Lin Yuan Peking University Speech 10,000 Words Long Transcript - Worth Collecting and Reading (Part 2)

The methods of investing in bear markets and bull markets are different, and the stocks bought are also different.

In the first half, I talked about some of the ideas of corporate investment. In the second half, I wanted to introduce what I think were some of the best stocks and our overall set-up.

Our investment approach should be flexible. I already said in the first half, my method is that when you are a person, you have to do it according to different situations, it is changing. Everyone divides this market into bear markets or bull markets. In fact, the two ways of investing are not the same, and the stocks bought in the bear market and the bull market are also different. Well handled, we can make money in the bear market.

What kind of stocks to buy in a bear market? Just buy some stocks with the highest level of certainty. I was in a bear market, and in 2003 I started buying three stocks. Guizhou Moutai, Wuliangye, Yunnan Baiyao. We can calculate its profit account for the next three years of the company's stock with extremely high certainty. Because it's a bull market, I don't want to talk about a bear market anymore, because I don't know what year the next bear market will be. Let's talk about bull markets. I myself divide the bull market into early, mid, and late stages. We need to learn how to avoid this risk before the bubble blows up, or before there are such signs.

The main criterion for buying a good company is whether the stock, whether it is a bear market or a bull market, whether it can reach a new high every year.

A bear market is where you have the highest certainty of doing it. If a stock has a dividend payout ratio of more than 8%, and its future performance growth is more than 15%, it will not suffer losses in a bear market, as I just said, because in a bear market, all stocks are undervalued. If you buy those that are grossly undervalued and can be counted, you will also make money by buying them for 12 months. My research has found that as long as a stock is grossly undervalued, it will be corrected by the market in 12 months. What is gross underestimation? Let's say we buy a stock. If its dividend payout rate is above 8% in a bear market, this is my own summary. More than 8%, its future performance growth is more than 15%, I think you will not lose money when you buy this company's stock, this is my own experience. Because the interest on bank deposits is only 2%, if it pays you 8% a year, it is at least higher than the bank's interest income. So, even if it falls this year, because the bear market is mostly down, it will reach a new high when it comes to dividends. The main criterion for us to buy a good company is whether the stock, whether it is a bear market or a bull market, whether it can reach a new high every year. Don't be afraid to buy the wrong one, buy the wrong one year and it's back. That is, we say that you can't set it for more than 12 months, even if it traps you again the next year, but the next year it passes 12 months and then unwinds it. When the dividend is lost, it makes you unwind and make money. Always you have the opportunity to unwind, you can hold the company. We are most afraid of continued declines, and we try to avoid buying companies that cannot reach new highs. In the bull market, regardless of the beginning, middle and end of the market, the most important way to make money is to buy leading stocks.

There is a general direction in the bull market, regardless of the beginning, middle and end of the period. It always has a faucet. What is a faucet? Leading the broader market, the general trend is upward, and there may be a shock adjustment in the middle. If this bull market continues for several years, the stock can also reach a new high. Last year I wrote an article about what is the bull-bear dividing line, and I said that if China Merchants Bank reaches 15 yuan, it is the dividing line. Why? Because from bear markets and bull markets, people will be very cautious and will buy companies that they think are good, so large-cap companies are the ones that people dare to buy the most. So everyone will buy companies like China Merchants Bank.

In a bear market, such companies would also be undervalued. By the time the bull market returned to normal, to normal standards, I think there was a 150% increase from underestimation to returning to normal. At that time, we counted China Merchants Bank 5 or 6 yuan, and if it rose to 15 yuan, it was exactly the bull-bear dividing line. In 1994, it was also led by the Shenzhen Development Bank, which just rose from 6 to 15 yuan, which is the bull-bear dividing line, and China Merchants Bank also verified this. In fact, what the bull market can take the lead in rising is what we are talking about that can run through the big center of the entire bull market. It may not be just China Merchants Bank stock, but why did I write about it in my article? I have my considerations. I set my standards first. China Merchants Bank must have the largest number of participants. There are so few people involved that I don't say it, I only say the most important thing, so that people can remember me. So I opened the shareholders' meeting of China Merchants Bank, and Ma Weihua came over and said that what you said rose to 15 yuan, and finally confirmed it. So here's an opportunistic one, and you have to be remembered when you speak. I'll tell you what's going to happen in the stock market over the next three years, and then you'll check it out. Otherwise it doesn't make sense to just say what was before.

The method applied in a bear market is not working in a bull market. You're also not making money fast enough. How to solve it abroad, in fact, is not written in the securities book. But the results of the research I did were that foreign countries were directly replaced. Fund managers in bull markets are not the same as fund managers in bear markets. Just change people, don't change your brain. So this indicates that bull and bear markets should think differently. At the beginning of the bull market, we chose leading stocks with large market capitalization as a key investment.

At the beginning of the bull market, I would be a fool, be a turtle, whether it went up or down, and grab the dragon head stock all the way.

For example, in the early days of the bull market, you often can't judge when the bull and bear divide. Today it's up and down tomorrow, and it's hard to tell if it's bull or bear. Because there was also a rebound in the bear market, it rose for a while and then fell. So we just grab the valuation, grab what's at its core, and I don't wait for it to go up. So at the beginning of the bull market, I grabbed this kind of stock in the leading position, which was equivalent to grasping the tendon of the bull market. At the beginning of the bull market, I grabbed the hold, I made a fool, I made a turtle, no matter whether it went up or down, I was the stupidest person and put it away.

In the medium term, the bull market will develop in depth. I think it's the middle of a bull market. The bull market is early to mid-term, and the medium-term is characterized by a lot of stocks rising. People have forgotten the risk of bear markets and slowly forgotten. The stocks that I did not dare to buy will also be bought, and everyone will definitely rise when they buy it, which is a restorative rise.

Bull market small-cap stocks must have risen over large-cap stocks, and the most profitable varieties in the bull market, in addition to leading stocks, are high-quality small-cap stocks.

In the bull market, the two types of stocks that can rise the most, one is the leading stock I said, which drives the entire bull market, and the early, medium, and late stages will rise. There is also a high-quality small-cap stock. As I said just now, why should I choose to grow up with equity and profits at the same time, which is equivalent to buying insurance. We have to choose some small plates, the smaller the plate, the easier it is to rise. I also wrote it last year in March and April, bringing up both categories. Because this is also the international experience, once the market is good, people will forget the risk, and may choose some small market value. Everyone with a small market value is easy to buy, and it is easy to rise. But I'm not going to speculate, so I'll pick some good small-cap stocks. This is going to run through the entire bull market. In the end, small-cap stocks must have risen over large-cap stocks. The above two categories are the stocks that can rise the most in the bull market. The investment strategy of a bear market and a bull market is not the same, which determines that your investment method is different.

At the beginning of the bull market, my deployment: leading stocks accounted for 60%-70%. Small cap stocks are 15%, and the middle piece is a low PE high dividend sector accounting for 25%-30%. By the middle of the bull market, the proportion of the middle piece has been reduced, or even reduced to 0, and then the investment in small-cap stocks has been increased. At the beginning of the bull market, I mainly bought leading stocks. I probably account for 60%-70% of the leading stocks; I account for 15% of the small-cap stocks, and the middle part is what I think must be undervalued in the bear market, with a payout ratio of more than 10%, accounting for 25%-30% of my portfolio. This is what we call a formation. The middle piece can always maintain the source of my life, without worrying about money. This was my time in the early days of a bear market. Nothing else can go up, and the annual dividend in the middle of this part is enough for me to live. Therefore, I will always be full of bear markets and bull markets, and I will not suffer losses. I didn't have a short position for a day. Unless I'm going to use the money, I'll sell it for whatever price.

This is the layout of the early bull market. One is the leading stock, one is the middle of the high dividend, generally high dividend in the bull market, it must be PE is very low, the dividend is very high. Low PE high dividend This is a pair of twin brothers that will be linked together. The third block is high-quality small-cap stocks. I am very idle in the bear market, which is also to pass my time, and I will write articles for them when I interview them. On the surface, I was spending money, but in fact, after I set up a good position, I was already helping me make money.

In the middle of the bull market, everyone will forget the pain of the bear market. The stock market is dormant most of the time, rising only 5% of the time. So as long as you survive the hardships of a bear market, you can do something else. Buffett went to farming, and I couldn't bear his suffering, so I went to love. So this is very important to pass the time. That way you don't care about the stock market.

In the medium term, I only need to do one thing, that is, to reduce the proportion of the middle piece, that is, the middle "low PE high dividend" piece, or even shrink to 0, and then increase the investment in small cap stocks. Because small-cap stocks can rise the most, the bull market must be the small-cap stocks that rise the most. Small-cap stocks are bound to bring you extra income, so you just have to do this step. If you don't pursue higher profits, at least I can share in this wave of bull index growth. Last year the index went up 130%, and I was up five times. In my stupidest way, after you buy it, don't ask me, it can at least keep up with the index, you will not fall behind the index. In fact, in the stock market, most people can't keep up with the index. How much the index has risen, most people's wealth growth has not kept up with the index, it is not easy to keep up with the index, especially our current index, it is actually distorted, the large-cap stock is on, it is according to the issue price, there is a lot of distortion, most people can not keep up with it is also very normal. But we can do this, for example, in 12 months, to outperform the index. The most important operation method of the bull market is to hold, can not take can not make a lot of money, make double or double is not called making a lot of money. I can't do it by throwing high and sucking low, and if you can do it, you are a god. Holding is the way through the entire bull market.

Of course, in the third period of the bull market, my judgment is only in the middle of the bull market now. It's not the craziest time of the bull market yet. I don't make that prediction, others are confused at that time, you also follow the confusion to make money, but you have to be clear in your heart, to what position you don't want to participate.

Next, my trick is how to avoid this risk. This is how to do it in a bull market. The most important way to operate in a bull market is to hold, and holding is the most critical. You buy the stock and you hold it. I'm actually a fool, other smart people are doing high throwing and low sucking, they make trouble, I make their money, I do the simplest way, I just take it. High throw low suck I think I can't do it, how can you do it? To do it is to be a god.

Let me give you an example here, the Hong Kong stock I just talked about has risen from three cents to fifty cents to three cents for several consecutive years. I have a partner in the business, and he does sell it every year to fifty cents, buy it back, and make a total of fifty or six cents in three years. Sold in the last year, I can't buy it back. Every time I saw him, he said he was making money again. I said you your way, and I ignored him. Finally, I told him that I said I made 32 times. He said, or you can.

If the stock market is always "high to sell low", chase up and kill the fall every day, the result is that the last time you can not buy back, from then on the dark horse and you have no luck, and the back should make the most money when you go, that is the big head. Just now a young lady told me that after buying the stock, should I hold it now or sell it and buy it again. I said, my train of thought is this. If you buy at a low level, the market is good to hold. I end up selling stocks, it must not be selling the highest point, I accept that the high point fell by 30%, if it makes my market value loss within 30%, I feel that I am the most successful. The market of 1500 and 1700 points is said to be high, but the people who sold at that time, I might as well sell a high point. When stocks make money, it must be the craziest time to make you money, make a lot of money. People who make money must have such an experience, if they can't take it, they can't make big money, and if they make double or twice, it is not called making big money.

Three conditions for selling stocks: finding a company with a better price performance ratio; how the company operates has changed; and the company is indeed overvalued.

I would like to add that when will I choose to sell? The previous section should have been said. Everyone thinks I've been buying, how do I sell? I sell on three terms. The first I always choose the cheapest thing in the securities market, the best price-performance ratio. The company I hold now is not necessarily something I don't think it can go up, I sell it and I'll choose something better.

The second is this company, and the business situation has changed. My life's investment in one company is like this, Sichuan Changhong. At that time, after I bought it, I found that the old price of the color TV was reduced, its gross profit margin fell, the business situation changed, and once the trend was formed. Of course, it is not to say that the gross profit margin changes in one or two months, for example, the company has an occasional change in order to hit competitors, which does not represent the trend. If its gross margin decline trend is formed, we will resolutely sell it. The biggest risk in the stock market is this risk – a change in gross margins. I have only encountered this kind of thing once, that is, I sold The Sichuan Changhong in that year.

The third is that it is indeed overrated. I feel that it will take me a hundred years to get our money back. When we were eating just now, there may be some students who don't understand PE. Pe means, let me explain. If the company doesn't grow, how many years you invest in the company to get your money back, it's a concept of time. PE8 times, that is, you invest in this company for 8 years to return the cost, I mean static, it has no growth in the case, this return time period, of course, this is the shorter the better.

We say that making money must be in a heavy position in three years can rise ten times, twenty times the stock, in order to get rich

I am also a person who is not willing to communicate with others, and they do not understand the communication. I have not been able to communicate with more than five people in my life. You told him for half a day, and he couldn't understand it. But I'm familiar with people, smart people, and you and he say he understands very well. Some people say, talk to me. I said you don't communicate, I never communicate with people, I just want you to listen to me. There's no point in me communicating with you, the questions you ask are ridiculous questions, there's no way to communicate.

We say that making money must be in a heavy stock, which can rise 10 times, 20 times, or even more in three years to get rich. Just now they asked me, you can only increase one to three times in three years. I said that I am the most conservative, and if you want to invest in the worst outcome, this is the key to investment. Just because we locked in the risk and saw it at the bottom doesn't mean I'll be able to make three times as much in three years. I earn three years, it must be on the big steps. My reckoning is the most conservative, and the stock market will magnify. I must calculate the account for 36 months. Of course, I want to calculate the account of five years, but I don't have this level, I can't calculate it. Therefore, for the operation of the enterprise, I count three years is also good, the fire eye golden eye can see. After calculating the account for three years, by 18 months, the limit of my past investment was that I had to earn money back in 18 months. So I used to invest, and it must work in 18 months. Although I did it for three years, it was usually done ahead of schedule.

But we can't shoot your own head, invest, must be prepared for the worst, as for the unexpected harvest is an unexpected gain, our requirements for ourselves is to prepare for the worst. In this way, you can win the investment, can you be firm, and can you hold. In a bull market, you don't want to watch someone earn more than you today, you envy him. We have to maintain a peaceful state of mind, we are a tortoise and rabbit race. It is precisely because of the ups and downs of the stock market that I can make money. If everyone finds a good company, there will be no bargains, and I won't make money. It must have been an undervalued company, and I went to buy it. The stock market rises every day, causing smart people to abandon its principles. That's why we say it's important to stick to principles. What I'm doing today is that I don't listen to what other people say except for this acre and three-quarters of land. You can learn anything, but you can't learn to make money. It just has a lot of temptations. I could see clearly, but the people around me couldn't see clearly.

I asked the people around me not to talk about stock prices. You don't tell me about the stock price, you say it outside the door. Here don't talk about today's rise, fall, you don't say this, you have to overcome the weakness of your human nature, overcome the weakness of your human nature, you are on the line, it is a greedy word.

You can learn anything else, you can learn anything in the natural sciences, but you can't learn to make money. Why do I say that making money must not be learned? Because it's just a lot of temptations. I can see clearly, but the people around me can't see clearly, and they will compare, including my parents, my wife, all like this. I'm with me every day, and she doesn't know. As soon as you talk to her, she is still her idea, so the overall investment idea is only clear to me.

For example, investing in a building, I know whether to buy today, how much to buy. Actually I just need to know two things, one thing is that I have money today, what stock to buy? The second is how much do I need to buy? The amount of money bought per stock. The latter is more important than the former. So a lot of people ask me what stock to buy, and I think it's secondary, the most important thing is how much you want to buy this stock. For example, we said that in three years, this stock can rise 20 or 30 times. You only bought 100 shares, which is more painful than jumping off a building. I thought of this, I didn't do it, I was going to jump off the building.

So I never get involved in buying and selling stocks. People with whom I have direct financial dealings, such as my family, my friends, he will definitely not be the one who placed the order, including myself. Because I know that human nature has weaknesses. You can do a statistic, it must be a random buy, and the end result is the best. High throwing and low sucking are all wrong, ten times right, once wrong, maybe the last time you didn't buy enough. So I ask our orderer must have no financial contact with us, it is best not to read any computer, do not understand anything, he only knows the operation. I'll pick this kind of person now. My securities trading is done by the employees of the securities company, and I usually do not talk to him, he gives me operations, is responsible for giving me orders, buying and selling. There are tricks in this. You must have the view that you are not the smartest person, and this matter should be done by others. Why? He has no financial interest. You ask him to buy ten thousand shares, and he will buy you the best price, but he will buy you enough. I don't care about the percentage, in the end it's whether you make enough, you buy Maotai and how much you buy. This is very important.

Therefore, people must have big ideas, and the direction determines his approach. That's what I do, I'll tell you. So I bought stocks, and often the price I bought was the highest price of the day. The highest price must have been created by me, no way, I can't control it. But I was the winner in the end. The people who sold me the stock, I believe will regret it. In the case of a bull market, as long as it is bought at a low level, it is held.

Portfolios can mitigate the risks of investments. Portfolio investing keeps my volatility risk at no more than 20% of the buy point.

Let's talk about how to do it.

So, if you give me money today, how do I combine it? Whether it's high or low now, who knows? It has indeed risen so many times, what to do? That's what we're going to talk about next, portfolios can defuse the risks of investment. The bull market has reached this point today, should we buy it? How to buy? At this time, the cumulative increase is large, and some things should not be bought according to the price of buying. Because I have a full position, I don't have to worry about it, I just have to hold it.

I don't know how high or low the stock market is, but I went back to sleep when I was full. This is my most basic method of operation.

How do I buy you want money? For example, I have a financial manager now, he gave me 1 million today, what do I buy. This matter must be planned. First of all, I want to track that this market is always undervalued. In the end, it is still for the enterprise to settle the account. For example, the trust I issued last month, I will put the highway portfolio 30%. Because at that time, I calculated that the PE on the highway was between 15-18 times, and I didn't think the price was high. Why not high? We have theoretical support for this. The PE of listed companies on overseas highways in the world is more than 35 times. Its growth is not as good as China's. Domestic highways, I calculated that its growth is more than 18%. Because of the automobile industry, I am very optimistic. Because we don't see good companies in the auto industry now, it didn't come out. I think China's automobile manufacturing industry, local companies should run out of some good, and even in a few years there are well-known companies in the world, I believe that the general direction of the automobile industry is not wrong, the house bought Chinese is to buy a car, the biggest consumption. I am optimistic about the automobile industry. But I was very competitive with car manufacturing, and I couldn't see the signs of running out, so we bought the highway. There are too many cars to run. Because the general direction can not be wrong, the highway it has a very high threshold, you generally rebuild a highway, all the highways I did research, the current market value is only a quarter of the reconstruction of a highway. For example, buy the highway according to the current market value. Now you're going to have to build the same highway for four times as much. So if you want to rebuild a highway that is the same as yours, it must be a loss and it is not cost-effective. Because the land acquisition and cost have gone up, he is four times higher, so why should I build it myself? So I'll make the highway a point.

In addition, we will choose the next three years, banking, tourism companies, its rapid growth of more than 30%, this growth PE will also be reduced. This subtle combination makes me not afraid to buy high, I dare to buy, after buying I can hold for three years, should not lose money. So how to solve this problem is to control the risk by combining the amount.

You don't look at this big market will fall, but some stock markets will not necessarily fall. Because I have been doing it for a long time, I know that the market has fallen, but this stock will not fall. I'll just make a combination. I have a combination of can rise, so it will be balanced, portfolio investment so that my volatility risk is controlled at no more than 20% of the buy point. For example, if you buy 1 million yuan of stocks, the risk we can bear is 20% volatility. So, when we buy, I, as a designer, I will design well. If I'm high, I might just give it a balance. This is very effective.

Holding the stock for three years I can withstand any risks in the broader market. Because of this company's account I calculated for three years.

I wouldn't do that in a bear market, so let's focus on it because it's a very cheap thing that will make money sooner or later. But at this high price, I have to make a portfolio. This does not mean that our stock market is high now. I even had the illusion that maybe after a few years, this position would be a starting position. I don't make judgments about this, I just say that holding the stock for three years can withstand any risk of the broader market. For example, the pee of the highway dropped below 10 times in 2009. That is to say, if you do not grow, you will return the cost of investing in this company for 10 years or 8 years. I remember when I bought the Ninghu Expressway in 2001, its PE was 15 or 16 times. At that time, it was a compound growth of 18%, and as a result, I bought it for three years, and it was more than 39% growth in three years, and in 18 months it made me earn several times. This is now the same with highways, including bank stocks. Like China Merchants Bank, last year I can buy 50% of my investment, I put 50% of the money to buy this stock, now I only need to invest 20% or 30%, I reduce the amount of it, which has a control over the risk. It's a balanced combination, and the risk is locked.

Now let's not talk about valuation, this is the biggest risk. Valuation is a tight curse in my head at any time.

It's a layoff, and then we do how to allocate assets. My strength is asset allocation, which is what I'm best at. A lot of people say why I left the stock market in a bear market, and I don't actually know. Every time there was a bear market, it was true that I was active outside the stock market, and by that time I had exited the stock market. I say full because I went to another cheap market to buy it. But why would I leave the stock market in a bear market? I've had about three bear markets. I've been out of three bear markets. Actually, I was confused at the time, I don't know, I just allocated through assets. After thinking about it, I think what I did was an art. Today I'm asked to take 10% or even 20% or 30% of the money and I'm going to go to other markets for cheap things, and I'm doing this work since last month.

For example, overseas markets, such as companies listed in Hong Kong, are also domestic companies. Because I've been tracking for a long time, I know it's time to get cheaper, this location is cheaper, and I'll buy it back. I will intentionally or unintentionally withdraw some of my funds to do this. This is my asset allocation. I'm in this market, and I'm always going to find someone who can make money. It was this location I bought without risk. I'll allocate my assets to this part. But there is a risk that the average person can't do, because he knows that cheap will not buy. For example, our current B shares, there are some B shares that are very valuable for investment, but we will not buy them now. Why not buy? It is because of the ups and downs of this market that people forget about discipline and valuation. Now let's not talk about valuation, this is the biggest risk. Valuation is in my head at any time (always know the high and low). For example, in today's small cap stocks, more than 70 times PE, I will consider whether it is high or not. But if you sell it it will definitely rise.

I do a big asset allocation every three years.

I am now forcing my 30% of my assets to be outside the A-share market within 12 months. I estimate that these 30 percent of assets will rise at least fivefold over the next three years, and that after three years, the benefits of these 30 percent include principal equivalent to 150 percent of my current total assets. Even if I lose all 70% of my money now, my 150% is still enough to ensure that my funds are growing. In 2003 I sold a Tongrentang technology in Hong Kong. At that time, I sold 17 yuan, and after selling the Moutai I bought back. Some time ago Tongrentang technology became more than 12 pieces, I bought it again, this year's performance I expect it to have 1.2 yuan in 2008 I gave it PE8 times. Tongrentang I calculated that it would not be able to do it for three years, and I just went to be a turtle again. Because I am not greedy, the A-share market must now be the best profitable market in the world, because it is a big bull market. It must be able to rise here. But I am already doing asset allocation now, and I force myself to withdraw my funds in the next 12 months to put tongrentang technology and Yadu and other companies, which is doing asset allocation. I don't want it to give me much in return this year, and as long as it doesn't make me lose a lot of money, I'll stay in it. This seems to be a conditioned reflex.

One of the tricks to beat the 2001 bear market was the allocation of assets outside the A-share market in 1997.

Actually, when the bear market first started in 2001, I was already doing this work around 1997. I also forced myself to do it, and this kind of large asset allocation is very important. I tell our customers that when you join our team, it is not only me who tells you how stocks operate, but also tells you the weaknesses of human nature, and I slowly cultivate so that you are not afraid of the stock market. You don't feel risky in the stock market. You are not afraid of the stock market to hold, will make money. There is also, when it is critical, I will give you asset allocation, and when it is critical, I will tell you what risks this company may have and what measures we should take. Just because I sold this stock doesn't mean I can't go up, and there are more stocks that I can go up after I sell it. But we only make reasonable, we know the money. This kind of asset allocation is like an indispensable element in a war.

In the first three years of the bear market, my market strategy was better, so I bought with a full position and waited for it. Now that I've made a lot of money, I'll think about it. But most of me am still in A shares. I don't have to worry about it, I'll just make such an allocation of assets, and that's it. The benefit it brings is what the people say that "the East is not bright and the West is bright", which is enough. It was able to lock in my current profits.

I haven't missed this method for so many years. Although there are mistakes in the short term, for example, I sold Sichuan Changhong in 1997, the highway I bought did not rise, and Sichuan Changhong still rose vigorously. My brother-in-law said that he already knew not to sell Sichuan Changhong. But after a few years of comparison, the results are different. In 2003, I sold the Ninghu Expressway and bought Moutai, which also fell from 27 to 20 pieces of Moutai and the highway rose vigorously, and now the result is that Moutai has risen 20 times, of course, the Ninghu Expressway has also risen. So the allocation of assets is like this, you lock in the risk. It is very important that the risk is locked in and you create more profits.

Another trick for me to make money. I used to have risk-free arbitrage almost every year every year.

Next I'll talk about another trick to making money in the stock market. I used to have risk-free arbitrage almost every year every year. Risk-free arbitrage accounted for 40% of my total assets in 2006. I am afraid of risk, risk-free arbitrage is to make us easy to make money. Let me give you a few examples, for example. The china merchants bank just mentioned is 102 yuan. Because its issue price is 100 yuan, we only need to judge that If China Merchants Bank does not fail within four years, I should make money, so I will borrow money to buy China Merchants Bank to convert bonds.

At that time, the stock price of Wuliangye was 6 yuan, and the exercise price of the put warrant was 7.99 yuan. Wuliangye is less than 7.99 yuan, Wuliangye Group buys back, and there is a bank guarantee. I'm going to make this money. In those days, I borrowed money and resolutely bought Wuliangye. I also wrote an article in Red Weekly at that time, and I said that if you buy it now, you will not lose money. Wuliangye has more than 30 pieces this year.

There is also a story that I went to Dalian with a friend in May. BOC Securities held some promotion meetings for listed companies in Dalian. I never paid attention to Shanghai Airport because it wasn't in my stock pool. At that time, the secretary of the board of directors of Shanghai Airport sat next to me, and I told him the story of Wuliangye. He told me that we also have a put card at Shanghai airport. I didn't eat well that day, so I quickly borrowed money, and I borrowed as much as I wanted. The stock price of Shanghai Airport is less than 11 yuan, the strike price of the put warrant is 13.7 yuan, I bought a lot of 11 yuan at Shanghai Airport, and when I wrote the article, it was also 11 yuan, but no one listened. Including my friend, he didn't buy a single share. The TV all shot me borrowing money, and I told it was a risk-free arbitrage, and that the put warrant was 70% put, guaranteed by the Shanghai municipal government. As long as you judge that the plane at Shanghai Airport can still fly in 12 months, you will not make a mistake in this investment. The money I borrowed was about 10%, and I must have made money. At that time, the Shanghai airport was only more than 11 yuan, you borrowed money to buy, the interest rate of 10% a year, or make money. Our financing projects must be risk-free arbitrage, which occurs every year. Now I've discovered new varieties.

Risk-free arbitrage is all about putting it at the bottom that has been seen. For example, some of the bonds that we see now, corporate bonds, it fell by more than 70. I wondered why corporate bonds with a face value of 100 yuan had fallen to more than 70. How to do it, buy a debt mortgage, then mortgage and then buy a debt, I dare to borrow money to buy, resolutely buy. I don't believe I can't make money. I've done this risk-free arbitrage countless times. (China Evergrande's dollar debt)

Buy stocks must be remembered. There is a lot of wealth that actually slips away from you. My friend went to Dalian with me, and he didn't buy it. I went to Dalian once, I ran for two days, and made 80 million yuan back. Mouth-to-mouth things, which don't require your money, bring other people's money. The opportunity is on your side, see if you can grasp it. A person's success, I summed up, many people are smarter than me, but also more capable than me, I may be a fool. But he's a little bit worse. This is risk-free arbitrage. Risk-free arbitrage in the securities market is sometimes very strange, even the government bonds have fallen to more than 60, and the 100 yuan issuance has fallen to more than 60.

At that time, we counted a company in Shanghai, Xujiahui had a real estate called Oriental Manhattan. It was a very large property and I went to see it. When I went to Shanghai, the general place only sold for 2,000 yuan, and it sold for 9,000 yuan. But we calculate its account, I convert its stock price to its market value per square meter, and its assets are so much. At that time fell to 900 dollars a square meter house. You buy its stock is equivalent to buying a house of more than nine hundred square meters, which is too cheap. But the stock market just makes this happen, and it happens often.

Today I told you about Tongrentang Technology, and in two days you will check its stock price. So we don't look at the big market, we don't have anything to do with the big market, I think it's certain, and it has nothing to do with the big market. If you pin your money-making on something you can't grasp, I think that's the biggest risk. Your fate is not in your own hands, I only have to shake off the market and make money. The ultimate fun we pursue in the stock market is compound growth, which is risk-free.

At present, in A-share investment, one of my stock selection methods is that the company that a fool can run is a good company. And what everyone just said, how to look at business leaders. Because Chinese, I don't think it's that noble yet. This is not to say that Chinese, because it is a system. Most of them are state-owned enterprises, and this system cannot be changed, this is the status quo. Quite simply, people have self-interest. If he earns such a little salary himself, he has no enthusiasm. Therefore, at present, in A-share investment, one of my stock selection methods is that a fool can run a good company, that is, even if he changes to a company called Hanako today, he can also run well, and this company is a good company. Good businesses and bad companies, you know it as soon as you communicate with the management of the enterprise. It's the same as people, rich people and people who don't, and talking is completely different. As soon as you go to this enterprise, he always talks to you about difficulties, how to struggle in adversity, how to make money, he always talks about his management, I look at it, I at least treat this company as a second-rate company. The company I like is to eat and drink, come and play, never talk to you about work, which is good. I said this kind of company you don't have to be afraid, he eats so much, he can eat these billions of profits poor? I didn't believe it. But this kind of company can definitely make money, so that's my opinion of business leaders. If you're pinning your hopes on a change of leadership, be careful about this. I think this line of thinking is problematic.

We should also pay attention to the financial indicators of the enterprise. You look at where a large part of its money is placed, and you still go to the securities market all day to raise funds for companies, you have to pay attention. The best companies in the bull market, his money has no place to use, he goes to play new stocks. If you have to go to the securities market all day to raise funds, you should be careful of risks for such companies. I found that all the technology companies with the word Science, like Tsinghua Tongfang, I said that it is a losing company. When the stock market is good, these companies must be rising companies, and as soon as the stock market comes down, it comes down. He was taking the money of the common people to spend it. The last time we went to Tsinghua to hold a meeting with Tongfang, the boss said that we had only raised more than 2 billion yuan in the securities market, and I said how many hundred million you had given to the shareholders. Isn't that what a loser is? This kind of company we do not touch. I say this, it's not that I don't respect this company.

A good company, in fact, it may be left by the ancestors, it may be a monopoly enterprise, but we like such a business, it makes money.

Tsinghua Tongfang can't make money, but it's not that we don't respect it, it still contributes to society, at least it raises so many people for society. But that doesn't mean I want to buy, I'm going to make money as an investor, and making money is the most important thing.

This is my criterion, the company I choose, its cash flow must be abundant, that is, the company that collects money. Ultimately, we're reflected in financial metrics, and I'm going to focus on the concept of net worth.

Some people who study finance will attach great importance to net worth. My personal view is that net assets that do not create substantial value are actually invalid assets. Your machinery and equipment, idle land, long-term put it, the house has appreciated in recent years, but you see some house projects can not bring benefits, that is, we say it can not make money. I think this is an invalid net worth. Honestly, I don't look at this indicator at all. I only look at its profitable assets, whether it is a profitable net asset, the return on this part of the net capital is the return on net assets I mean, the higher the return on net assets, the better, the high return on net assets, indicating that the profitability of the enterprise is strong.