What is the value investment that private equity funds believe in? What are the misconceptions of value investment?

There are numerous investors in the capital market and various investment secrets, but the "28 laws" of the stock market still remain unchanged. So, what exactly is value investment?Why are there so many followers but so few executors?

Of course, making money20%People may be capital tycoons who come and go without a trace, but more of them are those who adhere to investment principles. They may not lie counting money after a surge, but they will definitely be able to laugh until the end.

What is the value investment that private equity funds believe in? What are the misconceptions of value investment?

Value Investment - Looking at the Essence through Phenomena

Buffett's spiritual mentor Graham once defined value investing as follows: stock prices fluctuate around 'intrinsic value' and in the long run, there is a trend towards a return to 'intrinsic value'. This is similar to the price theory of Marx that we learned in our studies, where the price of a commodity always fluctuates around its value.

In the investment field, market value can almost be recognized as a measure of the value of a listed company, which is what private equity tycoons often sayEV(Enterprise Value:Enterprise Value)This is also one of the most important indicators for value investment. And the stock price isEVThe most direct manifestation can be illustrated by two figures:

Source: Network

Value investing requires long-term persistence, if you are unwilling to hold a stock10Nian, then you even10Don't hold even a minute

"If you aren't willing to own a stock for 10 years, don't even think about owning it for 10 minutes."

—— Warren Buffett

When it comes to value investing, the first thing people think of is investment guru Buffett. That's right!Countless people hope to catch the fast train of his value investment. The Berkshire controlled by Buffett, in the past36In the middle of the year, it was recorded that the age was approaching20%Returns from S&P during the same period500The annualized income is only8.5%. In his words, the most important point of value investment is:

Investment Rule One: Never Lose Money;

Investment Rule 2: Never forget Rule 1.

All investors are well aware that the most important thing in investing is to break even and then make money. Why is it important to maintain capital? Once a loss occurs, years of effort may be in vain:

Assuming the first year yield isk1The second year's yield isk2According to the formula:

[(1+k1)×(1-k2)]^1/2-1

investment1From the perspective of the situation: in the first year, it doubled, but in the second year, it directly halved, and the average annual yield is quite good, with25%. But the actual yield from the previous year was zero, because in the end, you didn't earn anything.

But breakeven does not mean absolute no loss, but allows temporary losses. Just like Buffett08I bought Goldman Sachs stocks during the financial crisis in, but the stock market has since fallen20%Many people at that time believed that Buffett was wrong. But so far, Buffett's decision is indeed a wise move.

Another point, long-term investment value. Value of a stock10Block, now when Paipaijun buys it8The block later fell to6Block, Pai Pai Jun has lost money40%. But this doesn't mean anything, just like Buffett40At the age of5000The asset value of ten thousand US dollars was lower than many investors of the same age at the time, but now it has become one of the few billionaires because it can maintain long-term stability20%The compound growth rate of. If the stock held by Pai Pai Jun has long-term investment value, then what about short-term "losses"?

Investment requires patience. Many people invest in stocks or consult with others, always thinking about rising stocks or even becoming wealthy, but often fail to meet expectations;If you persist in the belief of value investment for a long time and invest in value companies, even if the annualized return rate is not high, the long-term returns will still be considerable.

Easier said than done

The biggest challenge for value investors is to have strong psychological resilience to withstand short-term "losses", which in professional terms are periodic tracking errors. For example, US value stocks2013Year to2015The tracking error between the year and the market gradually increases, but if the time is extended to1995-2017By the end of the year, it can be seen that the returns of value stocks have left the market far behind.

Source: New Global Configuration Bloomberg

Because during decades of long-term shareholding, when the market rose well, you didn't have much of a rise in the market;When the market falls, it is common for you to fall much more than the market. Many people do not mean that they do not have the perseverance to adhere to the belief in value investment, but rather that they cannot bear significant tracking errors in the short term, lose confidence in value investment, and finally have to leave the market, ultimately resulting in investment failure.

So, in order to achieve value investment, in addition to having a good investment mindset and pressure bearing ability, longevity is also a necessary condition. If you want to achieve value investment, choosing a professional private equity fund for wealth management is a good choice. For example, there are many private equity funds engaged in value investment on the private placement network that does not charge subscription fees.

What are the misconceptions of value investment?

1The longer the time for value investment, the better. Many people remember Buffett as buying great companies and holding them for a long time. But in fact, Buffett places great emphasis on the dynamic balance of assets, starting from60From the beginning of the era to08Almost invested in Nian200Multiple companies, but holding more than3Only in the year of22Home. Going concern, corporate value, industry thresholds, and so on all need to be regularly evaluated, and those that do not meet the conditions naturally need to be sold, such as Buffett's07The annual sale of PetroChina is a good example(One is that the fundamentals of the industry have changed, and the other is that valuations are too expensive). The biggest pitfall of value investment is sticking to things that shouldn't be stuck to!

2Value investment does not require timing. Value investing teaches us that investors should focus on fundamental research and not be influenced by short-term factors. Taking hedge funds as an example, the returns of hedge funds are mainly composed of absolute returns and relative returns. Relative returns are the returns obtained by taking on systemic risks, while absolute returns still need to be timed. But this timing is based on macro trends, not short-term buying and selling points. Therefore, in order to obtain more absolute returns than others in value investment, timing thinking is crucial. Buffett has always believed that his success cannot be separated from the constantly upward macro environment of the United States. If he wants to say so, at least there should be more domestic investors than Buffett3Double confidence, because of China'sGDPThe annual growth rate is the same as that of the United States3More than times!