If you don’t find a way to make money while you sleep, you will work until you die! ——Warren Buffett
Is the Chinese stock market suitable for persisting in value investment?
This issue has been arguing and chattering since the "Shanghai Securities News" first introduced Buffett and the concept of value investment to Chinese investors on January 24, 1996.
There are even many portraits like "Black Swan" author Nassim Taleb who believes that Buffett is just a random walker with a particularly lucky fool.
Others said that Buffett’s performance depends entirely on the national fortune. He himself once said: "The best business must grow with the national fortune." "All investments are gambling on the national fortune!" And Buffett is lucky. Born in this era when the United States dominates the world, he was fortunate to encounter a bull market that lasted more than 10 years in the United States.
The ancients said, listening at the same time reveals that people have conceited weaknesses, and they can only listen to the harsh side of the ear. Opinions can better modify my own perceptions. Just like the view on speculation, the author is also learning philosophy, and finished the article "A shares have not changed for more than ten years is speculation, but really don’t look down on speculation!" "After that, I really looked at speculation objectively, and strengthened my path of value investment. The original reason is that I don’t have enough IQ and energy. I want to work hard and want to make money in the stock market. How can I have both fish and bear’s paws? If you are greedy, you can't do anything well and you will not get it.
The author said a lot of good things about value investment before. Today, I will sort out various opinions about "criticizing" value investment in China, and look at the truth of most people.
The article I thought would be finished soon, turned out to be "I don't know if I write it, I'm surprised when I write it." There are quite a few arguments that value investment is not suitable for China's stock market, even to the point of exhaustion.
1. China’s stock market is a credit market
According to a survey by authoritative institutions, even though more than a decade has passed, China’s stock market is still dominated by retail investors, and the 99% share seems to have remained the same. Step forward, no progress.
Why is the Chinese stock market so strong, cutting crop after crop, and still unceasing?
Why is it that I am harvested every time, cursing and vowing to never return to my heart when I leave, but as long as there is a turmoil and the rise is just showing its sharp horns, I can’t wait to return?
Are Chinese investors the bravest? Are Chinese investors the richest? Otherwise, why are so many retail investors daring to step into death?
Some people believe that this is because the Chinese stock market is essentially a credit market, and it is also a credit market with quasi-rigid redemption.
What is rigid payment?
The popular understanding is that you have invested in a wealth management product. After the expiration, the institution or platform will return the principal and income to you according to the contract. Regardless of any risks, the institution or platform will also give you Take the bottom line to protect your principal and income from loss.
In the past, the term was often used in trust products, because trust licenses are very precious. Even if the income is damaged, the trust institution will protect the principal and the income to the customers. The key is to keep the license. Chaos and conspiracy.
Therefore, the rigid payment can be summed up in 5 words: guaranteed capital and guaranteed income.
Of course, saying that the stock market’s rigid payment is a bit exaggerated, so I added the word “quasi” before it.
First of all, it is difficult for Chinese stocks to delist. Since the first batch of companies delisted in 2001, the cumulative number of "terminated listed companies" has totaled 95This number is lower than the delisting rate of more than 10% in mature markets.
Secondly, history and reality have proved that no matter how bad Chinese stocks are, they will not fall to a few cents. Even the more junk stocks, the easier it is to become the target of hot money and get the possibility of being overwhelmed. This has led to retail investors entering the market, basically no worries about the future, and really fell. It is a big deal to put it there and wait for the day when the miracle occurs. Fortunately, the Chinese stock market has lived up to expectations, and miracles have been witnessed constantly.
Past history tells us that as long as we die, we will be a hero again in a few years!
It’s this kind of recurring realistic case that finally allows leeks to participate in this market unscrupulously, and at worst it will not be as bad as chicken flying eggs or bamboo baskets. This kind of guarantee exists, plus people. The inherent gambling nature, as well as the constant flicking of experts and the media, have made the vast majority of Chinese stockholders daring to enter the market resolutely even if they are always bankrupt in this market.
It is also this guaranteed market, coupled with rampant speculation, every time a bull market, value stocks do not show up at all, but demon stocks and junk stocks go directly to the sky, and in a bear market. Everyone fell together, and value stocks shared the same ups and downs. As for the decline, it is nothing more than the difference between fifty steps and a hundred steps.
It is this kind of past and this kind of history that retail investors have always believed that this market is not because of their inability, but because of bad luck and bad mentality. , No messy operation, nothing to do, nothing to do, Lao Tzu is awesome, so he is still willing to borrow money to come in and play continuously.
Because there is a guarantee, and even a high probability of resurrection, the risk that value investment has repeatedly emphasized has always been regarded as the first famous saying. Buffett even regarded it as the "first, no one" of 85% of his investment philosophy. Losing money, second, remember the first." It always seems so out of place.
So, what are you doing so boring, value investment that you can hold for a long time after you buy it!
2. The Chinese stock market is subject to an approval system, and the shell is worth money.
There is another one in the Chinese stock market Guaranteed, that is the shell, even if it is really rubbish ST, the shell alone is worth hundreds of millions.
The current A shares are valuation under the approval system (the approval system is essentially an approval system).
The approval system has brought about "the scarcity of listing places", so a premium (bubble) is bound to occur.
This premium is the "shell value".
For example, a listed company, even if it is insolvent and faces bankruptcy, it can still sell its shells, at least for hundreds of millions of dollars.
This guaranteed value is the "shell value" under the approval system, or the "approval bubble".
Even if you specialize in speculation, you don’t have to worry about losing your money, because your stocks are worth hundreds of millions of dollars.
Not to mention whether it will be hot money, it is that in the future, it will be backed up by another powerful company, and the chicken will become a phoenix all at once, and it will be thrilled again.
Therefore, in the stock market, like junk stocks, some people buy them. Sometimes they get news and they may be backdoored. In addition, the stock price is overvalued compared to its shell value. On the day of the backdoor, it was precisely because stockholders had such a psychological existence, so it is not difficult for us to understand why even rotten stocks are traded. This is the reason.
In addition, the previous restructuring tricks that have appeared in the history of the U.S. stock market are still being performed in the A shares. Therefore, even if some stocks are dying, or even dying, they may be reorganized by the rescue strategy. Rescued.
The old iron who has seen the author write about the history of the US stock market knows that this kind of reorganization can achieve the effect of 1+1>2 in the stock market, and it can boost the stock price in the short term without spending a penny. , Seems to be a good thing to everyone.
Although this trick has been a bit overused in the past few years, it is occasionally used once, or the explanation is righteous, and stockholders often accept it. After all, most stockholders look at the short-term rather than the long-term.
So, from this perspective, A shares are indeed the most suitable place for retail investors today.
Someone said, "You can't make money in the Chinese stock market, you can only blame yourself."
Third, the market rules are different from the US
Some old iron will ask, does the US stock market have shell value?
The answer is no, this is mainly caused by the market rules of the Chinese stock market and the US stock market.
The US stock market is a market maker system, also called a quotation-driven system, while the Chinese stock market is a command-driven system.
I will explain them separately.
1.The market maker system
(1) What is the market maker system
Look at the last definition: it is the franchised dealer reporting the stock price to investors. At this price, it accepts the buying and selling requirements of public investors, and conducts securities transactions with it with its own funds and securities.
In other words, in the stock market under the market maker system, the stocks you buy are bought from the market maker.
Therefore, the market maker system, also known as the market maker system or the market maker system, is a popular and generally recognized market transaction system in mature international markets.
In layman's terms, the formation of stock transaction prices is determined by market makers, and investors buy and sell stocks with market makers as their opponents.
A market maker is like an intermediary between stocks and stockholders. It has money and stocks, and it has to go through it.
At present, the market maker system has been widely adopted by many mature securities markets. The "National Securities Association Automatic Quotation System" (NASDAQ system), which was born on February 8, 1971, and its over-the-counter market can be called The most successful model of the global market maker stock market.
(2) How does it make money
The business logic of the market maker system is that the market maker determines a purchase price and a sale price for the company’s stock by valuing a company. Then seek profit by earning the difference between the buying and selling price.
(3) What are its advantages?
The market maker system is in the developed securities market With a history of 48 years, its role in the securities market has been recognized by the securities industry:
It has the function of an active market and a stable market, relying on its open, orderly and competitive quotation drive The mechanism to ensure the standardization and efficiency of securities transactions is an effective means to improve market liquidity, stabilize market operations, and standardize the development of the market.
The market maker system has the following advantages:
Sitting in the market: When there is excessive speculation in the stock market, market makers strive to maintain the market by operating in the opposite direction to other investors The stability of the stock price reduces the bubble component of the market.
Market making: When the stock market is too quiet, market makers artificially buy and sell stocks in the market to drive popularity with an active market and return stock prices to their investment value.
Supervision of the market: While the market maker exercises its rights and fulfills its obligations, it monitors market changes through the business activities of the market maker, so as to detect abnormalities and correct them in time. In the emerging securities market, this is a useful attempt to maintain a reasonable distance between the government and the market and offset the inertia of government actions on the stock market.
(4) Who can be a market maker?
A market maker must have the following conditions:
Strong financial strength, so as to build sufficient stocks of securities Meet the trading needs of investors.
Have the ability to manage securities inventory in order to reduce the risk of inventory securities.
You must have accurate quotation capabilities, be familiar with the securities you operate, and have strong analytical capabilities.
Therefore, market makers need to be licensed. International market makers are usually held by larger gold merchants or banks. For example, the top five gold merchants in the London spot market and the three largest banks in Switzerland are the world's most A typical market maker.
(5) Why the market maker system is suitable for value investment
Because retail investors are rivals with market makers, there are basically no retail investors who have the confidence to win institutions.
Therefore, everyone had to study value together obediently. The market is stable and healthy, and value investment is also strong.
This is also an important reason why the number of stock market crashes in the U.S. stock market in the past 100 years is less than the number of A-share market crashes in more than 20 years.
Of course, if the company is not good, the U.S. stock market will be very miserable. Not only will it be targeted by short sellers, but it will often fall to the point where you dare not look.
2. Order-driven system
When the market opens, the opening price is formed by a call auction, and then the trading system sorts the trading instructions of investors who are constantly entering according to price and time. Buy and sell orders are matched by auction.
To put it simply, this system is similar to auctions. Whoever offers the highest price is sold to whoever bids higher. Shareholders compete against each other. Whichever is bigger, which is strong, which is ruthless and which is strong.
We can think about the auction site in reality. If we haven't been, we can recall the scene in the movie.
First, there are a lot of people, many of whom are pursuing speculation and making big money.
Second, it’s a bit messy. They are rivals and are all retail investors. Can everyone raise their cards?
Third, if you encounter an opponent in a realistic auction, you will often fall into psychological warfare, and the strongest will win.
Fourth, teaming up, playing screens, or arranging for waistcoats to drive up prices. Such things often appear in auctions.
Fifth, auctions are often slapped, and participants often lose their rationality, make bids without thinking, become gambling and speculation, and the final price is often much higher than the actual value.
Sixth, of course, the final winner is always the one with the highest bid and the richest.
Ladies and gentlemen, if you put the above six points in our stock market, wouldn’t it be quite appropriate?
Therefore, some people think that the Chinese stock market needs to understand Chinese characteristics, understand the Chinese stock market culture, and respect the laws of local speculation in order to become a winner.
Since A-shares is an auction site, speculation is the main theme. Hot money and institutions have figured it out first, so they have all become crocodiles, and their usual trick is to anticipate the subject matter ahead of time. Speculation, even if there are exceptions, such as: if there is no time for speculation due to policies and other reasons, they will make up the speculation, and then the A shares will return to "make up for the increase."
Fourth, the Chinese stock market is divorced from the essence of stocks
As the author once said, only Only by sticking to the essence can you succeed, but many things in the world are easy to go wrong from the beginning, because from the beginning and in the short term, shortcuts are always the most time-saving and labor-saving choice.
However, if you don't proceed from the essence and root cause, no matter how you do it or work hard, you will eventually become a hooligan.
Aristotle once said: "In any system, there is a first principle. It is a basic proposition or hypothesis. It cannot be omitted or violated."
In layman's terms, it means that the existence of any thing or the occurrence of any phenomenon is not without a reason, and there must be an essential reason behind it.
Elon Musk, the founder of Terrass, especially advocates first principles. He said:
"We use first principles instead of comparative thinking to think about problems. It is very important. We always tend to compare in life, and we do everything that others have done or are doing, so that the result of development can only produce small iterative development. First-principles way of thinking It is to look at the world from the perspective of physics, that is to say, look at the appearance of things layer by layer, see the essence inside, and then go up from the essence layer by layer."
This is what he sees " First-principles thinking model": Go back to the essence of things and rethink how to do it.
So, what are the first principles of the stock market? What is its essence?
The author believes that it should be understood in a simple and popular way:
I have to do one thing, and I don’t have enough or no money, so I divided the company’s contribution into N shares—— Shares, and then tell others what I am going to do. I will definitely make a lot of money in the future. If you believe in me, then buy the shares of my company and become a shareholder. Naturally, this matter will become yours. Matters-shareholder matters.
Of course, everyone is a shareholder, so they have the right to supervise and criticize me. The goal is to work together and work together to get things done.
If you succeed, everyone will be happy. Everyone will have a big bowl of wine and big pieces of meat. If it fails, the shares will be worthless, and the money you put in will go with the wind.
Therefore, the first principle of the stock market is to accomplish something, and its essence is to use capital to promote something.
Does China's stock market adhere to this first principle and this essence?
Objectively speaking, the essence of large A shares is an important financing platform for the country to implement industrial policies and industrial support. Some people even commented that A shares = state-owned enterprise financing platform.
In other words, financing has become the essence of A shares, and it seems that no one cares about it.
The money of stockholders is used to subsidize the development of the company, but what the company can develop into is basically without any supervision, and without any restrictions and restrictions, because we do not have the most basic short-selling mechanism and delisting system It's just a display.
As long as the Chinese stock market is the first principle and the underlying logic, it is completely missing the growth and success that value investors are most concerned about. The foundation of value investment is also considered the most proud of. The part turned out to be the least reliable.
To make an exaggeration, after listing and financing, whether you do a good job or not depends entirely on awareness and self-consciousness.
In this case, investors who spend money to invest have become a lucky draw.
If you get it, you will make a lot of profit; if you lose, you will be a leek and you will be unlucky.
As for the dividends of enterprises and the rights of stockholders as business owners, don't think too much about it.
Fortunately, there are still many entrepreneurs who understand the truth. Otherwise, even if Buffett comes, they will have to walk away crying.
Deeper thinking will lead to bigger topics. Some experts commented, "Big A has actually encountered a fundamental internal contradiction, that is, the national industrial policy and the national leverage reduction policy There is a huge tension between them."
To adhere to the national industrial policy to subsidize enterprises for industrial upgrading, then most enterprises are destined to lose money in investment.
Because the industrial upgrading is not stated, but is inevitably caused by the competition of the market itself.
Similarly, if you want to persist in reducing leverage and actively develop market-oriented direct financing, you must follow the market-oriented requirements.
"The state has only one role in the stock market-to protect investors. As for the purpose of industrial policy subsidies, it must be abandoned. Because this choice should be made by the market, not guided by tangible hands. "
However, we seem to be unable to get rid of the perfect logic of everything, so the fundamental tension of this underlying logic is currently unsolvable.
Experts said, "This incomprehension determines that there can be no long-term success, and no value investment."
It’s really heartbreaking, is it really only fishing Is it the only strategy to survive?
The most classic triple robbery of Xiao Duan Zi Da A, the national luck robbery-replaces rationality with feelings, and replaces analysis with hormonal bursting, and finally was cut off; Stud love robbery-always heavy warehouse , I thought I could come back with a stud, and eventually be mowed by someone else; Insider love-I always thought that with the insider, I could walk across the world, but in the end you were the victim of the news; Big A, Big A, A small gambling is happy, a big gambling hurts the body, and a gamble hurts the kidney.
5. There are too few stocks with valuable investment potential, and most companies have short lifespans.
Whether it is historical reasons, stock market system reasons, or development time reasons, or whatever For other reasons, our current indisputable fact is that there are too few good companies in the Chinese stock market, and companies with good longevity are even rarer.
The author once counted a piece of data and selected it according to stricter value investment assessment criteria: five consecutive years of gross profit margin> 30%; five consecutive years of ROE> 15%; five consecutive years of ROA> 10% ; ROIC>15% for five consecutive years. As a result, none of our large A shares meets the requirements.
After changing the ROE and ROA to four years, only 40 stocks were eligible.
If PE is increased by 30%; ROE>15% for four consecutive years; ROA>10% for four consecutive years; ROIC>15% for five consecutive years; PE