The Secret Of Speculation Stocks That Most People Do Not Know About

Company research for

Investor

It is very important, but do you know from which angle to analyze a company? If you read the following, you will gain something.

Part one: determining the "texture" of a company (depicting the overall impression of a company).

Ceiling

Ceiling refers to the state that the products or services of enterprises or industries tend to be saturated, reaching or approaching supply exceeding demand.

Before investing, we must make clear which of the following is the situation and give corresponding investment strategies for different situations.

In judgment, we should not only attach importance to the future of the industry, but also pay attention to the quality of the enterprises.

1) industries that have reached the ceiling - extremely saturated industries (such as steel industry).

Investment opportunities come from enterprises with monopolistic capacity, which are low-cost mergers and acquisitions of inferior enterprises, expand market share, and reduce marginal cost of product production and sales, thus further building market barriers and obtaining pricing power of products.

If the merger fails to achieve a marginal cost reduction, it can not be regarded as a good investment target.

For example, the merger of state-owned enterprises under administrative promotion is not based on the principle of market pricing, so its political significance is greater than economic significance. Such state-owned enterprises do not have investment value.

Those companies that still have good cash flow at the end of the recession and are highly competitive will have great potential investment value when a large number of similar enterprises are in trouble.

Judging the inflection point or turning point of demand is the key point, focusing on the merger and acquisition opportunities of large enterprises, such as the four largest Steel Corp in China.

2) industrial upgrading has created new demands, old ceilings have been deconstructed, and new ceilings have not yet been formed.

Such as automobile industry and communication industry.

These industries are usually relatively mature, and their investment opportunities lie in the new demand brought by technological innovation.

"Innovation" will break the balance of the original industry and create new demands.

Concerned about the balance between the old and new forces, enterprises representing new technologies and new productivity will stand out. Their products and services will gradually replace or even completely replace the old products, such as the impact of $TSLA and $AAPL (Apple) on the innovation of their respective industries.

3) industries with uncertain ceilings.

These industries are either in the emerging industry field, the demand is forming, and the future market capacity is hard to estimate, such as new energy saving materials, or belong to "fast consumption" products, such as improving the quality of life and prolonging the life span of medical products and services.

Such industries have always been the cradle of great enterprises, and bull stocks are emerging one after another. We should focus on mining those excellent companies that have the leading position in the sub sectors, namely, big companies in small industries.

We can fully understand the industry position and future imagination of a company through the above 3 points from the company and industry reports.

The key points are: 1. Are there any ceilings? 2. What do businesses do when facing the ceiling?

　　

business model

The business mode refers to what products or services the enterprise provides, and what channels or means the enterprise uses to charge to earn business profits.

For example, the manufacturing industry profits by providing products with practical functions to customers.

Sales enterprises gain profits through various sales methods (direct selling, wholesale, online shopping and so on).

The significance of studying business models lies in: 1. Is it a good business? 2, how long can such a business last? 3, how to prevent other entrants?

These three problems correspond to business models, core competitiveness and business barriers.

The business model, core competitiveness and barriers constitute the company's future investment value: the former refers to the profit model of enterprises, and the core competitiveness refers to the ability to realize the former.

Barriers are the cost of preventing other companies from entering through efforts.

For example, there is not much difference between DELL and Lenovo sales products, but DELL's computer direct marketing profit model is different from traditional computer sales, and its core competitiveness is its global direct selling online management system.

Lenovo wants to rebuild the platform too expensive, and may be much higher than the cost of DELL, so the direct selling network has become a barrier to DELL.

However, PC saturation is the ceiling of DELL, which limits its development space.

The profit model of $Baidu (BIDU) is realized by search traffic.

The continuous improvement of search technology is its core competitiveness. The huge database and a large number of application softwares built up by the first generation advantage are its barriers. The free flow of drugs is the business mode of Qihoo 360 (QIHU).

Strong R & D capability and fast service responsiveness are its core competitiveness, and rapidly accumulate huge user groups to form competitive barriers.

360, we have made great efforts to enter the search field with huge user volume. However, we have not seen breakthrough technological progress that can challenge the huge data and application barriers accumulated by Baidu. Therefore, 360 points have not yet had the ability to subvert Baidu.

In addition, the commercial mode of traditional banks is interest rate difference. The key competitiveness points are low cost storage capacity, lending ability and high credit.

Barriers are user bases.

Chinese banks have government credit as guarantee and low labor cost, so it is difficult for foreign banks to compete with them.

Once the deposit insurance system is introduced, the credit of small and medium-sized joint-stock banks will be questioned. Therefore, foreign investment has the top four priorities to reduce the proportion of investment in the mainland's joint-stock banks.

Brief business scenario analysis:

How to earn money? Products or services? Who will earn money? Are they digging or competing from existing sales, or creating new demands? How to sell? From production to terminal consumption, how many links are there in the middle? What is the way to minimize the intermediate links? Does the enterprise make efforts in this respect? Will the marginal cost decrease with the expansion of sales volume?

Generally speaking, we invest as much as possible in those enterprises that can understand business models in a single sentence.

The business model further analyzes the status of the industrial chain involved in the industry. What is the status of the industrial chain in the upstream, middle or lower reaches of the industrial chain? What are the different business models in the whole industry chain? What are the key differences? Those are the enterprises that have the most pricing power? Why?

Core competitiveness of enterprises

Business models can be imitated.

But the winner is always the minority.

The key to excellent enterprises is to have the core competitiveness of building business models.

The contents of core competitiveness include: shareholder structure, leader, team, R & D, professionalism, business management mode, information technology application, financial strategy, development history and so on.

1) specificity:

Specificity is not the same as "single". It refers to the ability of an enterprise to dig and expand products or services in a certain field.

For example, Shuanghui is absolutely exclusive in meat products, except for meat products.

Its product line is rich, and has the ability to dig and expand in hot meat, chilled meat, frozen meat, sausage and other meat processing products.

In contrast, Yurun Food, which is also a leading enterprise of meat products, is involved in real estate, tourism and other non main businesses, with scattered management and poor performance over the years.

Therefore, specificity determines the main direction and development strategy of the enterprise, and perseverance must be achieved.

2) innovation ability:

An excellent R & D team has acquired advanced processes, processes, or invention patents that can provide high standard products and services.

Pure technology does not constitute a permanent core competitiveness.

However, technical barriers in certain fields, such as patent technology, can maintain the leading edge of enterprises in a period of time.

In addition, the technical superiority will bring the advantages of production efficiency and production cost, and enterprises with technological superiority will be able to get higher returns than the average level of the industry.

We can get the logical result by quantifying the relationship between R & D expenses and income.

3) managerial advantage:

The development of enterprises brings excess returns to investors.

The quality of an enterprise leader and its management team is related to the quality of an enterprise and how far it can go and how big it can be.

In this part, we should focus on the background of leaders and management team members, and get information about their development direction, industry strategy, employment mechanism and incentive measures through tracking their words and deeds (through news, prospectus or board report).

We need to judge their personalities, patterns and values. These factors will imperceptibly affect the future of an enterprise and indirectly affect the rate of return of investors.

Practice has proved that first class talents can do three streams of business, making it possible to make the three level first-class.

On the contrary, the three generation of talented people doing first-class business is likely to make the best of them.

Many successful entrepreneurs of the first generation of entrepreneurs may be destroyed in the hands of their successors. Microsoft is a typical example.

In the many conditions of the core competitiveness of enterprises, the investigation of human factors is extremely important.

Economic moat (market barriers)

　　

City Moat

It is a metaphor, which is usually used to describe many safeguards against competitors.

The core competitiveness mentioned above is an important part of the moat, but not all. We can confirm the authenticity and depth of the moat through the following conditions:

1) rate of return.

Historically, does a company have a significant rate of return? The rate of return mainly refers to gross profit, ROE (shareholder equity return), ROA (total assets return) and ROIC (return on invested capital).

These returns are applicable to different business models.

The key point is to judge from the business logic, which aspects are the high return rates of enterprises? What are the determinants? Can they continue? What measures have been taken by enterprises to ensure the sustainability of high returns? The main quantitative analysis methods include Du Bangfa, Potter five force method and SWOT method.

2) conversion costs.

Does a company's product or service have a higher conversion cost? Transformation cost refers to the difference between the cost (including time cost) and the cost of using the company's products when the user abandonment of the company's products and uses similar products of other enterprises.

Higher conversion costs constitute exclusiveness, such as WeChat and Yi Xin, which are not very different from WeChat in essence. However, for users, there are many inconveniences in abandoning WeChat and using easy credit, and there is a higher cost of pformation (remodeling). WeChat has strong vitality and commercial value because of the advantage of first mover advantage.

If the user can not choose competitors' products, it shows that the products of the enterprise are sticky and dependent on the users, so the enterprise has relatively high conversion cost and exclusiveness.

Understanding the pformation cost of an enterprise must be considered from the perspective of consumers and users, judging from common sense, usage habits and business logic.

Conversion costs are not permanent and must be judged in combination with the actual situation.

3) network effect.

What are the ways in which enterprises sell products? Specifically, how much sales are generated by various means of sales, such as human marketing, specialized shop sales, chain affiliate or online store sales? How do traditional enterprises cope with the scale effect of e-commerce? What is the network scale effect of enterprises? The network effect usually refers to the sales or service network of enterprises, which provides users with convenience and user centered convenience.

With the increase of the number of users, the value of an enterprise gradually increases due to the expansion of the network and scale.

For example, the industrial and Commercial Bank of China has many outlets throughout the country, even in major cities abroad.

In contrast, it has a wider and wider network effect than regional banks. Therefore, ICBC has more users and its business value is relatively higher.

4) cost and marginal cost.

What are the cost components of an enterprise? What are the determinants of the cost? Can the cost of the enterprise be the lowest in the industry? How can it be achieved? Can the unit cost decrease with the expansion of the sales scale? It is not easy for an enterprise to maintain its cost advantage for a long time. It needs resources channels superior to its competitors (raw material advantages), superior production processes (process advantages), superior geographical location (logistics advantages), stronger market size (scale advantage), or even lower labor costs.

The other side of low cost is high gross profit and high gross profit, which is a manifestation of strong competitiveness. High margin enterprises usually have pricing power.

5) brand effect.

Does the product or service have brand effect? In fact, for most users, their sensitivity to brand is far less sensitive than price, and price is the first element to guide buying behavior.

The meaning of brand is that it can reflect the difference, quality, taste and word-of-mouth of products or services.

The value of a brand lies in its ability to change the buying behavior of consumers, thereby bringing above average value-added to enterprises.

Therefore, products or services with brand effects should have the following characteristics:

A.

It has strong identification.

B.

It's trust, dependence and satisfaction.

C.

Higher than the general price.

D.

It is the culture and values of an enterprise.

E.

For consumers, it is a priority purchase option.

6) what measures have been taken to maintain these advantages (moat)?

Growth

Growth focuses on future growth, not the past, but from the perspective of ceiling theory.

Growth needs qualitative analysis and can not be accurately quantified.

For emerging industries, the reference value of historical data is not large.

For mature industries, long historical data (preferably covering a complete economic cycle) can provide some clues, as a reference is still very necessary.

Revenue is a leading indicator of profits.

A.

Income growth

B.

Changes in main business

C.

Sales analysis of key customers

D.

Comparison of major competitors

The level of gross profit reflects the competitiveness of enterprises.

A.

Gross interest rate

B.

Cost composition

Water of net profit

A.

Operating profit (excluding the income of the investment, the change of the fair value and the profit after the business income)

B.

Real net profit (operating profit - income tax)

The gold content of income and profit

A.

Cash receipts (cash / income received from sales of goods or services)

B.

Operating cash rate (net cash flow / income generated by operating activities)

C.

Free cash Free Cash Flow (free cash = operating cash flow capital expenditure)

D.

Free cash / enterprise value (FCF/EV, enterprise value = market value + interest bearing debt)

Note: free cash and enterprise value can be calculated by the think tank encyclopedia.

Rate of return

1) ROE (shareholder equity return or net asset yield)

2) ROA (total assets return)

3) ROIC (return on invested capital)

Note: the above three indicators of return are calculated according to the think tank encyclopedia or related textbooks.

It should be noted that in the process of calculation, the items involving net profit and net assets must be dismantled to obtain the real value of business activities.

The dismantling of net profit can be seen in the previous section, "real net profit". In the disassembly analysis of net assets, the contents of assets that are not related to business activities must be excluded.

4) Du Bangfa

5) Potter five force method

6) SWOT method

Security: the key is cash flow and cash reserves.

asset structure

A.

The proportion of cash assets, cash and cash equivalents in assets represents the cash reserves of enterprises.

B.

Convertible cash assets include financial assets, paction assets and investment assets.

C.

Operating assets

Debt structure

A.

Interest bearing liabilities

B.

Interest free liabilities

Operating capital and capital flow

A.

Accounts receivable and principal arrears

B.

Stock composition

C.

The capital flow situation is the difference between the current operating capital change and the previous operation capital change.

Changes in operating capital = (prepaid + payable) - (receivables + prepaid + inventory)

D.

He uses other people's money to make money.

Specifically, the change of the operating capital of a company is positive, that is, (receivables + payable) (receivables + prepaid + inventory). The payment of upstream customers is equivalent to an interest free loan from the downstream customers, which satisfies the capital needed for the normal operation of the enterprise.

This is a relatively special business mode, such as Suning Appliance and Gome.

This business model shows the strong position of enterprises in the market.

E.

Credit.

The credit here refers to the credit of bills.

The bill is a kind of credit financing. The receivable bill of an enterprise is the credit to the downstream customers. The notes payable reflect the credit given by the upstream customers to the enterprise.

Bill credit reflects the relationship and status between an enterprise and its upstream and downstream partners, and it is also a business mode.

Cash flow is a key index to evaluate the competitiveness of enterprises, because profits can be whitewashed, and the result is more water.

The company with continuous cash flow has the strength of R & D and investment.

It can be broadly divided into several situations:

A.

Cash value added and operating cash flow are all positive.

B.

The cash increase is positive or offset, and the cash flow is negative.

It indicates that cash inflows from financing, issuing bonds or bank loans offset operating cash outlays.

Enterprises are still sound.

It is necessary to combine the interest rate level to assess the financial risks that enterprises may have.

C.

Cash value added and operating cash flow are negative values, indicating that the company has financial problems.

Of course, judging the development of a company depends on its core competitiveness and market barriers.

For example, Facebook.

If it is traditional enterprises or evasion is good.

D.

The cash added value is negative, but the cash flow is positive.

It shows that enterprises have investment, R & D or debt repayment expenses.

This situation needs to be analyzed in detail.

The key point is to decide which part of the cash consumption is to invest or raise money.

The most unsatisfactory situation is that cash is only used to repay debts, and the value of investment is small.

The second part: valuation.

The business mode of an enterprise determines the valuation mode.

1) heavy assets enterprises (such as traditional manufacturing industries) are mainly net asset valuation methods and profit valuation methods are subsidiary.

2) light assets enterprises (such as service industry) are mainly based on the valuation method of profits, and the valuation method of net assets is subsidiary.

3) Internet companies take the number of users, clicks and market share as the long-term perspective, and the market sales rate as the main factor.

4) emerging industries and hi-tech enterprises take market share as a long-term perspective and take market share as the main consideration.

Market value and enterprise value

1) regardless of which valuation method to use, market value is the most effective reference.

2) market value = stock price * total shares. The significance of market value is not equal to the meaning of stock price.

Market value is regarded as the recognition of market value by investors, focusing on relative "magnitude" rather than absolute value.

In the international market, the market value of US $10 billion is usually regarded as the best standard of mature large enterprises. The market value of US $50 billion is the highest standard of an international super large enterprise, and the market value of 100 billion represents the supremacy of enterprises.

The significance of market value lies in magnitude comparison rather than absolute value.

3) market value comparison.

A.

Since the market value reflects the magnitude of enterprises, the magnitude comparison of similar enterprises is of great market significance.

For example: the same is the production and distribution of film and television enterprises, the domestic Huayi Brothers market capitalization of 41 billion 900 million yuan, equivalent to about 6 billion 800 million U.S. dollars, while the DWA value of $2 billion 500 million.

In addition, Huayi Brothers earned 1 billion 300 million yuan (US $212 million) in 2012, while DreamWorks revenue was US $213 million.

The two companies earn at one level, but the market value is not at the same level.

It is speculated that Huayi Brothers may be seriously overestimated.

Of course, the high valuation reflects the expected price of the market. Overestimation and underestimation do not constitute the basis for buying and selling, but this is a warning signal.

Smart investors can adopt hedging arbitrage strategies.

B.

Common market value comparison reference:

A) the cross market parity of the same shares and the market value of the same company in different markets.

Such as: AH share price.

B) a comparison of the market value ratios of similar enterprises and those with the same main business.

For example, Sany is compared with ZOOMLION.

C) the market value ratio of similar business enterprises is the same as that of the main business.

Such as the comparison between Shanghai Jahwa and Unilever.

4) enterprise value (EV, Enterprise Value).

Enterprise value = market value + net liability.

The absolute value of EV is of little significance. It is usually combined with profit indicators to reflect the relationship between corporate earnings, net liabilities and market capitalization.

Such as: EBITDA/EV index used to compare the profitability of enterprises with similar enterprise value.

Valuation method

1) market capitalization / net assets (P/B) and market capitalization rate.

A.

To inspect net assets, it is necessary to identify items with significant entry and exit statements.

B.

Net assets should be eliminated to reflect the real operating assets structure of enterprises.

The net market rate should be meaningful in comparison. Absolute value is meaningless.

C.

To find out the historical minimum, maximum and average market price range of enterprises in a fairly long period of time.

The inspection period is at least 5 years or a complete economic cycle.

If the newly listed enterprises, there must be a paction history of at least 3 years.

D.

Find out the same industry has a long history of trading enterprises to make a comparison, clear the third market net rate range.

2) market value / net profit (P/E) and P / E ratio.

A.

The net profit must be clear if there is a significant entry and exit report.

B.

Net profit should be eliminated to reflect the real net profit of the enterprise.

P / E ratio should be meaningful in comparison. Absolute value is meaningless.

C.

To find out the historical minimum and maximum average price earnings ratios of enterprises over a long period of time.

The inspection period is at least 5 years or a complete economic cycle.

If the newly listed enterprises, there must be a paction history of at least 3 years.

D.

Find out the same industry has a long history of trading enterprises to make a comparison, define the third price earnings ratio interval.

3) market value / sales (P/S) and market sales rate.

A.

The sales volume should be clear about its main business and whether there are significant entry and exit statements.

B.

To find out the historical minimum and the average three sales rates of enterprises in a fairly long period of time.

The inspection period is at least 5 years or a complete economic cycle.

If the newly listed enterprises, there must be a paction history of at least 3 years.

C.

Find out the same industry has a long history of trading enterprises to make a comparison, clear the third market sales rate range.

4) PEG, reflecting the ratio relationship between P / E ratio and net profit growth rate.

PEG= earnings / net profit growth rate.

It is generally believed that the ratio =1 indicates reasonable valuation, while ratio >1 indicates overestimation, ratio <1 indicating underestimation.

This method only serves as an auxiliary index of P / E in investment practice, and the actual combat is of little significance.

5) Benjamin.

Graham's growth stock valuation formula.

Value = annual income * (8.5+ expected annual growth rate of *2), the annual income of the formula is the latest year's earnings, which can be replaced by earnings per share TTM (the last twelve months' earnings), and the expected annual growth rate will be the growth rate in the next 3 years.

Suppose that an enterprise's earnings per share TTM is 0.3, and its growth rate is expected to be 15% in the next three years. The company's stock price is =0.3* (8.5+15*2) =11.55 yuan.

The formula has strong practical value, and the result of calculation must be combined with other valuation indexes, and it should not be used alone.

6) there is another commonly used valuation method, interest rate valuation method, which is listed below.

7) none of the above methods can be used alone, at least with two joint judgments, and its absolute value is not practical.

The emphasis of valuation is the comparison, especially the comparison of similar enterprises.

The third part: margin of safety.

Market interest rates.

1) interest rate reflects the financing cost of the market, and it is also an effective index to measure the market funds.

2) interest rate dual track system.

Due to institutional reasons, interest rates in China are not yet fully marketization, so there is a parallel existence of official interest rates and private interest rates.

The official interest rate (bank interest rate) does not fully reflect the real financing cost of the market and the relationship between supply and demand of funds.

3) the one-year bank fixed deposit rate (currently 3%) is considered to be a reference standard for the risk free return in the short and medium term. The reciprocal represents the current market static P / E, that is, 1/0.03=33.33.

When the composite P / E ratio of the stock market is lower than this value, it means that investing in the stock market can get higher returns.

4) Shanghai Shanghai Interbank Offered Rate (Shibor) and treasury bond repo rate (Repurchase rate), these two rates truly reflect the fluctuation of market capital, and have strong practical reference significance.

Therefore, these two interest rate indicators are usually regarded as the reference standard for short-term risk-free return.

Their reciprocal reflects the dynamic price earnings ratio of the market.

5) the rate of return on financial products of banks is also a good reference standard for market risk-free return.

6) the comprehensive value of the above market interest rates reflects the margin of security of the market as a whole, and it directly or indirectly affects the risk preference of investors.

Interest rate valuation method

1) interest rate valuation method, market margin of safety.

Buying price determines yield.

Yield = yield / buy price, convert the formula to buy price = yield / yield.

This equation tells investors the fact that assuming that a company's earnings are 0.3 yuan per share and the level equivalent to the market risk free return (assuming 4%), the price of the stock must be less than 7.5 yuan (the bid price =0.3/0.04=7.5).

In other words, when the stock price is below 7.5 yuan, the investor can get the income higher than the market interest rate.

The calculation result of 7.5 yuan can be regarded as the safety margin value of the stock.

2) multiple interest rate valuation method.

Taking the one-year bank deposit interest rate, long-term Shibor interest rate, treasury bond repo rate and bank financial interest rate into formula, a relatively reasonable risk-free yield interval can be obtained.

This interval represents the margin of security of the market, and the value of the data directly affects the investor's asset allocation strategy, and indirectly affects the market's overall capital whereabouts.

Discount and premium.

Valuations must be determined according to specific industry and enterprise characteristics. The P / E ratio, the market rate, the selling rate, or the Graham valuation method or the interest rate valuation method, regardless of which valuation method, according to the principle of "buying price decides yield", the lower the buying price, the higher the future yield will be.

1) the principle of keeping in and out of files: do not attempt to be immortals.

No one can accurately calculate the value of a stock, nor can anyone buy it at an absolute low and sell it at an absolute high.

Therefore, it is the most effective operation strategy to properly amplify the margin of safety and the principle of separating in and out.

2) according to the valuation of the sub entry and exit strategy (suitable for long-term robust financial characteristics of enterprises).

For example, the long-term minimum market rate of an enterprise is about 1.2 times, and the radical can make a sub purchase plan at 1.5 times market rate, such as 1.5 times, 1.3 times, 1.1 times, 1 times, and 0.9 times.

The purpose of enlarging the margin of safety is to "not miss, not to deepen". The specific grading depends on the circumstances.

Contrary to the buying strategy, assuming that a company's long-term maximum price earnings ratio is 20 times, it can set up a sub selling plan from 18 times price earnings ratio (0.9 times premium), such as 0.9 times premium, 1 times premium, 1.1 times...

3) according to the four basic principles of graphic analysis.

4) simple fund management strategy.

The entry and exit can be equal in and out, or pyramid buying and inverted Pyramid selling.

From the point of view of risk control, the position of a single stock should not exceed 30% of the total assets of the account.

The fourth part: the bottom and the top.

Double click and double kill.

Earnings per share EPS reflects the profitability of enterprises. P/E reflects the expectation of investors on the profitability of enterprises, one is reality and the other is vision.

Davies double click is that when the market downturn, EPS and P/E are relatively low, and it is expected that enterprises will buy profits before the profit turning point, and their profits will improve.

When business is recovering, business EPS is picking up, and P/E is improving as market expectations improve.

The simultaneous rise of reality and vision can provide investors with the multiplier effect of stock price and get huge investment returns.

In turn, the above is Davies's double kill.

Davies's double-click and double kill are hard to quantify. When they are often reflected in the data, the share price has changed beyond recognition.

Therefore, we need to make an early judgement based on information analysis, which is the difficulty and the most effective part of investor's performance.

Of course, there must be traces to follow.

Good stocks are not afraid of waiting for three years.

For a high quality enterprise, what we need to do is to keep watching and waiting for the opportunity of market mismatch.

This opportunity requires a perfect combination of factors, including market integration, industry prosperity and the black swan event.

For robust investors, the chance for Davies to double-click is "once in a blue moon", at least for a few years.

Once a double click is successful, the stock price will rise by at least 1 times, and the quality leader enterprise may rise several times or tens of times. Once the opportunity to double click is missed, the stock price may never return to the level of double hit.

The joy of investing is to find such stocks and enjoy compound interest.

Mainstream bias.

Public opinion is an amplifier of market sentiment, especially those of large institutions with a certain market position.

This part of the public opinion with huge market influence is also called "mainstream bias".

Mainstream bias will lead to market consensus, and the ability to interpret the mainstream bias is the basic skill of mature investors.

Soros's reflexivity theory holds that the main force of the dominant price trend is the mainstream bias.

The root of mainstream prejudice is the assumption that the fundamentals are too optimistic or too pessimistic.

The fundamental aspect of the study is to find a balance of value, but the pendulum of the market never stops at the equilibrium point, and always swaying on its left side. It is precisely because of the pendulum effect of the market that it provides opportunities for prepared investors.

The foundation of stock value is the fundamentals of enterprises. When the mainstream bias is seriously deviated from the fundamentals and the market pendulum begins to be corrected, the strong force of price return will lead to the extreme form of stock prices.

Mainstream bias is not only an accelerator of the market pendulum, but also a damping effect on it.

For investors, a keen sense of direction is very important: is the direction of pendulum and bias consistent?

Signs of turning.

1) valuable information:

A.

News media began to reverse tone.

B.

Are there any more extreme situations?

C.

The macro environment and market funds have changed.

D.

The tone of mainstream bias is no longer firm, and there is a disagreement.

2) enterprise management begins to act:

A.

Buy or sell shares of the company;

B.

The development goals of enterprises have changed.

C.

A favorable or unfavorable speech or act by a leader.

3) financial data validation:

A.

Revenue is the first indicator of profit.

B.

Changes in the gold content of income;

C.

Changes in operating capital;

4) market data validation:

A.

The stock price reaches the lowest (high) valuation interval.

B.

Graphics show extreme trend;

C.

Trading volume has changed drastically.

D.

Margin trading has undergone dramatic changes.

It is very difficult to describe a complete investment logic comprehensively and systematically in highly generalized language.

Investment is an art, extensive and profound, is it that these thousands of words can be clearly stated, it seems that each paragraph can be lengthy or writing books.

However, as a summary and combing of my personal investment career, it is beneficial to learn and learn to write down to others.

The purpose of this article is to help researchers to put forward some structural research points, hoping that they will be able to map out and write some valuable reports of buyers.

At the same time, we hope to provide some professional ideas for the developers of investment assistant software.

This article only represents personal views. Welcome to add and correct!