My views on the stock market
I did participate in A-share investment in the early years, but until the beginning of 2018, I did a review for several months and finally decided to completely give up A-share investment.
First of all, let me make the conclusion of the review in the early years clear to everyone. Stock trading is inherently directional wrong. I forgot to mention, it is the A-share market. What is a directional error? To put it simply, you have been wrong from the moment you opened an account with a brokerage firm.
First, let's talk about the economic cycle of the Chinese stock market. This is a problem that most newcomers and even old investors have not considered. There is a big cycle every 10 years, or even longer. This means that it takes about 10 years to breed investors, and during this period there will be two years of bubbles, and the stock price will soar for two years, reaching a climax. Then the bubble bursts, and then the market returns to its value.
This is also Lin Yuan's method of always holding full stocks. He kept full stocks throughout the 8-year bear market, and the last two years of craziness. He made most of the profits, then dumped the market and reinvested again using this compound interest trading technique.
In the two years when the bubble was created, the vast majority of profits were generated, and the profits could even reach more than 300%. The problem is that the Chinese stock market is not mature. In an immature financial market, speculative funds account for a large proportion of the total market holdings, which cannot be sustained. Once the bubble bursts, the decline cannot be stopped at all. There is no chance to run, so if you run slowly, you will return to the starting point.
Lin Yuan has a very strict exit mechanism, but in most cases, leeks have no exit mechanism. Leeks are more easily dominated by market sentiment. When the market goes up, they feel that their IQ is high, and when the market goes down, they feel lost and incompetent. They feel happy when they make money and feel weak and helpless when they lose money.
So if you really have long-term capital that can last for more than ten years, you must also know how to run away in time when the bubble is at its peak, otherwise, you will be very miserable. Even if you hold the best investment targets, it may be a waste of time. I suddenly remembered the classic line of Zha Zha Hui, "Ten years, ten years, do you know how I have been living in these ten years?"
Finally, let's talk about the normal situation. In the eight years of repeated ups and downs, choose the right investment target. That is, the so-called long-term value investment target rate of return. The most powerful fund manager in China has a compound annual rate of return of about 17%. It is already very powerful for ordinary people to achieve 7%. Buffett's annualized rate of return is about 21%, which is the world's top level.
So you suddenly feel that it is difficult to earn 7% annually (key point), which is just the level of inflation. It is more reliable to focus on a specific area and cultivate your ability to make money outside the market than investing in the stock market.
Finally, let me say something that you may not like to hear:
Cherish life and stay away from the stock market.
