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Introduction To Stock: How To Become A "Smart Investor"

2011/4/28 16:20:00 64

Intelligence is not only manifested in intelligence, but rather in character: patience, restraint, desire to learn, control of one's own emotions, and self reflection.

Bill Gate asked Buffett how to become a successful man.

Investor

The answer was the same as those who had consulted him for many years, that is, to read Benjamin Graham's works.

Among them, Buffett most highly praised was published in 1949, "smart investors".

This classic investment book, which has been in place for 60 years, has been regarded as the Bible of investment.

Times are changing, markets are changing, investment types are changing, pactions are becoming more and more complex, but human nature is not changing.

What kind of talent is "

Smart investors

Graham has a clear definition in his book: patience, restraint, desire to learn, ability to control his emotions, and self reflection.

It is not so much in intelligence, but rather in character.

To control his emotions is a very important but often neglected point. In the final analysis, the value of any investment is and will always depend on the price of buying, not the heat on the market.

Graham mentioned in his book an example of Newton's "South China Sea bubble".

In 1720, South Sea Co became the hottest stock in the UK, and investors were in hot pursuit. More than half of the members of Parliament participated in it. Even then, the king also subscribed for a stock worth 100 thousand.

The stock price surged from 128 pounds per share in January 1720 to more than 1000 pounds per share in July, up to 700% in 6 months.

Newton held the stock at that time and had already made a profit of 100% totaling 7000 pounds. However, under the infection of the market fanaticism, he bought the stock at a high price and eventually lost 20000 pounds (converted to the present value of the currency equivalent to about 3 million dollars).

Newton sighed: "I can figure out the orbit of celestial bodies, but it is hard to predict that people are so crazy."

It was a great blow to Newton, and no longer allowed anyone to mention the two words of the South China Sea in his whole life.

Graham's comments on Newton's performance in the stock market are also quite disparaging. "There is still a big gap between Newton and smart investors. The behavior of the greatest scientist in the world is like a fool."

stay

Graham

There are several classic metaphors in the theory, including "market Mister", "Sun mouse", and "pendulum".

The market is like a pendulum, always swinging between short-lived optimism and irrational pessimism.

Smart investors must be good at exploiting this pendulum effect. "They are realists, who sell stocks to optimists, and buy stocks from pessimists".

300 years later, madness similar to the "South China Sea bubble" is still playing in various forms in the capital market. The pendulum also swung back and forth over the stock market. Graham's classical theory is still powerful and forceful.

According to incomplete statistics, in China, 70% shareholders are in a state of loss, and there is an unfair pattern of stock raising, which is called "one earning two flat, seven loss".

How to become the "10%" of the minority? Calm down and read Graham.