In 1998, I followed the philosophy of "following the footsteps of the main capital." Seeing the strong trend of Jinhua Shares in the market, it seemed to have signs of major capital operations. So I bought in, but the day after I bought it, I was trapped. However, I firmly believed that the main capital could not withdraw completely, so I decided to stick to this stock.
One or two weeks later, one day near the closing, Jinhua Shares, which had been falling that day, suddenly rose sharply at the close after a few big orders.
I was very excited, thinking this was a sign of the main capital protecting the market. In the evening, I began to look forward to the future rise in the stock price of Jinhua Shares. But what I didn't expect was that the next morning, Jinhua Shares actually opened lower, and after the opening, it kept falling. The whole day's trend was weak and powerless.
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At this time, my analysis of "main capital selling out" had already begun. I realized that it was very likely that the big money inside was selling, and the rise at the end of yesterday was just to create an illusion, preparing for today's selling out. I immediately stopped the loss and left at a cost of more than 2000 yuan.
The main capital created the sharp rise at the end of the previous trading day for Jinhua's stock price, mainly for two purposes: one is to use a small amount of money to raise the stock price, to open up space for the next day's sale price.
The other is that the big hand at the end of the day can induce retail investors, making them realize that this stock has big capital to protect the market, and the number of retail investors who want to sell the next day will be reduced. To reduce the pressure of retail investors selling out the next day, and to create a good environment for a smooth sale the next day.
Now looking back, if I hadn't stopped the loss in time at that time, I would have to wait until 2014 to get out of the trap! That is, it took 16 years to get out of the trap. From this, we can see that chasing the high is the source of loss. A stock that has risen three or four times in a year, if we don't understand its fundamentals, and buy it because it is a hot concept or because its market trend is very strong, the final risk is really too great!
Why did it take 16 years for Jinhua Shares to rise back to the price I bought at the beginning? This question is very key. Because how many 16 years can a person have in life? The reason is that the fundamentals of Jinhua Shares are not good! If its performance could grow every year, its stock price would have doubled long ago.Many stock investors have been stuck with stocks for ten or even twenty years, and still cannot break even. The most important reason is the deterioration of the company's fundamentals. Taking China National Petroleum Corporation (CNPC) as an example, many people have been stuck for more than ten years and still cannot break even. In addition to the high purchase price, the weakening of the company's profitability is also an important reason. In recent years, with the opening of the oil market, the monopoly of the oil industry has been greatly reduced. CNPC is facing competition from private enterprises, the company's net profit margin has decreased significantly, and the main business profit has not made any breakthroughs for many years. With weak performance growth, the stock price naturally finds it difficult to rise.
In 1998, I did not know how to analyze the long-term fundamentals of a company. At that time, I was able to stop the loss of Jinhua shares in time, in addition to my style of swing operation at that time, luck was also a major reason.
Long-term value investment is most afraid of persisting in the wrong direction for a long time. For example, many people have been holding stocks in the non-ferrous metals, department stores, and traditional fuel vehicles for a long time and have been stuck. The reason is that they bought stocks in cyclical industries or industries replaced by new technologies at high prices during the market, which ultimately led to holding for 10 or 20 years and still not being able to break even. For stock investment, this is really the most terrible thing.
Stock investment must understand the fundamentals. We need to make a correct assessment of the future prospects of the industry and the company for the next 10 years, think about what the industry will be like in the next 10 years, and only in this way can we do a good job in stock investment.
For example, what about the current gold sector, what will happen to gold in the next 10 years? I think that gold is currently at a high level, and it would be great if the price of gold in the next 10 years is a little higher than it is now. Thinking this way, it will be found that the significance of investing in gold-related products at present is not great.
And what about the A-shares? How much will they rise in ten years? I think the increase in the CSI 300 Index in ten years is likely to be far greater than that of gold, so buying A-shares at present is definitely much more appropriate than buying gold.
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