What is reverse investment?

The core is not to go with the flow

The first level means that when everyone goes to stock trading, I quit, and when everyone talks about the stock's color change, I start to quietly open positions

The second level means that we should specifically look for those stocks that are deserted, conduct research in industries that are ignored, and speculate less on hot stocks

In short, we don't go where there are many people

Then why not?

Because only reverse investment can obtain excess returns

Almost all investment masters are reverse investment masters, but their expressions are different.

For example, Buffett said, "Others are afraid that I am greedy, while others are greedy and I am afraid",

Soros said, "Everything will flourish and decline, and after it is good, it will be bad",

Charlie Munger said, "Things must be reversed.

these are the most classic expressions of reverse investment.

why can reverse investment achieve excess returns?

The reason is very simple, because when everyone is concerned, a large amount of funds will definitely flow in and the stock price will definitely rise.

Therefore, if you speculate on hot stocks, you will become a high-ranking takeover man, but how can you buy high-ranking stocks with excess returns?

so how can we make a good reverse investment?

There are three points to note.

1 It depends on whether the company's stock is low enough.

Sometimes a company's stock seems to be low enough, but it has not reached the bottom yet.

For example, the computer industry looked low in 211, but then it fell by 7% in 216.

so you must wait until the valuation of this company or the whole industry is low enough to enter.

what are the characteristics of industries suitable for reverse investment?

One characteristic is that no one cares, and retail investors, professional institutions and fund managers turn a blind eye.

Then such an industry is an industry with potential reverse investment.

For example, Peter Lynch once invested in the funeral industry, earning dozens of times in three years.

It is because no one pays attention to such an unpopular industry.

is there a more accurate criterion?

Yes, judging by valuation, we will talk about the method of valuation next time.

2 Whether the problems encountered by industries or companies are long-term problems or short-term problems

If they are long-term problems, they will not have the value of reverse investment

For example, since 21, functional phones have been in a long-term decline compared with smart phones

For example, the film industry has been in a long-term decline compared with digital cameras

For example, Gome in the era when channels were king.

the key question is whether the underlying logic of industry competition has changed, and this logic is efficiency and cost.

why can't traditional retail do e-commerce?

from the cost point of view, offline stores need rent, transfer fee, decoration fee, a large number of employees, water and electricity, etc.

while e-commerce is almost left except for a small number of employees.

from the efficiency point of view, offline stores will be closed until 9 pm, because there are no customers,

when business is good, a store with a capacity of several hundred people at the same time will be packed

and inventory turnover will be tight. And you can do business 24 hours a day,

it won't be as crowded as a store to accommodate 1 million people at the same time,

and the inventory turnover rate of an e-commerce company like JD.COM has been reduced from more than three months to 38 days

This is the change of the underlying logic of the industry

Once such a change occurs, Then the old business form and the new business form are not competing in one dimension

so it is a long-term decline

There is another way to judge whether the long-term or short-term behavior has changed, that is, to observe whether the behavior of consumers has changed

For example, American Express's share price has fallen sharply because of the supplier scandal, but Buffett went to observe the consumers and

found that people had no influence at all, and used the American Express card as usual. So Buffett bought

in one fell swoop. For example, in 213, when the eight regulations came out, the stock price of Maotai fell sharply.

This is not that there is anything wrong with Maotai. Maotai is still the best liquor in China.

The core of whether or not to buy it is whether China people will drink liquor in the future.

Is it difficult for the liquor culture in 2 to disappear like this?

No, so this is a short-term fluctuation.

Do people in China really stop drinking liquor?

3 Does the company's stock have Soros reflexivity

That is to say, when the stock price falls, will it cause the company's fundamentals to change, and the deterioration of the fundamentals will cause the stock price to fall further

When an industry or company has these three characteristics, it is not suitable for reverse investment

Then how do you judge whether you are suitable for reverse investment?

It's mainly about the attitude of falling

If the price keeps falling after buying a stock, and you don't change your face, and the more you buy it, the more you are suitable for reverse investment

If the stock falls, you will be frightened and unable to sleep, and you will not be suitable for reverse investment

Are all industries suitable for reverse investment?

No

For example, the computer industry and the steel industry

Why?

Because of the overall rise of the mobile Internet, the computer industry is facing a long-term decline

While the steel industry is facing a long-term downturn in national infrastructure and industry, with excess supply, homogeneous competition and meager profits.

If you make reverse investment in such an industry, you will be deeply trapped.

so which industries are suitable for reverse investment?

the answer is industries with first-Mover advantage

what is an industry with first-Mover advantage? It is after entering this industry that the first enterprises will accumulate brand advantages,

technology and talent advantages

channel and supply chain advantages, efficiency and cost advantages, capital and scale advantages, etc., which set a high threshold,

making it impossible for later enterprises to compete

Such enterprises have two values:

1 For investors who have bought shares of this company, The risk is greatly reduced

2 The return on investment will be relatively high

For example, Gree in the air-conditioning industry, if you give a company 1 billion yuan now, he can't compete with Gree.

Because Gree has the first-Mover advantage formed by years of operation, the threshold of the industry is very high, and it is not necessary to have a little money to overturn the first place.

After Gree became the leader of the industry in 26, the return to investors plus dividends has reached an astonishing 5 times today.

This is the high return brought by the first-Mover advantage.

However, some industries are not like this. For example, the mobile phone industry has no first-Mover advantage. Loukia dominated the world mobile phone market for many years,

but it was destroyed by Apple almost overnight. The company's performance and profits fell precipitously, and investors lost all their money.

why is this so?

because the high-tech industry has always been technology-driven, once a subversive technology appears, it will definitely kill the boss of the original industry.

Loukia, an Apple industry giant, has no resistance

So which industries have the first-Mover advantage?

It mainly appears in the consumer goods industry and retail industry, so Buffett's long-term stocks are almost all of this type.

In addition to the first-Mover advantage, the following aspects should be paid attention to when making reverse investment:

1 Whether the products and services are differentiated

If they are not differentiated, they will generally fall into the price war, so the profits are meager and the returns of investors are very low

For example, steel and nonferrous metals,

2 products and services in cyclical industries such as coal can be easily replaced

For example, the film mentioned above and the functional mobile phones have been replaced by later digital cameras and smart phones

3 Is it a problem of individual stocks or the whole industry

For example, the impact of the eight regulations mentioned above on the liquor industry is temporary, and there is no problem in the industry and Maotai, so it is possible to invest in reverse

4 Whether the foundation of enterprises is stable

Some enterprises have passed the.

For example, the Qin Chi wine mentioned in the book "The Great Failure" was made famous by the standard king of CCTV, but it fell very quickly and easily.

how to do reverse investment?

don't chase hot sectors

it's human nature to go to busy places, but it's necessary to overcome the nature in order to obtain excess returns

For example, in 28, the hot sectors of LED and photovoltaic were heavily subsidized by the government, and all over the world, as a result, none of these industries started

.

why?

Because the popular industries are subsidized by the government, the result is overcapacity, and companies are not paying attention to the real cost and efficiency because of subsidies.

Subsidies distort the price signal, and enterprises sell products at prices below the cost. Once subsidies stop, that is, companies stop developing.

The more concerted the market is, the more dangerous it is. For example, in 21, many institutional investors began to over-allocate the pharmaceutical industry and

paid less attention to banks.

This is the value of reverse investment

The challenge of reverse investment

The key is the test of human nature. Sometimes you think it's time to enter, but it keeps falling, and it's a few years.

Can you hold it?

So don't pursue buying at the lowest point and selling at the highest point, because this is something you can't grasp.

Specifically, once you find a company suitable for reverse investment, you will buy more and more.

After buying expensive, all you have to do is wait and wait for the market to pick up.