned the core of the book in the preface: there is only one criterion for real investment, that is, whether it is creating real value, and whether this value is beneficial to the overall prosperity of society. This is to distinguish the relationship between value and profit. Creating value is not the same as creating profit. Perhaps an enterprise with a strong sense of social responsibility innovates and develops the newest vaccine for the people of China, and gives free vaccinations to the staff fighting against the epidemic. Such a company creates great value through innovation, but the profit is not reflected in the upcoming quarterly report or annual report, or even a loss, but the reputation and public confidence is a powerful source of motivation for the company's future development. Can such a company be judged only by its financial results? It's clear that you can't!
Why is it so hard for individual investors to invest now, or why do stocks have to be called "speculative" stocks? The speculation is the price, not the future of a company. Individual investors who do not make money are always obsessed with the point of entry, timing and emotions, their capital is rarely built on a full objective analysis. This kind of money is called "fast money", the game of asymmetric information, hot pursuit of speculation, the right to rent-seeking, with a very high short-term rate of return. This is not a strategy, but never the best policy. As the market advances, the yield of this fast money will be gradually swallowed up, and then turned into a loss.
Zhang Lei's High Altitude has always held the belief that a business opportunity should not look at its past revenue and profit, nor can it simply look at today's and tomorrow's revenue and profit, although these straight numbers are important, it does not represent the whole picture. And the real need to focus on the core, is what problems it solves, whether it has to society, to consumers to improve efficiency, create value. As long as it is a business that creates value for the community, its revenue and profits will be realized sooner or later, and the community will ultimately reward it in the long run.
After receiving $20 million in financing from Yale University, HighTech's first investment was in Tencent. They saw the essence of Tencent: socialization may have circles, but social tools do not. I believe you and I did not think of this when we used QQ in front of the screen. However, he thought of it; Gao Tiling thought of it. Instantaneous information transfer between people is a great contribution to enhancing social efficiency in the future. The future and time have proved that their beliefs are correct and can be upheld all the time.
As an individual investor, is it better to buy a security and wait for the right time to sell it, or to become a shareholder of the company and its **** destiny? Many people will resolutely choose the latter, and in the current SSE index stood at 3600 points, ecstatic to become the latter.
Many people, including me, have wondered how Zhang Lei and his HighWatermark went about doing value analysis.
The first point is the core. It's about the industry, the company, and the management.
Industry: business model - the essence of business, the logic of making money; competition pattern - oligopoly, monopoly competition ...... growth space -Long sunset night, sunrise industry ......
Company: business model, operation mode, process mechanism, management radius, scale effect, core competitiveness.
Management: whether the founder has a pattern, how to execute, entrepreneurial spirit.
Deeper and broader level: industry development, company evolution, management potential, business (business model) birth, change, death and the driving factors behind, to understand the causes and consequences of each history.
Gains are not just empty promises, they are based on true ultra-long-term research and analysis.
To give you an example: there are three major tracks with the most potential for social investing today: pharmaceuticals, technology, and consumer.
First of all, grasp the essence (underlying logic): retail is service, content is goods, what you see is what you get.
First of all, look at consumption, which can be simply understood as retail.
The first big development is marked by the birth of chain stores. The birth of the chain store to be established in the ecosystem, and the premise of this great development of the ecosystem is the emergence of the railroad. Railroads created new efficiencies for modern logistics and facilitated the movement of people. This allowed the demand for highly standardized chain stores to flourish.
The term "new retail" appeared in the United States in 1919-1926. There were even unmanned convenience stores. Without good merchandise, the chain itself is untenable. With Procter & Gamble and Unilever leading the way, well-known consumer goods companies began to emerge. After the second industrial revolution produced television, and airplanes, the spread was further increased. With the development of the times and the progress of industry, Wal-Mart and other supermarket-type retail companies gradually became the mainstream of the retail industry ......
The railroads standardized logistics and production, the chain stores standardized the purchasing and service experience, the consumer goods companies standardized the commodities, and the TVs and airplanes standardized the perceptions, which constituted a complete retail eco-system, and as the industry innovates, it continues to innovate on the basis of the original system and model.
In the 21st century, e-commerce appeared before our eyes. The core of the retail industry is to connect goods and consumers, e-commerce compared to the traditional retail industry, the importance of the offline channel will be reduced or even replaced, with a highly efficient logistics system to lead the way. The difference between Jingdong and Amazon lies in the fact that Jingdong has integrated its own logistics system and formed a full supply chain system.
And then look at the technology
The essence of the innovation era 1.0 is the innovation of the business model, is to use the technology of the Internet to do the "connection". For example, search engines, social networking tools, e-commerce, online shopping, group buying ...... The key to the shift to Innovation Age 2.0 is convergence. This integration is no longer a simple copy and superimposed, but will be applied to the whole industry chain, to achieve long-term value creation and *** with the development. This is the process of transformation from C2C to IFC.
Cao Dewang, the king of glass, said, "What changes the world must be manufacturing." When technology is combined with manufacturing, it can realize the rebirth of the industry chain and continuously create new value.
Therefore, Gao Tong invested in Gree Electric, Fuyao Glass, Blue Moon, Kid King, Bull Group, etc. to realize the digitization of the industry chain.
Lastly, look at pharmaceuticals
In China's industrial map, the pharmaceutical and medical industry will definitely occupy a very important position. The industry itself has strong consumer and technological attributes; high barriers to entry, growth, profitability, anti-cyclicality, and a very deep moat.
But China's pharmaceutical and healthcare industries have a reputation for being thirty, with a ten-year R&D cycle, a billion-dollar investment, and less than one-tenth of a percent R&D success rate. Over the past few decades, low-level and highly repetitive generic drugs have dominated the mainstream, and there have been very few homegrown innovative drugs in China. Generics is a strong sales-driven industry, not a strong innovation-driven; the core lies in the pharmaceutical representatives, not the R&D staff.
Since 2014, Gao Tiles has invested extensively in a number of small innovative companies within the broader healthcare sector: WuXi PharmaTech (small molecule R&D service provider), Kaleidoscope (integrated service provider for R&D and manufacturing of new medicines), Aier Ophthalmology (the largest ophthalmology healthcare chain), Cottonwood Reproductions (assisted reproduction integrated service provider), Myriad Healthcare and Shanghai Wicresoft (medical device platforms), Baizi Shenzhou (molecular medicine platform), and Biovision (molecular medicine platforms). ), Baizi Shenzhou (molecular targeted drugs, tumor immunity drug R & D), Cinda Biological (monoclonal antibody new drugs), Hengrui Medicine (anti-tumor innovative drug absolute leader) ......
The second point, how to understand the value of time. The most expensive thing in investment is not money, but time.
Time is the value of creating compound interest, compound interest is the best gift of time to this investment. With the passage of time can deepen the moat, is an "asset", otherwise it is a "fee". When you are making an investment, think beforehand, you have the confidence to take enough 5 years, how many times. If not, please consider the need to invest.
The third point, there is only one moat in the world.
Zhang Lei said: subsidies or monopoly can not produce great companies, only in the competition can produce great companies. There is only one moat in the world, that is, entrepreneurs continue to innovate and create long-term value. If you can't create long-term value efficiently, the moat is actually very fragile.
One way to grow a business that lasts is through self-revolution and internal creation. Just like bamboo, forget about the past successes and keep growing new ones. Amazon has an almost money-printing model, but they have been involved in other areas, cloud computing, smart devices, no boundaries; the same with Apple; and now SpaceX, ByteDance, etc.
Making the most of the past is a way to create new ones, to forget the past.
By putting values ahead of profit, and believing that values are the real core of the business, profit is just a natural consequence of doing the right thing. This is a non-gaming entrepreneurial spirit, and the more you do this, the more you can focus on long-term value creation. When a company eyes only profits, constantly woolgathering, quickly withdraw investment! In the near future, profits will be swallowed by the market, bringing you only a green.
Never run into a misunderstanding, the data on the books look good is a good company, the value is not absolutely low P/E ratio. There are more unquantifiable intrinsic factors that often make the difference between investment success and failure.
Claude Bernard famously said that what constitutes the greatest obstacle to our learning is what is known, not what is unknown.
If you're struggling to find an undervalued stock, and you're lucky to find one, it's even more important to understand why that stock is undervalued. Value investing is not just an investment strategy, it's a value, a search for the certainties that continue to create value in the midst of so much uncertainty.
Value investing is not about right or wrong, it is about choice.
If you are fortunate enough to have a sincere entrepreneurial heart, then the thinking should start to change from the bottom.
Standing in the perspective of a capitalist, Zhang Lei suggested that the biggest risk of entrepreneurial activities is to remain unchanged and not dare to take risks, and if the entrepreneurs don't take risks, the investors are taking the biggest risks.
Entrepreneurship is not about windfalls, but about logic. Many business opportunities come from the collapse and compression of the value chain. For example, Ctrip, eLong. Popular business models often have brutal competition and high elimination rates.
The entrepreneur is often the first employee of the company, and his attitude and spirit are very important. Organizational and management innovation is the core driving force for companies to kill the competition, keep free thinking, and truly understand and practice value management. The business model is always centered on creating value, and constantly break the routine to build new carriers. Because only what the customer needs is of value. This need is in dynamic change. If a product is not repurchased, the service does not have positive feedback, so what is the social value? There is no social value, where there will be commercial value?
In addition, an empathetic entrepreneur can not be missed, an empathetic entrepreneur is worth to be followed. Therefore there is such a saying that there is no business that must be done, but there are friends that must be helped. The greatest happiness at work is to do interesting things with reliable people, treat your coworkers as your business partners. And let your company to the pursuit of great achievements as the goal, rather than to obtain material wealth rewards.
Investors can not do churning, can not be a good teacher, and in any situation can not be high a few inferior people. Sometimes, after experiencing suffering, you can understand the difficulties of others.
Looking back at the whole book, it is not difficult for you to get an insight into his ideals. The fundamental purpose of founding High Tide Capital is not to make money. Maybe he also thought about profit, and the words in the book can't reflect what he really thought. But what I believe is that an unethical investor can't write an enlightening book.
This book tells me not only how to understand value investing, but also teaches me to abandon some hostility and impatience. China advocates the spirit of craftsmanship, not to do a good job of the big things, but to do the small things well, I believe that "I have the power of small". I understand that there is an order of value: personal value, social value and business value. There is no order for personal and social value, they are all located before business value. As Zhang Lei said: Profit is just a natural result after you do the right thing. The words in the marketplace have their own ineffable truth: people who only have money in their eyes often can't make money.
This is just looking at China's industrial development from an investor's perspective. Zhang Lei proposed: we are not only investors, but also entrepreneurs. But essentially they have not personally experienced the development of China's manufacturing enterprises, just a bystander's perspective to scrutinize, although there is empathy, but it is difficult to really do empathy.
Zhang Lei is a great investor.
But if you can calmly listen to the speeches and interviews of entrepreneurs like Cao Dewang, Ren Zhengfei, and Dong Mingzhu, you will not hide your national pride, and you will not be able to stop clapping your red palms. They are like a thousand-horse, a good investor is like Bole, *** with driving the rapid development of China's economy. When the market is flooded with bad money to expel good money, financial reports falsified, power monopoly, poor quality products and other phenomena, we can not help but say thank you for their existence.