According to the historical data of the market, we can know that the effect of partial stock mixed funds to make money is obvious, and many funds have performed well for a long time. These funds can achieve excellent performance, thanks to the fund manager's stock selection ability and investment strategy.
So, how do these funds with excellent long-term performance choose stocks? What kind of stock do you like to buy?
By understanding the stock selection strategy of excellent fund managers, we can find some characteristics.
An enterprise that can continue to grow.
Buffett once compared investment to snowballing. First, there must be a long slope; Second, there must be very wet snow. Long ramps mean long-term investment, and wet snow means good enterprises. Then the best way to make a good investment is to find enterprises with growing development space, cash flow and profits.
Enterprises that can continue to grow can create value through the growth of profitability and cash flow.
The persistence of enterprise growth is greater than the growth rate.
There are also specific requirements for the growth of enterprises. Excellent funds with stable long-term performance are more concerned about the sustainability of enterprise growth than the speed of enterprise growth.
A sustainable growth enterprise has two main characteristics:
1, the industry has a large room for growth, which makes the ceiling of the enterprise high.
2. The business model of the enterprise has strong barriers. When the barriers of enterprises are high enough, the profitability or growth of enterprises will be certain and sustainable.
The growth of an enterprise is related to its competitive advantage, but not to its short-term prosperity.
Enterprises create value through the continuous growth of cash flow and profits, and short-term prosperity does not affect the long-term value of enterprises. The value of an enterprise is determined by its future cash flow. The future cash flow is determined by the expansion of enterprise scale and the profitability brought by low cost. The barrier of enterprises lies in the cost advantage of management ability. Low cost helps enterprises to achieve optimal profits at long-term balanced prices, while the guarantee brought by free cash flow is the optimal growth and continuous capital expenditure of enterprises.
The premise of value creation brought by the growth of profitable enterprises is persistence.
If you want to earn the value creation brought by enterprise growth, you must be able to accompany the enterprise growth and stick to it. Therefore, many long-term outstanding funds will insist on holding after selecting the target and will maintain a low turnover rate.
Valuation is to value the future of an enterprise.
Valuation is the valuation of the future of the enterprise, and it is the valuation of the future growth space and profit growth level of the enterprise. The current valuation of an enterprise is not the most important thing. The core is to see what scale the enterprise can develop in the future and how much profit and cash flow it can bring. Therefore, we can consider buying in a position with relatively low long-term valuation and high implied return, and then investing for a long time.
It will not be sold until it is found that the judgment at the time of buying has not been fulfilled, there is not much room for profit in the long run, or a better choice is found.
Through these stock selection ideas, Bian Xiao believes that many investors can understand the significance of long-term investment and growth more deeply.
I hope the above contents are helpful to you.