After the market hours on January 18, a heavy news was read by everyone excited.
From the RRR cut in early December last year, to the one-year LPR rate cut on December 20 last year, and then to the MLF and OMO rate cuts on Monday, the future will "open the policy toolbox a little bigger".
Yang Mama is definitely true love.
In the circle of friends, a thousand shares have been staged.
However, after confirming the market, it is still the A-share that we are familiar with.
The performance of major A-share indexes 20220119
Source: Wind
It's another day of "why didn't it come true?"
Since the beginning of the year, there have been many benefits, but the market has not bought it.
Seeing that last year's profits continued to shrink, some small partners joked that they knew that it would be good to run at the beginning of the month.
Screenshot of netizen communication,
For example only, no investment reference or advice
It is difficult to buy early to know.
But even if you know you're going to fall, it may not be wise to sell just to avoid falling.
Why is "selling to avoid falling" debatable?
Investment guru Philip Fisher has a brilliant interpretation:
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01
Good companies are not in a hurry to win or lose for a while
As long as I'm confident in the company's long-term future, I'm not going to sell the stock.
If you invest in a well-run and financially strong company, even the most intense short market cannot erase the value of the stakes.
Conversely, truly excellent stocks create peaks again and again, and each time the high price reached can be several times higher than the last.
If investors master the right principles, they will be able to distinguish between outstanding and mediocre companies with a high accuracy rate of up to 90%.
No matter how hard you try, no matter how skilled you are, the odds of correctly predicting the short-term movement of a stock are at most 60 percent; and that estimate can be overly optimistic.
In this way, it does not make sense for you to sell your stake with a 90% chance of being correct based on some influencing factor that is only 60% sure at most.
If I expect the price of these stocks to rise to a peak above current levels in a few years, I will choose to continue holding them.
For investors seeking long-term profits, the odds of getting the prediction right for a while are not the only consideration. In terms of risk versus reward, long-term investment is a better approach.
02
Holding a good company for a long time has a higher probability of making money
Which of these two judgments do you think is more likely to go wrong?
1, an outstanding company will fall sharply in the short term;
2, an outstanding company will rise sharply in the long run.
This is the simplest math problem.
In terms of probability, or from the perspective of risk relative to reward, we should prefer to hold on to a good company.
Predicting the adverse trend of a good stock is far more likely to make a mistake than predicting the strong long-term appreciation potential of the stock.
If you hold on to a stock during a short-term market downturn, even at the worst point in time, it will at most fall to a certain extent from the previous peak, and this is only temporary, and one day it will surpass the previous high.
However, once you sell it and don't buy it back, you will miss out on long-term benefits.
The long-term benefit is several times higher than the benefits of buying and selling stocks in short-term forecast reversals.
03
"Sell high and buy low" is difficult to achieve
Selling at a high price, buying it back after a big fall, of course, is very fragrant. But the operation is very difficult.
When are you going to buy it back? How do you tell when to re-buy?
Theoretically, you can buy after the end of the upcoming downtrend. However, this must assume that the investor knows when the stock price stops.
I've seen too many investors sell their holdings that would have been expected to be lucrative in the coming years, fearing the advent of a bearish market.
The bearish market often doesn't come true, while the stock price continues to rise; even if the bearish market did, I hardly ever saw any investor buy back the same stock before the stock price rises above the sell price.
They usually want to sit back and wait for the stock price to fall lower.
But when it really fell further, it began to fear other things, and the result was never bought back.
From my observation, people who sell these stocks and plan to wait for the right time to buy them again are rarely able to achieve their goals.
They usually expect a bigger drawdown, but in reality such a decline never happens.
A few years later, when this fundamentalally strong stock continued to rise beyond the price at which it was sold, they missed out on all the value added later, and may even switch to buying other stocks of inferior intrinsic quality."
Even if a good stock goes through several trades, each time selling at the highest price and then making up for it at a lower price, the rewards will not be able to withstand the losses caused by a misjudgment of the timing.
Many people tend to sell stocks too early, and then may never buy them back, or delay them for too long to reinvest, thus missing out on their original benefits.
In 2021, an overseas scholar counted the historical trading records of 650,000 accounts owned by 300,000 households in a brokerage firm in the United States and found that:
Over the past 13 years (2003-2015), about 9% of investor accounts (i.e. close to 30,000 households) have experienced the following: more than 50% of the decline in equity in a 90% of accounts with a month is attributed to the account owner's untimely buying and selling operations.
Logically speaking, there are two main reasons why you choose to sell or even liquidate your position when the stock market falls sharply, or it is not an optimal investment decision:
First of all, selling when there is a sharp fall is generally not in the investment plan, and investors are often emotionally agitated and lack the composure and rationality of the brain when it is in a calm state. In such a state, it is easy to go to extremes and make wrong investment decisions.
Secondly, most investors who choose to sell when the stock market falls sharply, it is difficult to make up for the position in time after the decline stops and buy back the stock again. However, this is precisely the key reason why the vast majority of investors are unable to obtain better returns.
About 1/3 of the investors who chose to sell when the stock market fell sharply mentioned above never bought the stock back.
For these investors, the losses suffered due to the short-term jump far exceed the short-term gains brought about by the escape.
Under what circumstances is it sold?
Mistakes have been made while buying
After making mistakes when buying, the situation became clearer and clearer, and the company's actual situation was not as ideal as it had been.
To manage this situation properly, it is necessary to rely on emotional self-control. To some extent, it also depends on whether investors can be honest with themselves.
Company fundamentals have changed
For example, market iteration, technology updates, management is not good, and the country is in turmoil. At this time, it is necessary to distinguish whether it is a temporary risk or a continuous risk. Whether the company can carry it.
There are better opportunities
For example, Buffett, the god of stocks, will not exchange stocks under normal circumstances, and only consider buying new stocks when he thinks that the stocks he wants to buy have better value (or growth).
And he may buy new shares more with his own cash than by selling his original shares.
4
The share price currently held is ridiculously high
For example, when a company's profit can maintain a 30% growth rate all year round, and the stock price doubles or more in a short period of time, it is likely to be overvalued by the market.
This growth rate is very fast, but its stock price is likely to have overdrawn its intrinsic value.
To sum up, A shares often "renege on their promises", and many "good words" have not been fulfilled.
Instead of struggling with short-term markets and stock prices, be patient.
Many times, smart investors are "lazy" and like to "do nothing". It will not trade frequently, nor will it quickly change the portfolio at the first stroke of the wind.
What they most want to see is that their investment can grow with the company and share the long-term results of the company's operation.
As Jim Rogers put it:
Usually it is best to "sit quietly", the less you buy and sell, the better, and always wait patiently for the arrival of investment opportunities.