Pay attention to the official account and the compass in the world to read the text "How to become an investor step by step"
Let's talk about a topic of long-term investment today, long-term investment and frequent short-term trading, and medium-term swings, are different.
You can think of it as a value investment, or you can think of it as a regular investment, a regular investment.
Some of our full-level readers are long-term investors in the U.S. stock market.
I can see from the comments that some people have been voting for more than 20 years.
One thing is clear, the S&P 500 Shiller P/E ratio is indeed at an all-time high, and if you look at the U.S. stock market for more than 100 years, it is also one of the highest positions in history.
This matter is also a hot topic in the international market, in fact, many large foreign investors are also discussing whether the US stock market will usher in a sharp pullback.
First of all, we have to distinguish that the S&P 500 Shiller P/E ratio and the stock price are two different things.
The former represents human nature, and the latter represents price.
The S&P 500 Shiller P/E ratio can't rise indefinitely, it actually reflects a situation where I'm paying your company a lump sum for decades of earnings and you're willing to sell it.
There is an upper limit to this few decades, and if it is too overestimated, then there is no need for the business owner to continue to operate, just sell the company and take the money and leave.
So, if the S&P 500 Shiller P/E ratio reaches a certain threshold, it will lead to a large increase in the number of people who sell stocks, because it can't be done, it's too overvalued.
The large increase in the number of people selling stocks will lead to a decline in stock prices, which is an indirect relationship.
The hot discussion in the international market now is when this critical value will trigger the decline of stock prices.
So those of us who do long-term investment, or those who do regular investment, come to me and ask me whether he holds a position, endures a price correction in a certain period of time in the future, endures this loss, or simply liquidates his position.
After the clearance, just wait, and wait until the S&P 500 Shiller P/E ratio is at an all-time low, and then build a large position and re-enter the market.
The answer to this is simple, divide people.
Some people, people build a system to arbitrage, and they are betting on the correction of the S&P 500 Shiller price-earnings ratio.
Some people, they do bands, they think very clearly, when to enter the field, when to play.
So if you do such a long cycle, even if you know you will, you can't actively avoid this kind of pullback.
If you want to learn from other people's bands, you will face an embarrassing fact.
We all know that price and value do not intersect most of the time, value is a straight line, price is a sinusoidal curve, sometimes price is lower than value, sometimes higher than value, and occasionally equal.
Then it means that there are two possibilities, one is that the price catches up with the value, and the other is that the value catches up with the price.
See what I mean?
For example, the current price is higher than the value, you know and I know, there is a possibility that the price will pull back, tend to be close to the value, or even overfall, below the value, revealing the buying point.
It is also possible that it will be accompanied by an explosion of productivity, which, in turn, rises in value and it goes closer to the price.
For people like you who do ultra-long-term, you originally wanted not to gamble, otherwise what would you do with fixed investments?
You're just not going to make decisions.
Well, now if you're going to pull out, if you're going to avoid losses from future pullbacks, you're going to have to gamble.
If the bet is right, the price pulls back, close to the value, you take it back, and you win.
But what if the bet is wrong? If the value is up, close to the price, what do you do?
Do you understand the weight of my words?
What exactly do you do, you have to be clear to yourself, whether you do swing or ultra-long.
If it's the latter, you can't avoid it in a human way, because the internal logic of the underlying trading system of your two trading styles is different.
Cavalry has the advantages and disadvantages of cavalry, as well as the fighting style of cavalry; Infantry has the advantages and disadvantages of infantry, as well as the style of fighting of infantry.
If you have a cavalry unit sometimes according to the cavalry code and sometimes according to the infantry code, then sorry, instead of having the advantage of both, you will be the first to be eliminated on the battlefield.
Because you are not like the four at all, you are not an army at all, you have become a straggler with a blind command.
This is something that all professional investors and commanders should try to avoid.
For example, when the S&P 500 Shiller P/E ratio is at an all-time high, and you sell a stock, it may take seven years for the S&P 500 Shiller P/E ratio to return to its all-time low.
So may I ask, have you been empty in the past seven years?
And there's another problem, seven years later, when the S&P 500 Shiller P/E ratio is at an all-time low, if you look at the price of the stock that you used to sell, maybe it's even higher than the price you sold at the beginning.
Do you understand this? As I emphasized earlier, it's not a direct relationship, it's an indirect relationship.
For example, the S&P 500 Shiller P/E ratio has halved after a few years, and the price at which you sold it at 100 may be 150 when you come back.
It's not a paradox, it's quite normal.
So I said, around the S&P 500 Shiller P/E ratio, there are three kinds of people in the market.
The first type of person is the S&P 500 Shiller P/E ratio itself, and he bets on whether it will rise or fall.
The second type of person, who is a swing band, when the S&P 500 Shiller P/E ratio is very high, he withdraws, and his funds go for something else, or, he goes short.
But you have to note that he does not rely on this one indicator to go short, he is determined to go short based on a combination of other parameters, and he has a whole set of his own trading system to complete the entire short trade.
It's just that the S&P 500 Shiller P/E ratio is at a high level, what is it for him? It's a reference, it's a reference for the climate class.
Just like I am a troop operation, I want to know that it is sunny and cloudy and rainy.
But you have to pay attention, sunny days and cloudy days and rainy days are just references, no army says that as long as the weather is fine, all troops will be dispatched, there are no such short sellers.
The third type of person is the ultra-long line you came to ask.
For people like you, the S&P 500 Shiller P/E ratio is really limited to leverage.
As an ultra-long-term or regular investor, when the S&P 500 Shiller P/E ratio is extremely high, I estimate that the market environment is likely to pull back, so what will I do?
Will I reduce my position? No, it won't. I will stop increasing leverage.
That is to say, I may have increased 5 times the leverage before, but now I don't add it, I will have zero leverage, I don't use margin, how much money I have, how much I can do, zero leverage position.
And I don't open new positions anymore, I don't continue to buy more, I don't chase higher.
So when the S&P 500 Shiller P/E ratio is low, I can slowly add up the leverage, or increase the position aggressively.
You go and see Warren Buffett, he's the way you play.
When the market is clearly overvalued, he gradually stops buying, and you find that his cash holdings have increased, and it has reached an all-time high, close to $190 billion.
What is he waiting for? He's waiting for the market to be significantly undervalued, and then he's buying in large quantities, and you'll find that he's holding less cash, and of course, if he's still alive at the time, he's too old.
But if you look at Berkshire Hathaway's historical cash holdings, you can see that in 2008, cash reserves fell sharply, suggesting that he felt that it was foolish to hold cash at that time and should have been aggressive.
This is the right thing for a long-term investor, who adjusts the leverage, adjusts the ratio of cash to holdings, but does not take a short position during the whole process, even if he thinks the market is going to pull back.
If the whole market pulls back 3 percent, then Buffett's position part will be solid to eat the 3 percent floating loss, which is unavoidable for long-term investors, that is, the same source of profit and loss.
This is the normal way of playing for ultra-long-term investors, who are actually investing in the market itself. His wealth itself has been accompanied by the ups and downs of the market.
In the end, what you do has nothing to do with the market, not even with indicators, but with which investment strategy you use, and your specific trading system.
Some people will withdraw, some people will even go short, some people just hold their positions, and under every trading strategy, there are stable profits.
But the premise is that you have a complete trading system, you are fighting according to military regulations, cavalry can win, infantry can win, archers can win.
Only the stragglers who are not like the four are invincible, because those people have not established a trading system at all.
Pay attention to the official account and the compass in the world to read the text "How to become an investor step by step"
