First, your understanding and expectation of fund evaluation must be correct.
First of all, there are many factors in our fund evaluation history and future process, which may affect the stability of performance. For example, changes in fund company shareholders, fund managers and fund scale may affect the stability of performance. To take a step back, assuming that these factors are stable, the performance of the fund may still change. Why? If we evaluate the short-term, the short-term benefits may be uncertain and cannot reflect a person's ability. So our rating usually measures this person's ability for a long time in the past. For example, he has experienced a bull market and a bear market, and his ability can be recognized. So, if all the factors I just mentioned remain unchanged, you can get some excess returns in the next two to three years, but you can't expect to get high returns in the next month by buying a five-star fund.
Why? Each of our fund managers is an athlete, and he has his own professional field. Our rating is triathlon. Ok, he got a good evaluation. Maybe the market is ruthless. I'm going to Bimalasson today and riding a bike tomorrow. For a five-star fund manager, he is especially good at marathon. If we say that next season, he may not be able to win than riding a bike, or even worse than others. Therefore, we must first have a clear understanding and expectation of fund evaluation.
Second, integrate the judgment of the market and choose people who are suitable for the next market.
Fundamental research only shows that the performance of the fund is analyzable, judgable and predictable to a certain extent. The fundamentals of the fund determine the relative performance of the fund, while market factors and fundamental factors determine the absolute performance of the fund.
Therefore, there are three steps: first, run for the right fund manager; Second, understand the specialty and style of this fund manager; Third, choose the right manager in combination with the market. We have to do a lot of work in this respect: the first step is to score each fund manager and choose the right manager. In the second step, we will distinguish the style of each fund, whether he is good at marathon or swimming at racecourse, and know that he is good at fields and not good at fields. Third, through some qualitative research and our judgment on the market, we finally choose some suitable funds.
But now we find that although the fund industry is known as expert financial management, it is still out of touch with our own actual needs. Public Offering of Fund products, in particular, focus on the pursuit of relative returns. Most fund managers still focus on stock selection, but they do relatively little on timing. But for our fund investors, we need him to help us both, asset allocation, timing and stock selection, but this is not the case in reality. Because for fund companies, the scale is generally relatively large, not to mention the difficulty of timing. In terms of scale alone, it is difficult to appear. When I am bearish on the market, the scale can be reduced to a very low level in a short time, so the impact cost on the whole market is great. Therefore, for fund companies, more majors are still in stock selection.
Third, asset allocation and timing have a great impact on the returns of fund investors.
There are many losses, and fund selection is a problem. Many times, the timing is wrong. Therefore, we can see that timing has a great influence on the returns of fund investors. Different investors have different risk preferences and different asset allocation needs. We can see that as our fund investors, there is a very, very great demand for asset allocation and timing, which cannot be met by the products of fund management companies.
If the timing is not good, there are two reasons. I think the first point lies in people's greed and fear, because first, no asset allocation method or timing method can tell you where the highest point is and where the lowest point is. No one can do it except God. And our demand, while causing a kind of fear, may capture the short-term performance of the market, because short-term gains will definitely have a great impact on him. Let's give a simple example. You are lucky to know Buffett. He told you about a stock, telling you that this stock is very good. You bought it for a long time and kept it. There must be great value-added potential in the future. Later, you bought a stock here, but after a while, the stock plummeted. You can't find Buffett at this time, so many people tell you that Buffett is too old, or someone tells you that Buffett recommended stocks based on his judgment and understanding of the market at that time, but now the market has changed. It's not Buffett's market at that time, so you can't sell it quickly.
I believe that for ordinary investors, 90% investors will choose to sell. This is because your greed and fear of short-term gains and your humanity will make you lose your way, and you will involuntarily follow your own humanity. This is why we buy the highest point and sell the lowest point, and this is to follow human nature. Even as a professional investment consultant, I can't tell him where the highest point and the lowest point are. Maybe I will tell him that in 2007, if it is above 4000 points, I think it is overestimated, and you should gradually reduce your investment. However, when I came over the next month, I found that it rose from 4,000 to 4,500. Many people would scold you for not believing it, because short-term gains have an impact. He thinks you are wrong and will not stick to your point of view.
It's the same going down. You told him that you could buy gradually below 2200 points in 2008, and no one believed you at this time. Maybe he lost 2000 points in the first month and the second month. He will hate you and won't believe you. It is human nature that makes it difficult for us to choose the right time. If we can control our humanity, treat the fund as a medium-and long-term fund and grasp the overvaluation and underestimation of a medium-and long-term market, I believe it is possible to allocate assets at the right time, as long as you ignore the short-term phenomenon.
Fourth, formulate strict investment strategies and control your greed and fear.
We have many methods of fund selection, but we are relatively lacking in timing. Timing is a very difficult thing, and some professional investors can't do it. Why do we investors do it ourselves and how do we accomplish such a difficult task? Timing is also the most controversial part. In fact, we can base on a very simple indicator, historical valuation. In fact, in this case, we can also establish such a method. When the market is relatively valued, we will gradually withdraw from the bubble, gradually sell a little when it is expensive, and gradually buy more when it is cheap.
Of course, our humanity is not that simple. This is one of the core ideas, and many people may ask. This aspect is very simple. When it is expensive, we will gradually sell some and buy more when it is cheap, which ordinary investors can see. For example, supermarkets have discounts, and everyone buys them when they promote sales. However, we found that you didn't buy such a wealth management product. Most people buy at the highest point and sell at the lowest point. This is what we call human greed and concern for short-term interests.
So what can we do to suppress our humanity? If we follow your humanity, it will be difficult to make money. It can only be said that most ordinary investors can control their greed and fear by formulating strict investment strategies. If we can use this method well, the key is to restrain our concern about short-term gains and human greed and fear. If we can combine the timing asset allocation with our base selection, I believe the excess return will be higher.
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