In any market, there are some valuable but unpopular targets.

Because of industry cycles and expectations, these once glorious varieties have been cast into a layer of dust.

Many friends will ask, the PE and PB of the stocks I bought are so low, why don’t they rise?

Varieties with low valuations will definitely see a valuation recovery, right?

In this regard, I asked a number of industry researchers and drew some conclusions by analyzing some historical data.

The story of diamonds starts with a short story.

A long time ago, no one knew the value of diamonds, so they lay there quietly.

Later, people began to mine diamonds on a large scale, but diamonds were still relatively cheap.

When did diamonds really become valuable?

Starting from the merchant's definition, "A diamond is forever, a diamond will last forever", linking love and diamonds.

Have you ever discovered that the diamond ring you buy may actually be worn once in your life?

Once upon a time, gold was used when getting married. But now times have changed. Diamonds are still the same diamonds, but the price has gone up because diamonds have stories.

Business Valuation Issues Is there any connection between diamonds and business valuation?

If we compare a company to a diamond, then if a company wants to sell at a high price, it must have the following points: 1. The company itself needs to have something that can shine, whether it is the company's net assets, profitability, or products and

Technical capabilities 2. It needs to be sought after by the times, the recovery of the industry cycle, and the attention of funds. 3. It needs to know how to market itself, and it needs to generate added value and good expectations for the future.

The low valuation only represents the first point.

Does a low valuation represent value?

The answer is yes.

Low valuation means that the value is underestimated.

If we can judge the reasonable value of an item in the long term, then when the value is lower than this constant value, it is undervalued, and we should be able to buy it and wait for the value to be restored.

But people often make a mistake, which is insufficient understanding of value.

A piece of clothing that normally sells for 100 yuan is now sold at a discount for 50 yuan. So is the value of this piece of clothing 50 yuan or 100 yuan?

It depends on why the clothes are discounted. If summer clothes are sold in winter, then they are discounted due to the season. Maybe in summer, they will be worth 100 again.

If it is discounted because the style is old, then the value of this piece of clothing may be 50 yuan in the future.

The same principle is also reflected in the luxury goods industry.

Many people do not understand luxury goods, because the value of luxury goods itself lies in a symbol of status and an added value, which is very different from the practical value that is tangible and tangible.

If you look at luxury goods from the perspective of ordinary people, many people will not buy luxury goods even if they have money, because in their eyes luxury goods are overvalued.

But the actual situation is that luxury goods are not easy to lose value. If they are limited editions or commemorative models, the value will only rise but not fall.

Valuation theory in the stock market In the stock field, the low and high valuations that a company should have also depend on the added value, and this added value is also a story.

The story of a company comes from expectations, and expectations are reflected in the theme.

Judging from the history of stocks, all low-valuation industries will experience restorative markets, but the cycles are uncertain and are calculated on an annual basis.

Most of those industries and companies whose prices have really risen have been in high valuation areas for a long time and will not be undervalued.

Very few companies rise from low valuations to high valuations.

Most of the companies that have gone up have gone from reasonable valuations to high valuations, to ultra-high valuations, and then to bubble bursts and back to reasonable valuations.

Most companies with low valuations are undervalued, repaired, undervalued again, repaired again, and so on. Once the valuation is repaired, they will be sold off and return to the low valuation area again.

Remember, most low-valued stocks are undervalued because there is no reason to be overvalued.

Many people are discussing that banks are currently severely undervalued, not only in China but also in the Hong Kong stock market.