万字解读《聪明的投资者》: 投资界圣经，一本书让你看懂投资

Why do more than ninety percent of investors eventually lose money?

Because most people mistake investment for speculation.

Welcome to Xiaoa Reading Circle.

a financial growth channel that hopes you will be richer.

financial and growth channel.

Today, I will share with you a book a book regarded as the Bible of investment, called The Intelligent Investor.

The author is Buffett's teacher, Benjamin Graham, and also the originator of value investing.

To be honest, I've seen many novices rushing into the stock market recently.

I'm really worried for them.

Because most people may not even understand the most basic investment logic, they just jump in.

and want to make quick money by luck.

This is too risky.

So, whether you are a senior investor or a novice, I suggest you read this book.

it might help you save a lot of money or even earn more.

Now ordinary people can achieve wealth appreciation to achieve wealth appreciation.

Graham is definitely a significant contributor.

Before him, investing for ordinary people was like the church in the Middle Ages, full of metaphysics and superstition.

which was incomprehensible and unapproachable.

And Graham was like a guiding light.

He told everyone that investing is not fortune-telling and praying, but to choose good companies based on logic and principles.

This is also the first the first professional book for ordinary investors.

No wonder Buffett said the greatest book ever written.

In fact, Graham's main point is simple.

In short, buying stocks is to buy a company.

just like you are doing this business yourself.

You need to understand it, instead of focusing on the fluctuating numbers every day.

The market is always volatile.

Investors' emotions fluctuate wildly between extreme optimism and pessimism.

Smart investors should learn to buy when others are fearful and sell when others are greedy.

Earn money from extreme emotions.

money from extreme emotions.

His safety margin theory is also one of the most important principles of investing.

We should never pay too much for a stock.

pay too much for a stock.

to reduce the chance of making mistakes and reduce risks.

Graham also encouraged students to buy high-quality and undervalued stocks regularly undervalued stocks.

Because he believed that compared to holding a lot of cash in hand, investing money in excellent companies is more reliable.

So how did he form this value investing philosophy?

Let's take a look at the life of Graham.

He was born in London in eighteen ninety-four.

Later, the family moved to New York.

He had a privileged childhood.

His father was in business.

and there were chefs and butlers at home.

so he was well-off.

But life is like the stock market, is full of unpredictable black swan events.

His father died suddenly, the family's life fell from heaven to hell.

To make a living, Graham's mother borrowed money and wanted to make a fortune in the stock market.

But the ending is predictable.

She got nothing.

and lost everything.

which made the family's financial situation worse.

This incident had a profound impact on Graham.

He witnessed the danger of speculation firsthand, and realized that ordinary people must not invest randomly.

and he must find a more rational method.

So he studied hard and won a scholarship to Columbia University.

When he graduated, the school wanted him to stay and teach, But Graham refused.

because he wanted to go to Wall Street to see what real investment was like.

He started as a clerk in a bond company, and gradually became a partner.

Later, he started his own business and founded an investment firm.

In this process, he gradually formed centered on rational and long-term investing, value investing concept.

Speaking of this, you must be very curious about As the founder of value investing, how Graham's investment performance is.

According to the data that can be found now, from nineteen thirty-six to nineteen fifty-six, his average annualized return was fourteen point seven percent.

Many people may say that it's not that great.

In a good market, any passerby a day's profit is higher than his annual return.

But in fact, if we extend the time to twenty or thirty years, you will find that most of the investors and financial institutions all lose money.

Many people make a lot of money in a short time, and enjoy great success.

But as time goes by, the money will be lost.

or even lose more.

So, There is a famous saying in the investment world that the one who laughs last is the real winner.

So Graham's long-term returns in the history of Wall Street, is definitely excellent.

Of course, his student Buffett is even more outstanding.

In the past sixty years, with an average annual return of twenty percent.

and assets have increased thirty thousand times.

The core philosophy of value investing is to win in the long run, rather than pursuing short-term pleasure.

So it's very different from most people's quick in and out.

is completely different.

He encourages us to find those truly valuable companies and hold their stocks for a long time.

Simply put, Value investing does not earn the difference between buying low and selling high, but two premiums. First, the premium for the growth of excellent companies.

and the second is the asset appreciation brought by social and economic development.

This is also why Buffett can hold Coca-Cola for so many years.

Since investing in nineteen eighty-eight, including the Nasdaq crash in two thousand, and the financial crisis in two thousand and eight.

He was unwavering when the price hit rock bottom.

Over thirty-six years, from the initial thirteen hundred million dollars, bringing him more than thirty billion dollars in returns.

So, how did Buffett how did he intersect with his teacher?

It's all thanks to the book you're listening to.

In nineteen forty-nine, fifty-five-year-old Graham published The Intelligent Investor.

The next year, Buffett, who was nineteen, read it by chance.

he felt like he had opened his eyes.

and thought it was the perfect investment theory.

Later, he learned that Graham taught investment courses at Columbia University.

In order to learn from him, Buffett directly applied for Columbia University's graduate school.

He was a tough guy.

After graduation, he even applied to work for Graham's company, saying he could work without pay, just to learn the real skills.

but was ruthlessly rejected.

Because at that time, Graham's company only hired Jews.

But Buffett didn't give up.

he persisted in writing letters to his teacher, reporting his understanding and insights into investing.

A few years later, Graham was finally moved by his sincerity and agreed to let Buffett come to the company and taught him how to invest.

The next story is familiar to everyone.

After Graham retired, Buffett returned to his hometown and founded his own investment company.

and gradually optimized the teacher's inspection strategy.

which eventually became Berkshire Hathaway today.

and became the stock god in everyone's mind.

After becoming famous, Buffett often teaches students.

and the textbook he used was still The Intelligent Investor.

So what exactly does this book talk about?

how can ordinary people apply the concept of value investing?

In fact, its essence lies in teach you how to find good companies and hold them patiently.

Don't be disturbed by short-term market fluctuations.

disturb your mind.

Simply put, is to treat good companies as your partners and go through the long years together, and enjoy the dividends of its growth.

Just like Buffett investing in Coca-Cola, He didn't earn from short-term stock price fluctuations, but the decades of brand accumulation of Coca-Cola and business expansion.

However, There are too many temptations and traps on the road of investing.

Just like the recent stock market surge, many experts and influencers began to teach people how to trade stocks.

and鼓吹 a bull market is coming.

However, which can easily make ordinary people fall into a deep pit.

Because most of the losses in the stock market actually start in a bull market.

Most people confuse investment with speculation.

Let me ask you a question.

how do you choose funds and stocks?

Are they similar to the following situations?

The first is to trade in bands, is when the stock price starts to rise, buy at a low point, and sell it when it rises to a certain high point.

to earn the price difference.

The second is to rely on news.

pay attention to the online essays on financial news every day, or so-called insider information, and analyze whether they are good or bad for the market.

If it's positive, buy them quickly, Wait for the rise if it's negative.

sell them quickly.

and buy them back when they fall enough.

The third is to hold the trend.

hold for a long time.

For example, now everyone says new energy, chips, artificial intelligence are the future trends.

So they buy stocks in these fields and hold them for a long time and wait for appreciation.

In this part, many people think they are doing value investing.

So the question is, are these methods really reliable?

Graham believes that for ordinary investors, may not work well.

The methods themselves are not wrong.

Many professional investors and institutions also use these methods to make money.

But the problem is these seemingly simple three-pronged approach have a very high threshold.

Ordinary people can't handle it.

For example, doing band trading, Can you really seize the opportunity every time?

The market is constantly changing, No one can accurately predict the rise and fall.

Most people see the stock market rise for a few days, they rush in to buy.

only to be trapped at a high price.

or sell in a hurry when it falls, missing the opportunity for a rebound.

The second way to operate based on information is actually more suitable for those professionals and investment institutions.

because they have faster and more comprehensive information channels, and professional teams to study and interpret.

But for ordinary investors, when the news reaches our ears, it is often lagging behind.

the market has already reacted.

Trying to make money from information it's likely to be in vain.

The last one Graham said that押趋势 even if you are right about the big trend, you may not make money.

In the fifties of last century, everyone thought the aviation industry would thrive.

so fund managers frantically bought airline stocks.

As a result, the industry did develop later, but due to overcapacity and fierce competition, which led to airlines' meager profits.

The entire industry was generally in the red.

but investors lost money instead.

These methods are used by professional investors, there may be a little chance of success.

But for ordinary people, are too difficult.

Those who used them to make money more relied on luck.

But many people mistook this luck for their own strength.

mistaking speculation for investment.

Graham believed that real investment must be based on analysis, It is an understanding of the company's business.

to ensure the safety of principal, and pursue appropriate returns on this basis.

If both cannot be achieved, safety should be the first priority.

On the contrary, those who buy when others say it's good only pursuing high returns, and don't pay attention to fundamentals, are speculating.

However, because the word speculation sounds like something disgraceful, so many people in the capital market and even some professional institutions prefer to use the word investment to cover up their speculative behavior.

Lemon said that most people lose money because they only focus on the rise and fall of stock prices, lack of understanding of the company, turning investment into gambling.

They win by luck.

and losing is the norm.

You may ask yourself if the stock exchange closes tomorrow, can you get your principal back?

The same goes for real estate investment.

if the house can't be traded, can you recover your cost?

Those who can answer these questions are investors.

Those who can't answer are speculators.

Among speculators, ninety percent of them will eventually become leeks.

所以 how can we become smart investors?

Graham gave several key points.

You can practice and imitate by referring to them.

First, focus on the fundamentals of the company.

Just like you really want to do this business.

You need to know how the company makes money, whether the management team is capable and honest, and the health of the financial situation.

Secondly, we should protect our principal.

and control your position.

Only use money that you don't need for a long time before investing in the stock market.

and accept its fifty percent fluctuation.

If you can accept a loss of one hundred thousand yuan, then it's best to invest only two hundred thousand yuan.

and keep a sufficient safety margin.

Then, keep a rational expectation of returns.

Don't always think about getting rich overnight.

Fraudsters take advantage of this mentality to cheat you.

Set realistic income goals for yourself.

such as bonds with an annualized rate of five percent, and the stock market's long-term annualized rate of eight to ten percent.

which is already very good.

Finally, you need to persevere.

and wait patiently.

Don't be influenced by short-term fluctuations.

Trust your own judgment.

and hold high-quality companies for a long time.

Just like in our previous video as we said in the video about compound interest, As long as you can save five thousand yuan per month, and compound interest through index investment, In the future, it's possible to have tens of millions of assets.

Maybe many friends will think that ordinary people don't have much capital, and study companies, and it seems impossible.

Graham also explained this.

He said judging the value of a company is not that complicated.

Learning some basic financial knowledge can help you judge.

This is which is enough for you to get an average return.

As for which simple knowledge to learn, we will share in detail later.

But Graham also admitted that people always have the urge to speculate.

and it's okay to have a small gamble occasionally.

But you need to control the degree.

and not as a serious investment.

If you don't take it seriously, speculation can bring happiness.

But once it becomes the main way, it may bring you misfortune.

So his advice is that we can set up two accounts.

one for serious investment, and the other for small-scale speculation.

Keep speculative funds within five percent of total assets.

So even if it fails, the loss will be within the acceptable range.

It won't affect the overall investment plan.

Does it sound familiar?

This is similar to the black swan is consistent with the barbell strategy proposed by Taleb.

Most of the funds are used for safe and stable investments.

and a small amount for high-risk opportunities.

So, The wisdom of top investors is actually the same.

According to Graham's philosophy, what strategies can ordinary people adopt to truly achieve wealth appreciation?

Let's start with the conservative one.

He proposed a suitable for most ordinary people defensive investment method, called dynamic adjustment of stock-bond portfolio.

It is especially suitable for those who are usually busy don't want to follow the stock market's ups and downs every day, or those who don't want to worry too much about managing money, but also want their money and at least outperform inflation.

The core logic of this model is to prioritize defense, and seek stability.

First, ensure the safety of your funds.

and not easily attack.

nor blindly pursue high returns.

So how to do it?

Graham gave an example.

If you have spare money to invest, you can divide it into two parts.

One part is used to buy high-quality stocks, and the other to buy government bonds.

and high-quality bonds, the proportion of the two His suggestion is between twenty-five and seventy-five percent.

For example, you can set it at forty percent stocks and sixty percent bonds.

or fifty-fifty, or even seventy-five percent stocks and twenty-five percent bonds.

Anyway, the minimum is not less than twenty-five percent.

and the highest is no more than seventy-five percent.

The benefits of doing this First, it is to ensure safety.

because stocks and bonds are complementary.

When the stock market is good, we are willing to hold more stocks.

But the more we buy, the greater the risk.

So at least twenty-five percent of bonds.

This hard indicator can ensure that our safety bottom line will not be broken.

After all, the default risk of high-quality bonds like treasury bonds which can hedge against some of the risks of stocks.

Second, they can support each other in terms of returns.

The returns of the stock market and bond market often show a seesaw effect.

When stocks rise sharply, bond returns are usually lower.

while when stocks are sluggish, bond returns tend to perform well.

Graham explained that This is because when the stock market is particularly good, the stock prices of listed companies are high.

they don't need to sell too many shares to raise a lot of money.

so they naturally don't need to issue bonds and the interest rate on bonds will drop.

On the contrary, if the stock market is bad, public companies need to borrow a lot of money by issuing bonds, and interest rates go up.

And by taking advantage of the complementarity of stocks and bonds, we can reduce the overall risk of the portfolio relatively reduced.

and more stable returns.

What's the advantage of this method?

Graham said it allows you to not predict market trends or spend time monitoring the market.

When a bull market comes, stocks or indices rise well, you can sell some stocks to buy bonds Lock in profits. When a bear market comes, the stock market falls, and bonds perform better.

you sell bonds and buy stocks or indices.

which is equivalent to buying on the bottom.

This kind of fool-proof lazy investment strategy can effectively diversify risks but also help you outperform inflation in the long run.

So, what determines the proportion of stocks and bonds?

be determined based on what?

The author says that first, it depends on your risk appetite.

and your ability to withstand risks.

Let's first look at risk appetite.

If you are a very conservative investor, and only willing to take the minimum risk, you can choose twenty-five percent stocks and seventy-five percent bonds.

Conversely, If you can accept relatively high risks, you can buy seventy-five percent of your money in stocks.

Of course, most people may have a moderate preference.

then you can choose fifty percent of stocks and bonds.

Let's look at risk resistance.

such as whether you are single or married, What do you rely on for a living?

What are your consumption habits?

Do you have children?

How much education expenses do they have?

What's the situation of your parents?

How old are you?

and your health.

Do you have a pension?

How much investment loss you have.

Your quality of life will not significantly decline.

and so on.

These are all specific manifestations of your risk resistance.

After analyzing, if you think your risk resistance is not bad, then increase the proportion of stocks.

On the contrary, If you think you have many places to spend money, and can't bear too much loss, then hold more bonds.

Of course, Graham said after setting this ratio, it can be adjusted.

Maybe after a year or two, some changes have occurred in your life, such as promotion and salary increase, and your risk resistance has greatly improved.

you can re-determine a new ratio.

Graham also suggested that at the end of each year, we can adjust our portfolios we can make a dynamic adjustment to restore it to the original stock-bond ratio.

For example, suppose you have one hundred thousand yuan, forty thousand invested in stocks, and sixty thousand in bonds.

Now a bull market is coming, and the stock price starts to rise.

The stock worth forty thousand yuan becomes fifty thousand.

but the bond value remains unchanged, still sixty thousand.

Then your total assets become one hundred thousand yuan.

The previous ratio was four to six.

Forty percent of one hundred ten thousand is forty four thousand.

Now the stock has appreciated to fifty thousand yuan, exceeding six thousand yuan.

What should you do?

Lehm says you should sell the six thousand yuan stocks and use the money to buy bonds to bring your portfolio back to a four-to-six ratio.

Conversely, if the stock price falls, you should sell some bonds and add it to the stock.

Simply put, you sell the part that grows well you sell the excess part and fill in the other side.

Adjust it every few months or a year Just keep your fixed ratio.

This defensive investment strategy is so simple.

Many people may wonder such a mindless operation why can you make money?

Because it follows the basic logic of investing.

Sell when assets are overvalued and buy when undervalued.

According to Graham's strategy, In a bull market, stocks are sought after, When prices are high, we sell to make a profit and gradually exit.

When stocks are undervalued in a bull market, we can buy at a low price and gradually enter.

This is actually contrary to is opposite to that of most investors.

Many people add positions when stock prices rise sharply, and sell stocks in a hurry to avoid risks when market falls.

He thinks that non-professionals do this are basically irresponsible for their own wallets.

Graham said that the most important thing in investing is defense.

Rather than giving up the opportunity to attack, but to guard against risks first.

and protect your position first.

Even if the worst happens, you won't lose too much.

Defense first is actually a profound philosophy of survival.

When Zeng Guofan fought against the Taiping Heavenly Kingdom, he often used a tactic called building a strong camp and fight a dull battle.

This tactic is simply to defend without attacking.

The Hunan Army built the most solid defense line, and let their soldiers hide behind.

and not to engage with the enemy.

Then they slowly advanced the line of defense and surrounded the enemy's city.

besieged for two years.

When the enemy runs out of ammunition and food, they will surrender.

By preserving their strength, to wait until the day we win.

For Graham's defensive investment, the opportunity is when the bull market crashes.

When the market panics and falls sharply, we reduce bonds and increase our stock holdings.

At this time, we buy cheap assets.

and the certainty of making money will be higher.

But this logic is against human nature.

Almost no one can keep positive and optimistic while everyone around them is in distress, and still remain positive and optimistic.

That's why only ten percent of people in the stock market can really make money.

That's the basic logic of defensive investing.

Although today's market environment compared to the era of Graham, has changed a lot.

but his defensive investment strategies can still give us many inspirations.

The most important thing is not how much to invest in stocks and bonds, but when we invest, the first thing we need to do is to build our own defense line.

First, we need to ensure our long-term survival.

Of course, if this method is to be truly implemented, there is a very critical issue to solve.

which is what to buy.

how to choose the right stocks, funds, and bonds, and when to buy them.

This should be an eternal topic that plagues all investors.

Some companies never rise after buying, Some companies rise less when the market rises sharply, and fall more sharply when the market falls.

Some illegal institutions or influencers will even guide you to buy pig-butchering scams. So, how can we ordinary people avoid these pitfalls just like Buffett, enjoy the long-term benefits of a company?

Graham said Stock selection, is essentially a threshold.

and the art of companies.

Even for those investment masters, finding a good stock it also requires a lot of effort.

Like Peter Lynch, he personally visited five or six hundred companies a year to find a few truly valuable ones.

And Buffett studies various company financial reports from morning till night, but he only bet on a few companies in his life.

which can be counted on both hands.

Most of our investors buy stocks are too casual.

Many people see what's hot in the news recently, and buy whatever they see.

Those who do other jobs They feel they are familiar with pharmaceutical companies.

Ordinary people think they can see the development of military industry.

and even many people just buy what they like.

and they are confident.

But when asked why they buy, they can't explain the reason.

Our investment not only is it extremely risky, and most likely end up losing money.

So, for ordinary investors, how to screen out good companies?

Graham gave us four suggestions in his book.

But before that, I want to give you a warning.

Because The Intelligent Investor was published in nineteen forty-nine.

Although it was revised and updated once it has been revised and updated once, but now the times have progressed.

Today we have more convenient tools.

Stock selection has become much easier.

Index funds are something that didn't exist before.

Now we can directly buy the CSI three hundred index, A five hundred index, or S and P five hundred index, and so on.

They are composed of a basket of the best companies.

Buying index funds is like buying a bunch of good companies at once.

and even the step of stock selection can be saved.

However if if you want to pursue higher returns than the market average, or want to challenge yourself and enjoy the fun of stock selection, then you can refer to Graham's method you can screen good companies by yourself.

First, let's look at his stock selection advice for conservative investors.

First, you should diversify your investment.

but not too much.

No matter how confident you are, the first step in stock selection is always to control risk.

Don't put all your eggs in one basket.

Everyone knows this.

But how much diversification is appropriate?

Graham suggested buying at least ten stocks.

so that if one stock performs poorly, and drag down the entire portfolio.

But it can't be too scattered.

Thirty is the maximum number of stocks.

Because if you buy too many, you will not have the energy and time to track the performance of each stock.

which will increase the risk of investment.

The second point is to prioritize large companies, which are also known as white horse stocks.

Stay away from small-cap stocks.

Many friends may think that small-cap stocks have explosive power.

Large companies have high market capitalization, with small stock price fluctuations.

and it's hard to multiply many times.

But the same, small companies are easy to soar and also easy to plummet.

There are many tricks.

which is difficult for outsiders to understand.

The business of large companies has been tested by time with relatively stable profits, and have more resources to cope with market changes.

especially in times of unstable international situation, their ability to withstand risks will be stronger.

How big is a big company?

There is no global uniform standard for this.

But market value is the simplest reference.

For example, you can set a threshold companies with market value below twenty billion.

On this basis, Graham also suggests prioritize leading enterprises in each industry and financially sound companies.

Current assets should be at least twice current liabilities.

This can ensure that the company has sufficient cash flow so that they won't be in trouble due to high liabilities.

Of course, these data you need to check these listed companies' financial statements can be found on brokerage platforms. Anyway, you must learn to research before investing.

Smart investors only invest in value, not desire.

The third point is is to find companies that pay dividends for a long time.

Why? Because continuous dividends it can prove that the company has the ability to generate stable profits and create value for shareholders in the long term.

On this basis, Graham suggested that we we can also add a profit growth indicator.

For example, you can prioritize companies that companies that have profits every year.

There are not many companies that meet this standard.

If you are still not assured, you can set a minimum profit growth rate.

such as an average annual growth rate of more than five percent.

Companies that meet these conditions are basically good companies that can make money for long.

The last point is to pay attention to the price-earnings ratio.

and be cautious of high-growth stocks.

Many investors are attracted by emerging industries or technology stocks.

thinking they have a promising future.

and the stock price has the opportunity to multiply many times.

But this is also one of the traps one of the easiest pitfalls to fall into.

Because the price-earnings ratio to some extent, represents how popular the stock is at the moment, whether it's hyped.

The higher the price-earnings ratio, actually means that the farther the stock price deviates from its actual value.

Of course, high-growth stocks are worth paying attention to, but the price should not be outrageous.

In reality, growth stocks that enter the public eye are usually already very high.

For example, some technology stocks have price-earnings ratios of tens or even hundreds.

That means it will take decades for us to get back our money.

it will take decades.

For ordinary investors, it's very difficult to make money.

In American history, technology growth stocks often made investors lose everything.

For example, in the era of Graham, IBM was always the leader in growth stocks.

But within six months from nineteen sixty-one to nineteen sixty-two, its stock price fell by half.

Texas Instruments also rose from five dollars to rose from five dollars to two hundred and fifty-six dollars.

But two years later, the stock price fell by four-fifths only forty-nine dollars left.

Graham reminds us that when looking at a company's price-earnings ratio, we should focus on its long-term average.

such as the average price-earnings ratio over the past seven years.

it's better to control within twenty-five times.

If you only look at the past year, the price-earnings ratio should be controlled within twenty.

For defensive investors, no matter how attractive high P/E growth stocks are, are not for you.

So it's better to give up those less popular but large companies with reasonable price-earnings ratios.

which is more suitable for you.

Everyone can only make money within their own ability.

In addition, he also gave a simple method, called dollar cost averaging.

We invest in RMB, which can also be called the RMB cost averaging method.

Simply put, it's dollar cost averaging.

monthly or quarterly, to buy those high-quality white horse stocks.

such as leading companies in various industries.

Their profits are stable, which are high-quality investment targets in the long run.

This reminds me of Duan Yongping advised young people to save the money left over each month to buy Moutai stocks.

but it was laughed at by everyone.

Because buying a share of Moutai now costs over one hundred thousand.

Young people who can save so much money every month are also relatively few.

But in fact, Dadao's original intention is the same as the advice Graham gave us.

coincide.

Through the method of fixed investment, in the market downturn, you can buy more high-quality assets.

When the market is booming, you buy less, the risk is relatively small.

But if you look at it in ten or twenty years, and look at it as saving money, as long as you can persist, you can achieve an annualized return of seven to ten percent, it is very possible.

Of course, this is advice for defensive investors.

to achieve long-term investment without much worry.

If you want to pursue higher returns, which means taking on higher risks.

What advice and models did Graham give to aggressive investors?

what advice and models he gave to aggressive investors?

Is there a way to outperform the market and achieve higher returns?

and achieve higher returns.

He said you need to actively look for high-quality companies that are undervalued by the market.

Buy when its stock price is lower than its intrinsic value, and hold until the price is higher than the intrinsic value.

Through in-depth research and analysis, you can find market mispricing.

so that you have the opportunity to obtain higher-than-average returns.

Let's use an example.

Suppose there is a house worth two million yuan, and can receive seventy thousand yuan in rent every year.

The tenant is very stable.

But due to the current economic downturn, the rental market is sluggish.

and it's hard to rent it out at thirty thousand a year.

Its valuation will then decrease.

People may think that the house is not worth that much money.

and only willing to spend five hundred thousand yuan.

But after two years, the economy improves and the real estate market becomes hot again.

Rents of one hundred thousand a year are still in demand.

At this time, everyone will change their views on it.

The valuation may become three million.

This is the market's fluctuation in intrinsic value and future earnings confidence.

Graham's advice to us is buy it when the market values it at half a million, and sell it when someone offers three million.

The same is true in the stock market.

Find those undervalued treasure companies and buy and hold at the right time, and wait for the value to return.

Obviously, compared to defensive investing, This requires you to spend a lot of time to study the real situation of the market and the company.

It also requires more professional knowledge.

For most people, is not suitable for most people.

However, there must be people who think buying low and selling high Isn't this what everyone is doing, buying on dips and selling on rallies?

Everyone can do it, but it's not.

Aggressive investing and ordinary short-term trading are fundamentally different.

First, the buying logic is different.

Most people trade stocks mainly by looking at prices.

they buy when the price drops today, and sell when it rises tomorrow.

and buy again if it falls the day after tomorrow.

But the aggressive investment mentioned by Graham focuses on the intrinsic value of the company.

Through in-depth analysis, to judge whether a company is worth long-term investment.

That is to say, it must be a good company.

This is the decisive factor for buying.

The price only determines when to buy.

Secondly, the mindset is different.

The emotions of ordinary investors are easily influenced by market fluctuations.

They are afraid when it falls, and crazy when it rises.

Their mentality is very unstable.

But Graham's aggressive investment is based on confidence in the company.

even if the stock price falls in the short term, he can remain calm.

Thirdly, the risk control is different.

Many people easily put a large amount of money on one or two stocks.

with concentrated risks.

Aggressive investing doesn't bet on a single stock.

but to find a large number of companies that are undervalued.

and diversify the investment.

In addition, Graham also suggested that only ten percent of the position for aggressive investing.

buy the stocks you choose.

and the remaining ninety percent for defensive investments.

such as index funds and bonds.

Because, Although finding opportunities to outperform the market is important, but ensuring the safety of principal is more important.

I guess many friends are confused by this.

What kind of aggressive investment is this?

There is no trace of aggression at all.

Perhaps is the reason why they can become investment masters.

Ensuring the safety of principal is the basic respect for risk.

So, how to operate aggressive investments.

Graham said that Before doing so, we should first avoid three major pitfalls.

First, avoid high-interest bonds.

Many people think bonds are very safe, but don't forget that high interest rates often come with high risks.

The companies issuing these bonds may have credit problems. So it's better to choose bonds with high safety but slightly lower-yield bonds.

but also ensure the safety of principal.

Second, don't blindly buy new stocks.

This may also be Graham is most likely that Chinese investors complain about.

Because before us, it was almost a sure-fire operation.

Few people have heard of losing money in IPOs.

But in mature foreign markets, the new shares' price falling on the first day is not uncommon.

Because the quality of companies varies, and greater risks.

For Chinese investors, is a wake-up call.

Currently, there are still opportunities to buy new shares.

But in the long run, as our market becomes more mature, it is likely that we will be like foreign countries the myth of making money from IPOs will eventually be shattered.

Thirdly, is to be cautious about buying foreign government bonds.

Graham said that Although the yields of many countries' national debts are high, but ordinary people lack in-depth understanding and credit ratings, lack in-depth understanding they can't make reasonable judgments on risks.

If a foreign government defaults, you have no means to protect your rights and interests.

所以 If you have the need for global asset allocation, you must conduct in-depth research.

Don't just look at the interest rate.

After understanding the minefield, Next, we need to look at how to choose stocks for aggressive investments.

Graham gave us three suggestions to help us find undervalued good companies.

First, look for those industries that are neglected by the market.

industry leaders.

Because they are not favored by the market now, it means they are likely to be undervalued.

When the market is bad, from those well-known indices, select companies with lower price-earnings ratios temporarily neglected leading companies.

Because these companies have relatively solid fundamentals.

Once the market recovers, they tend to rebound first.

Of course, to spread the risk, you should find several such stocks for diversification.

You may wonder whether this method is reliable.

Graham did research, he found that in the thirty-four years from nineteen thirty-seven by this method, it outperformed the market in twenty-five years.

So, If you want to get excess returns in the stock market, you may pay more attention to these temporarily undervalued industry leaders.

Then his second suggestion is to find cheap and high-quality securities.

But cheap here doesn't mean low stock price, but refers to companies with market capitalization lower than net working capital.

you choose.

The market undervalues these companies, there is an opportunity for value return.

When buying, we should still adhere to the principle of diversification.

and hold a portfolio of multiple stocks.

Finally, Graham also mentioned some special opportunities, do you some super giants violate antitrust laws and forced to be divided into several small companies.

which often leads to stock price fluctuations and revaluation opportunities.

At the same time, It also brings good investment opportunities to investors.

Although this situation is relatively rare, we need to pay close attention to market dynamics.

But if it happens, we need to study it carefully.

Don't miss it.

Aggressive investing doesn't mean taking risks, but to discover undervalued value in the market to discover undervalued values in the market and obtain higher returns than the average level.

He still emphasizes risk control and requires you to spend a lot of time to study the fundamentals of the company.

After talking about the stock investment strategy, how should we choose funds?

In fact, for most ordinary people, funds are a worry-free and safe investment choice.

We can use money market funds to store the money we need for daily use.

we can also use bond funds as a stable financial bottom layer.

Nowadays, most young people buy or recommended by financial institutions, are equity funds.

Because it is simple to operate, and we don't need to choose stocks ourselves.

The fund manager will make a good investment portfolio.

Secondly, it diversifies risks.

Funds usually invest in multiple stocks.

and fund managers are more experienced and professional.

Theoretically, it can manage money better than most people.

and achieve better returns.

So in mature markets, for many years, it is regarded as a near-perfect investment product.

For example, in the United States, there are tens of millions of households participate in the stock market through funds.

But is the reality really so good?

Many people know that I have a tuition account which is my earliest investment.

which are some active stock funds.

I still keep it there.

and I haven't touched it.

I remember it lost maybe fifty to sixty percent at most.

This is actually a bit counterintuitive.

In the past, we all thought that public funds seemed to have less risk.

and banks and Alipay were also promoting them.

And I bought from famous fund managers.

but the returns were terrible, but some fund managers even went to jail.

So later I separated other investments I just left this account there as an experiment to see how much it would underperform the market.

But in recent months, the market has rebounded so much, My other accounts have already made a profit of more than ten percent.

It's still down over thirty percent.

We can see how long it will take to recover the cost.

Of course, this is not an isolated case.

In fact, those who entered in twenty twenty-one have basically encountered this situation.

So what's the problem?

What mistakes did we make at that time?

Graham gave the reasons in his book.

Firstly, we are easily fascinated by the myth of high returns.

and overestimate the returns of funds.

Graham counted the returns of the ten largest funds the returns of the ten largest funds in the US, He found that their performance was roughly the same as the S and P five hundred.

That is to say, even the top funds in the industry in the long run, only matched the market average.

In the last half century, financial scholars have also done a lot of research confirming Graham's observation.

They found that as long as the time is extended, the returns of most funds cannot outperform the market.

After a short period of brilliance, their performance will quickly decline.

Secondly, many investors tend to choose the funds with the best past performance, thinking that it represents the strength of the fund manager.

But Graham reminds us that past brilliance does not mean future success.

The market is full of uncertainty and chance.

Past high returns may just be luck.

and cannot be replicated.

In the Black Swan we just talked about, Taleb also emphasized this point.

Capital markets are a typical extreme world.

where luck is more important than ability.

Graham said that the main reasons why high returns of funds cannot be sustained there are three reasons. Firstly,

which will seriously affect returns.

When fund companies had small asset sizes in the early days, it was relatively easy to outperform the market.

As long as two or three of the selected stocks performed well, the entire fund can the fund could rise sharply in a short time.

But when investors are attracted by high returns, and a large amount of funds enter, and the fund size increases, to avoid risks, funds must invest in more stocks.

It's hard to focus on them.

The excellent performance of individual stocks the impact on overall returns is weakened.

performance returns to the average level.

Second, high management fees is also an important reason for affecting our investment returns.

Graham said that some fund companies even before the fund is publicly sold, let insiders invest first to obtain initial high returns.

and then publicly promote this rate of return attracting ordinary investors to enter.

They also charge high management fees.

such as two percent or more per year.

eroding investors' actual returns.

As mentioned earlier, Originally, as the fund grows, returns will decline.

This small return is also eaten up by high management fees.

So many large funds can't outperform the market.

The third reason is the herd effect.

which is simply imitation.

When a fund is successful, other funds will copy its investment strategy.

This easily leads to everyone buys the same few stocks, which are often referred to as fund heavy stocks.

When the market is good, a large amount of money flows into these stocks, the stock price will be pushed up, and the risk increases.

But when the market starts to adjust, these funds will concentrate on exiting, causing a sharp decline.

So, how should smart investors choose funds?

Graham gave us two suggestions.

First, choose index funds.

including my idol Buffett, Munger, and John Bergers.

all recommend that ordinary people invest in index funds.

to avoid stocks and active funds.

Because in the long run, the market is fluctuating upward.

Index funds can at least help us the average return of the market.

Meanwhile, its management fee is low, which reduces the erosion of our the erosion of our returns.

Historical data also proves that most of the actively managed funds can't outperform the index in the long run.

So it is very suitable for our long-term investment.

Over time, the more you can enjoy the power of compound interest.

As Warren Buffett said, Investing is like a snowball.

You need to find a slope long enough.

Investing in an index fund is a good choice.

Of course, Although most funds cannot outperform the market in the long run, there are still a few funds that perform well.

The problem is how can we find them?

Graham summarized several characteristics of these funds.

Firstly, the fund manager should be aligned with the interests of investors.

He should be the boss, rather than a professional manager.

so that he won't jump ship.

so that he can be responsible for investors.

Meanwhile, his own money should also invest in the fund he manages.

so that he can pay close attention to performance.

Second, fees should be reasonable.

Don't buy those with high fees.

Graham said the concept of you get what you pay for doesn't hold true in the fund industry.

Funds with high management fees doesn't necessarily mean their stock selection skills are high.

In fact, High fees are mostly the result of early publicity, It has nothing to do with their actual investment ability.

Those good funds that can really outperform the market If they want to last long, will consider the investment returns.

charge lower management fees to benefit clients.

However, with unique investment strategies, and dares to be different.

Like Fidelity Magellan Fund managed by Peter Lynch, he bought some cheap assets that other funds would not buy.

For example, in the eighties, he bought almost bankrupt car companies.

Chrysler.

This is actually what Graham said, find undervalued potential stocks.

For those popular and popular growth stocks, Peter Lynch seemed to be he was rather indifferent.

Because those stocks' prices were overvalued, and the risks are high.

By looking for these three characteristics, 你 you have a chance to find good funds that outperform the market.

Of course, There is an old saying in the stock market that Those who buy are apprentices, but those who sell are the masters.

Especially for friends who buy active management funds, just like buying stocks, you should always be vigilant.

The product and manager you buy have any abnormalities?

Gelmi pointed out that we should focus on several signals.

If you find problems, you should consider selling.

to ensure the safety of principal.

The first signal is a sudden and drastic change in trading strategy.

For example, this fund which originally mainly invested in value stocks, but now suddenly shifts to popular growth stocks.

The investment style has changed.

Second, fund manager changes.

which increases uncertainty.

The new fund manager may have different strategies and unknown ability.

Third, there are abnormal fluctuations in performance.

A formerly stable fund suffers a sudden sharp loss or surge.

which may indicate that the investment strategy or the market environment has undergone adverse changes.

Fourth, sell decisively when the market is overheated.

Usually in the middle and late stages of a bull market, the trading volume will significantly increase.

A large amount of money floods into the market.

Because active funds have minimum position requirements, the new money must be used to buy stocks.

But at this time, market prices are already very high.

So the risk will greatly increase.

Graham advised us to take profits.

Or when your fixed investment returns reach more than twenty percent, you can consider cashing out.

Wait for the market to adjust, and start a new fixed investment plan.

When you are practicing these investment concepts, you may encounter a problem.

you may encounter some professional problems you don't know who to consult.

How to find a reliable investment advisor?

In the nineties, the US stock market was very hot.

and you could make money by buying anything.

Many Americans thought they were great investors.

They invested in stocks by themselves.

But then the Nasdaq bubble burst, and lost a lot of money.

So many people reflected on it they thought that without professional guidance, the idea of independent investing is stupid.

Graham said this reflection is half right and half wrong.

The right side is that most people do need professional guidance.

The wrong side is that Even if you find an investment advisor, if a stock market crash comes, you probably won't escape.

Because many people have a misconception that they think professional investment advisors help us make money.

But in fact, they help us save money.

Graham said that their duty is to use their professional knowledge and experience to prevent clients from making investment mistakes.

But we will find that seems a bit disconnected from reality.

In reality, investment advisors usually emphasize how much money their clients' investments have earned and how good the returns are.

But Graham doesn't like this behavior.

He thinks this approach of catering to client expectations actually makes the role of advisors lose their essence.

Why does he say that?

He said that most ordinary investors are only suitable for defensive investments.

They have little investment knowledge and are easily influenced by others' advice.

But defensive investments are conservative and boring. When they hear about high returns,

and boring. When they hear about high returns, we will inevitably be impulsive, and want to try something exciting.

So the biggest role of finding an investment advisor is to suppress our impulses and prevent us from straying off track.

to protect the basic portfolio.

correct.

Most of the investment advisors' practices have gone wrong.

losing their role as a firewall.

They forget their basic responsibilities and blindly cater to clients.

Clients envy others' high-yield investments, so the advisors help them pursue high returns.

Graham said that This trend is actually related to the profit model of financial institutions.

Many institutions rely on commissions for profit.

The more customers speculate, the more frequently.

the more commissions they get.

So they are willing to cater to customers.

the mentality of speculation and chasing high returns.

But Graham said mathematically, speculation is bound to lose money.

Let's do the math.

Speculation relies on luck, But good luck won't always be there.

So the excess returns brought by good luck will eventually be offset by bad luck.

In the long run, speculation is at best a break-even level.

But if if you subtract the high fees commissions and management fees, it's hard not to lose money.

Financial elites are so smart, they certainly know that speculation cannot make money.

So they only earn commissions, and do not take a share of investment income.

No wonder the author said that Wall Street's prosperity is built on commissions.

But this doesn't mean there are no good investment advisors on the market.

Graham himself is a securities analyst who has been in the industry for fifty years.

He said, in some traditional financial institutions, it's easier to meet those conservative and conservative investment advisors.

They won't encourage you to speculate, or recommend high-commission products.

If you meet them, remember to cherish them.

and hold on tight.

So who needs an investment advisor?

The author says people with the following three characteristics can consider First, there is a huge loss, such as during a financial crisis, your portfolio losses far exceed the market.

you need professional guidance.

Second, financial control is out of control.

If you find that you can't save money, and always fail to pay various bills on time, it means there is a problem with your financial management.

you need someone to help you.

to make a comprehensive financial plan telling you how much to spend, borrow, how much to save and invest.

Third, the investment portfolio is not scientific.

If you can't allocate your own portfolio, or your previous investment portfolio fluctuates significantly with the market, This may mean that the things you bought are relatively homogeneous, you haven't achieved true scientific asset allocation.

This also requires a professional asset allocation plan.

How can we identify reliable investment advisors?

Graham said, First, you need to ensure that he is credible.

You can check the qualifications on the regulatory website, to see if there are any risk warnings.

negative information such as legal proceedings, complaints, and fines.

For domestic investors, we can go to the official website of China Securities Association to check the securities broker's qualification certificate.

and the China Securities Regulatory Commission's website to check if they have been punished.

Of course, Some people like to find relatives and friends who work in finance as investment advisors.

But Graham doesn't recommend this.

because it's easy for us because of our feelings and trust in relatives and friends, overestimate their professional abilities.

and blindly trust them.

It's better to find a stranger.

Secondly, we can also take the initiative to learn the abilities of investment advisors.

For example, you can ask them some questions.

What is your investment philosophy?

Do you invest more in stocks or funds?

These questions to understand their understanding of investment and risk.

You can also ask if they use technical analysis.

Do you use timing trading?

Graham said that If he says yes, the average investor should directly pass him.

Because in his eyes, it's speculation, not an investment.

Of course, we also said that This is the view of value investing.

They don't believe anyone can analyze price trends.

In addition, we can also ask him, can you help me what average annual return rate you can get.

Graham said that if the other party says ten percent or more, then the investment advisor is not trustworthy.

He thinks such a promise often represents an aggressive style and a little irresponsible.

Of course, if the other party says something too affirmative, such as you must not miss this opportunity, If you don't buy, you will regret it for a lifetime.

We can beat the market.

It's a certainty.

Graham said, you can report him to the regulatory authorities.

because it is illegal inducement.

The third point we need to consider what questions the investment advisor will ask us.

Why?

Because truly excellent people in the financial market never lack clients.

They are usually picky.

If he caters to you, and is compliant, this is a dangerous signal.

Graham said that for senior investment advisors like him, usually ask clients how is your current financial situation?

Is it balanced?

What is your expected rate of return on investment?

Why do you need a financial advisor?

What are your long-term goals?

A reliable consultant will ask you endlessly.

Lower your expectations.

and correct your unreasonable asset allocation.

If he thinks your ideas are all right, then this person is not trustworthy.

In the end, the purpose of hiring an investment advisor is not to manage money, but to manage ourselves.

Of course, even if you find a reliable consultant, we still need to remain rational in investing.

Pay attention to the company you invest in, the shareholders and management inside is also a risk point of long-term holding of a stock.

In two thousand and one, the American energy giant Enron suddenly exposed a financial fraud scandal.

and soon declared bankruptcy.

which shocked the world.

Because the company was a Fortune Five Hundred company a regular on the Fortune Five Hundred list.

and had a good reputation.

But surprisingly, Enron's fraud had been publicly disclosed in the shareholder report.

the way of related-party transactions and the connection with executive interests were clearly disclosed.

So, why no one found these problems in advance?

Lehm pointed out that most investors didn't pay attention to the details of the company's disclosure, let alone exercise their right to vote on supervision or even the right to replace management.

Many investors voluntarily give up their rights as shareholders.

To some extent, contributed to many fraud incidents.

This reminds me of there are often jokes about investors being laughed at online.

For example, someone asked him what do you do for a living?

He said he was a shareholder of five listed companies.

The other person laughed at him and said, Stop bragging.

Look at your little appearance.

but he was actually a homeless person.

It sounds a bit funny, Right, because most people think the stocks that investors hold can be considered as a shareholder of a listed company.

But Graham said, why not?

Even if you only hold one hundred shares, legally, you are also a legitimate shareholder of the company.

You have the right to hold the board of directors to be responsible for your interests.

This is legitimate.

In his opinion, we investors should pay more attention to their shareholder status.

Of course, some people may say that it's not easy.

our power as small investors is too weak we can't compete with major shareholders and management.

This is indeed a reality.

But I think what Graham emphasized is that we at least we should at least consciousness and attitude to safeguard our property.

Whether the means are effective or not is secondary.

The key is to have this awareness.

Here is a little aside.

In the first edition of The Intelligent Investor published in nineteen forty-nine, first edition, Graham earnestly advised investors to actively supervise the board and management.

This part is very long.

However, in the revised version in the seventies, he cut it by three quarters.

His student Buffett commented that This shows that the old gentleman was very discouraged.

because he found that his advice had no effect for decades.

investors were not interested in his advice.

After buying stocks, no one cared.

whether the board and management are responsible to investors.

This made the old gentleman feel very sad.

He also worried about us.

As small and medium shareholders, we should pay most attention to what risks should we pay attention to?

Graham said.

we should focus on how the company's profits are distributed.

Theoretically, as investors, we certainly hope that after the listed company makes money, dividends to us.

But in reality, it's strange.

many people don't care whether the company pays dividends, and some even prefer the company not to pay dividends.

Why is that?

Graham said This is because investors believe that the rhetoric of the board of directors and management.

They will say Although the company has high profits, but we want to defer dividends use the profits for company development.

When the stock price is high in the future, everyone will earn more.

But the premise of this statement is that we need to supervise them to see whether they really use the profits for company growth because many of them are just excuses not to pay dividends.

So most of the time, where they use the money.

A large part of it is used for stock repurchases.

According to data, as early as two thousand, American listed companies had already used forty-one point eight percent of net income on buying back their own stocks.

From twenty ten to twenty twenty, they have accumulated about six point five trillion US dollars in share repurchases.

This is almost equivalent to half of the A-share market value.

Their large-scale share repurchases makes many Chinese investors very envious.

because it will support the stock price, especially when the market is bad.

Parent company's repurchases can stabilize stock prices.

It seems that investors have benefited, and the company seems to be responsible for investors.

It earns a good reputation.

But Graham and Buffett have publicly expressed their opposition.

They believe that the stock repurchase most of the benefits did not go to ordinary investors.

because most of the stocks repurchased at low points are mostly used as options incentives were given to executives.

When the market is good, when the exercise period arrives, executives cash out at high prices.

buy low and sell high, and make a lot of money.

This is equivalent to the cost is paid with the dividends of ordinary investors, while the profits go to the executives.

So Buffett and others said that it's better to it's better to distribute profits directly to ordinary investors.

Of course, some people may argue that Although some of the profits are taken by executives, but some of it is also invested in company development.

If all the profits are distributed to shareholders, the company has no money to grow, we will suffer in the end.

In response to this view, the book cites two academic studies.

One study found that companies with low dividends within ten years have lower profits.

The average profit margin is three point nine percent three point nine percent lower.

Another study found that companies that continuously increase dividends will also increase their profit margins in the next four years.

This contradicts the above statement.

Why does the profit distributed to investors the company develops better?

Buffett has explained this.

He said that this is because the management teams of most public companies have poor capital management skills.

With excess profits, they are likely to make some unconsidered investments, which leads to waste of funds.

After giving the excess profits back to investors, the management's funds are limited, they will spend money more carefully.

The efficiency of capital use is actually improved.

So Graham tried to argue that every ordinary investor choosing stocks should pay attention to the board of directors and management team.

try to choose those companies willing to continue dividends.

For the stocks already held, if the company refuses to pay dividends for various reasons, we should bravely use our shareholder status and question them through legal means and urge them to safeguard our rights and interests.

Otherwise, the company is unqualified.

If you can follow these investment principles, then, you are a real smart investor.

Then let's talk about the best time to buy a stock.

how to judge it.

Many friends have such experience.

watching the stock price fall all the way, thinking it's a good opportunity, they buy the bottom.

but they end up being deeply trapped.

That feeling is not pleasant.

Some prices look very attractive, but it turns out it's not the bottom yet.

So how to tell if the stock price has bottomed out?

If Graham were standing in front of us now, what would he say?

He would definitely say he doesn't know.

Because value investing he doesn't think anyone has the ability to predict stock prices.

Since the trend cannot be predicted, how can we know when it's the top and when it's the bottom?

However, at the end of this book, proposed an important concept, the safety margin.

Using this concept to select stocks, I can't guarantee that you can buy at the bottom.

but at least it can greatly reduce the risk of being trapped.

So what is a safety margin?

Simply put, it is your safety margin.

Let's take buying bonds as an example.

Graham believes that if the company's profits far exceed the bond interest, interest, the safety margin will be higher.

For example, A company needs to pay one million in bond interest every year, but its annual profit is ten million.

Even if there are huge fluctuations in the market, investors holding its bonds don't need to worry too much.

because its blood bar is thick enough.

Even in the event of a very extreme crisis profits suddenly drop by ninety percent, he can still pay the interest on time.

The nine million difference between profit and bond interest which is what Graham called the safety margin.

In addition, There is another way to judge the safety margin of bonds.

is to see if the assets of the enterprise exceed the liabilities.

For example, a company's total liabilities are ten million, but its assets are worth fifty million, the bond investors will feel more at ease.

Because even if it has cash flow problems, he can sell some assets to pay off the debts.

The sudden shrinkage of asset value in a short time, The probability of more than eighty percent is relatively low.

So when assets are far greater than liabilities, the safety margin will be high.

The situation of stocks is more complicated.

because stock prices fluctuate at any time, unlike bonds, interest is fixed.

However, Graham said the basic logic is similar.

The lower the price you can buy stocks, the greater your safety margin will be.

So how to judge whether the current stock price is low enough and whether we can buy it.

Speaking of this, many friends may expect Graham to give an indicator or a set of formulas to check the financial reports of listed companies and apply the formula to calculate and immediately know whether to buy or not.

whether to buy or not.

But unfortunately, there is no such universal formula.

In the book The Intelligent Investor, Graham gives some specific judgment criteria.

For example, Graham mentioned that the profit after deducting debt of a company over ten years can exceed the current is half of the current market value, the current stock price is very low, the safety margin is high.

For example, if a company's current market value is within eleven times of its profit, then buying the stock at the current price the safety margin is also high.

However, I must remind everyone that for our investors today, the reference significance of these specific indicators is not significant anymore.

Because the market environment has undergone earth-shaking changes.

These methods have long been proven to be no longer applicable.

Even Graham himself realized this.

After the book was published in nineteen forty-nine, it was revised and republished every few years.

When it was revised to the seventies version, Graham himself said in the book Using the original calculation method, it was impossible to find a margin of safety.

Because stock prices rose in the seventies, there were no such cheap stocks.

So we can see that his protégé, my idol Buffett, later on, based on his teacher's ideas, made some improvements and optimizations.

For example, The core of Graham's strategy is to buy low.

In things that others generally don't want to undervalue, and find the valuable part.

It's like picking up other people's cigarette butts and smoke the last puff.

So it is also called the cigar butt strategy.

In the fifties and sixties, there were many such stocks in the US stock market.

This strategy worked very well.

But by the time Buffett was born, there was no such market environment anymore.

So he didn't continue to pick up cigarette butts, Instead, he spent a lot of time to find those with excellent management teams and good companies with long-term growth potential.

and hold them for a long time.

and wait for the market to give rich returns.

Although the specific strategy has changed, the underlying principles are still taught by teachers.

Valuing the long-term value of the company, and not short-term fluctuations.

and refuse speculation.

So for ordinary people like us, investing masters, the most important thing to learn is actually their investment ideas and thinking logic.

rather than specific investment methods.

Any specific method has a time limit.

When time and space change, even the most effective methods will become history.

We should grasp the underlying things.

We mustn't lose the big to gain the small.

Graham's margin of safety is still worth learning.

is still worth learning from.

Buying at a relatively low price This is never wrong at any time.

The book also mentions that the biggest loss for most investors is actually in a bull market.

is buying a stock of poor quality.

Poor quality doesn't mean it won't rise.

Quite the contrary.

It may rise rapidly, but its value does not match the high price.

So when the market falls back, are the first to be squeezed out of the bubble.

are often these stocks.

Among these stocks, the most typical are the popular growth stocks.

Graham believed that they lack sufficient margin of safety, especially some high-tech stocks.

whose financial data even show losses.

but their market value can be billions or even tens of billions.

or even tens of billions.

We are used to it.

and even subconsciously accepted a statement their high stock prices is a concentrated manifestation of the market's expectations.

But in Graham's view, optimism in a market without any financial support.

He expressed considerable puzzlement.

He believes that a company in the red has no margin of safety.

Ordinary investors should not pay attention to it.

Of course, Some may think Graham is an old-fashioned person.

companies like Tesla and JD that have lost money for years eventually achieved profitability and fulfill their high stock prices?

The new era of technology industry is completely different from that of traditional industries.

The old man's safety margin theory may be outdated.

But we need to think about how many growth companies with high stock prices really grow into Tesla and JD?

For ordinary people who cannot bear high risks, we should not read about small probability events.

Graham's safety margin is actually a talisman for ordinary people.

Of course, you may have noticed that a loophole in this theory.

is the basis for judging the safety margin.

is based on past performance and profit levels.

When past performance is good, does it mean the future will be good?

The answer is obviously no.

We have talked about black swans before.

Taleb pointed out that using the past to predict the future is a typical empirical fallacy.

Thinking this way will sooner or later encounter major surprises, which is a black swan event.

Obviously, Graham also knew this.

so he emphasized that no matter how low the price you buy a stock, you should diversify your investment.

and spread your money among dozens of similar stocks.

so even if a black swan event occurs, your risk will not be too high.

In this way, we can still go through the cycle outperform the market, and discover value.

Okay, The book The Intelligent Investor is finished.

It is a classic work of value investing, It tells us the most important truth that the essence of investing is not managing money, but to control yourself.

Abandon emotions and delusions, and return to value and fundamentals.

is the root of all successful investments.

I hope this book can bring you a lot of benefits.

Welcome to leave your thoughts in the comments section.

See you in the next book.