Remembering the detours we took back in those years: Stock selection - Cryptocurrency digital trading platform technology

Over the past ten years,

There have been many detours in stock selection,

I will briefly summarize over the weekend:

1. Choosing industries and companies you do not understand;

If you pick stocks this way,

Either you can’t hold on,

Or even if you can hold,

In the end, you’ll find some rise,

And some fall,

Because you don’t understand,

So essentially it’s gambling;

Warren Buffett said,

You don’t need to know a lot,

And you’ll still be very wealthy…

2. Choosing cyclical stocks with uncertain reversal timing;

Cyclical stocks have strong explosive power,

But the reversal time for many cyclical stocks is very long,

Shipping stocks since 2007,

It took nearly 15 years to reverse,

Who can wait?

Pig farming is also a cyclical industry,

But the cycle of pig farming is almost the shortest among all cyclical stocks,

Easier to grasp; in the long term, roughly a four-year cycle,

Relatively more certain…

3. Choosing small industries,

Non-leader,

High-valuation stocks;

A typical example is Qifeng New Material, which I chose back then,

It’s a company with only 15 billion in market cap in the entire industry,

Qifeng is the third largest leader,

Bought at a market cap of 5 billion,

With a valuation of over 30 times! Resulting in a huge loss of 50%;

On the contrary,

Investing in large industries,

True leaders,

Low-valuation companies generally don’t lose money easily,

Adding a point,

It’s best if the selected companies have certain prospects…

4. Choosing companies with low industry entry barriers;

Although catering is a large industry,

There was a catering company called Xiang E Qing that has now delisted,

Even if you choose Haidilao,

Long-term, it’s still not good,

Mainly because of low barriers,

Too easy to copy;

Similarly,

Clothing companies,

Even choosing giant Hailan Home is uncertain,

Women’s clothing is even more difficult…

Pig farming is also low barrier,

But large-scale pig farming has high entry barriers,

Wang Jianlin initially wanted to farm pigs,

But found that building a large pig farm costs more than a five-star hotel,

Management is even more difficult,

So he gave up…

5. Choosing companies whose performance range cannot be calculated;

Many large industries,

Leading companies,

High barriers,

And their business models are easy to understand,

But it’s still hard to calculate profits,

For example, some tech companies,

It’s unclear how to determine profit ranges…

6. Choosing companies with poor management;

Some companies,

Management and strategy formulation are obviously poor,

Should be avoided,

For example, overly aggressive,

Blind diversification,

Revenue may be substantial,

But over a long period, no profits are visible…

Conversely,

Those focused,

Prefer to follow strategies,

Seek steady progress,

Can succeed in the long run,

And at least survive longer;

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Based on the above summary:

When selecting stocks, choose those with “large industries,

leaders,

low valuation,

high barriers and short cycles,

that you can understand,

estimate,

and where management is relatively excellent”;

For example,

In the pharmaceutical,

consumer,

and well-known brand industries,

the probability of success will be much higher…

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