refers to Davis' double-click theory.

taking index funds as an example, we know that the net value of index funds = P/E ratio × profit+dividend. Generally speaking, the stage of good profit growth is also the stage of economic prosperity, and the market will give a higher price-earnings ratio valuation. For example, in 27, the domestic GDP growth rate was 14%, and the profit growth rate of listed companies was about 2-3%. At that time, the overall P/E ratio of A shares was also more than 4 times. But there is a limit to the long-term growth of profits. For listed companies, it is relatively normal to maintain 8-1% profit growth for a long time. Excessive profit growth, then the profit growth rate will decline, and the valuation will also drop sharply. When there is a negative growth in earnings, the valuation will also reach a historically low position.

In a sense, Davis' double-click coincides with the way we invest in index funds: the economic downturn and slow profit growth are prone to underestimate opportunities. When the economy resumes growth, the profit growth is good and the valuation will reach a high level. Realize double benefits. Relying on Davis' double click, Davis created a fortune of 9 million dollars in 47 years with more than 5 thousand dollars. Moreover, he passed on his investment philosophy to his son, Shelby. Shelby has increased his wealth by 37.9 times in 2 years. Then Shelby also cultivated the third generation of the family, and continues to invest today.