————It's not an opinion，it is a fact.
"Hold = Buy"? This question has bothered me for a long time.
If the equation is true, is it necessary to continuously increase the position of the underlying that is already held?
If the equation does not hold, how are the new funds arranged? When do I sell what I already hold?
Holding stocks is different from funding:
Stocks have valuations, performance growth rates, industry policies and other fundamental factors that can guide your transactions, such as if the valuation is too high and you sell.
Buying a fund is to give the money to the fund manager, the fund manager will help us adjust the position, do we still need to adjust the position ourselves?
Later, I read Duan Yongping's book and thought clearly about this problem - whether for stocks or fund investors, holding = buying, this equation is true.
<h1 class="pgc-h-arrow-right" data-track="11" >, hold = buy is a fact</h1>
This question not only bothered me, but also bothered Duan Yongping before, and he asked Buffett for advice.
Buffett replied, "It's not an opinion, it is a fact.", and then Duan Yongping had an epiphany.
Duan Yongping further explained to us:
All investment varieties are opportunity costs for us, cash is limited, and if you choose one, you lose the opportunity cost of the other.
The essence of investment is to try to buy an investment symbol with the highest yield and can last a long time. If you find such a symbol, the original funds will continue to be held, and the new funds will continue to buy, so hold = buy.
For example, variety A is expected to have an annualized yield of 15%, variety B is expected to have an annualized yield of 8%, and variety C is expected to have an annualized yield of 12%, without considering volatility and transaction costs, there is no doubt that you will continue to hold and buy variety A.
Funds are also one of the investment varieties, and buying funds is also constantly looking for funds with the highest expected yields. So investing in an investment fund, holding = buying.
<h1 class="pgc-h-arrow-right" data-track="20" > Second, in the actual investment, is it really necessary to continue to buy? </h1>
Duan Yongping and Buffett discuss the theory, in the actual investment, whether it is stocks, funds or gold, crude oil, the expected rate of return of each investment variety will not be "clearly marked price, posted public", but need to judge themselves, can not be seen at a glance which investment target of the future can bring you higher returns.
So in real investment, hold = buy? The following content is not what Duan Yongping said, it is my own thinking, and several conditions have been added on the basis of "holding = buying":
(1) Portfolio investment
In actual investment, we cannot hold only a few varieties. Investments that are too concentrated face greater risks. Portfolio investments can reduce volatility and uncertainty.
Ideally, if you find multiple lowly correlated investment targets, and you predict that each one will have a higher and same expected rate of return, then use a portfolio configuration.
For example, if you find 5 targets, all of which are expected to have an annualized yield of 15%, then each match is 20%. When you have already bought 20% of a target, continue to hold but no longer buy.
At this time, the holding of a single target ≠ buy, and when you have new funds, you can buy the entire portfolio.
Even if you can't find multiple high-yielding targets, you should moderately spread out some low-correlation symbols, even if others may have lower yields.
(2) Dynamic adjustment
You expect A target with an annualized yield of 15%, a faster short-term rise, a pre-cashed return, and after research you think that the expected annualized rate of return will drop to 12% in the future.
While the other C-target continued to fall during this period, after research you think that the expected annualized yield in the future rose to 16%.
In this case, you should not continue to hold and buy the A target, you should reduce or even liquidate the position, and increase the position C with funds.
The amplitude of the position adjustment depends on the certainty of your research, in the actual investment, it is difficult for you to be 100% sure, so it is best not to adjust the position too aggressively, you can also keep some A.
(3) Vote for what you can understand and stick to the circle of ability
More really, the expected future rate of return is also difficult to judge, depending on the depth of study.
Sometimes, even if a certain target rises or falls a lot in the short term, you still can't tell what its expected future yield is. Because research is difficult to exhaust all information, the future is also unknowable.
Therefore, investment should try to invest in what you understand, and adhere to the circle of ability.
For example, variety A has risen more in the short term, although you think that the expected annualized return rate in the future has dropped from 15% to 12%, but other investment targets you do not understand, do not understand, or you look around and find that you can not find other varieties with a return of more than 12%.
Then you should still continue to hold and buy A, which is at least better than buying a Treasury bond (3%).
In summary, in the actual investment, whether holding is equal to buying, to analyze the specific situation, the key is to see if you can find an investment target with a higher yield.
<h1 class="pgc-h-arrow-right" data-track="41" > third, not optimistic about the original hold, but it has been set, do you want to wait for the return of the capital and then adjust the position? </h1>
Many people can hold for a long time not because they are optimistic, but because they are covered, even if they find better, they still have to wait for the return of the capital to adjust the position, which is the wrong approach.
The correct approach is that if an underlying with a better expected yield is found, the position should be adjusted immediately even if it is losing.
Because you are not optimistic about the target you originally held, it means that you think that its expected yield in the future is low, which is a mistake and should be corrected as soon as possible.
The discovery of a better target represents a higher expected yield. Switching over early may be faster to return the cost, isn't it better?
Fill in the underlying yield, the answer will be obvious: for example, you originally held the A fund, you think the potential annualized rate of return is 15%, and then the loss, further research, you found that its expected yield is only 5%, and the potential yield of the B fund is 12%, there is no doubt that at this time, you should sell A as soon as possible to replace B, you can return the capital faster.
<h1 class="pgc-h-arrow-right" data-track="49" > fourth, short-term ups and downs do not represent long-term yields</h1>
The market can reflect value in the long term, but the short-term volatility is very large, and it does not immediately reflect the true value and yield of different assets.
The "expected yield" may not necessarily materialize quickly, and the short-term rise and fall of the market may be in the opposite direction of the long-term expected yield.
A target with a high potential yield may also fall a lot in the short term: stocks with an expected annualized yield of 15% may fall by 50% in a year, and if you want to earn a real and reasonable expected return on the target, you must hold it for a long time.
However, sometimes it will rise a lot at once, giving you a quick cash, or even over-cashing. This is where investing is hard.
It is this kind of short-term volatility that makes it difficult to decide whether to hold, buy or sell, resulting in frequent trading.
The solution to the problem is to anchor the expected long-term rate of return and then earn that yield by holding it for a long time.
<h1 class="pgc-h-arrow-right" data-track="56" >5, the anchoring of the expected rate of return comes from in-depth research</h1>
Although the expected rate of return is difficult to predict, it is still calculated, because this is the most fundamental goal of our investment. Not only to calculate the yield, but also to consider the sustainability.
The only way to calculate and predict is to dig deeper.
However, many people buy a target and do not study it in depth. It is often because it is better in the short term to buy, because it is not good in the short term to sell.
In this case, it doesn't make sense to discuss whether holding is equal to buying. It's like a gambler discussing with a gambler whether he should continue to buy big or change to buy small in the next game.
All rebalancings should be made only when you think that you can make a better return or lower volatility after careful study. Otherwise, you don't have to care at all about whether holding is equal to buying.
Conclusion: This article may be a bit of a detour, but I think it is still important to figure out the question of "whether holding is equal to buying", if you do not understand it, it is recommended to read it several times. Or you can leave a message to ask me.
If you find the article useful, I hope that everyone "likes, watches, and forwards" three times to support me, thank you!
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Tip: Funds are risky, and investments need to be cautious! This article is only a personal research analysis, not as an investment basis, according to which the operation of profit and loss at your own risk.