A fan friend has expressed disagreement with my optimistic view of the photovoltaic industry. He said: "I am very pessimistic about the photovoltaic industry because I have been involved in the production of the photovoltaic industry. The raw material of solar panels is quartz sand, which is roughly divided into several major processes, each process is a factory. The first step is to purify quartz sand into 99% silicon powder, which is a high-energy-consuming industry; the second step is to purify 99% silicon powder into 99.999% silicon rods; the third step is melting, slicing, etc., to make solar panels. The whole process consumes a lot of energy. The electricity generated by the entire life cycle of solar panels is far less than the energy consumed in the manufacturing process of solar panels. Therefore, it is an energy-decaying production process. Solar energy cannot replace coal and oil."
His statement reminds me of a car repair master's pessimistic remarks about new energy vehicles. The car repair master said: "New energy cars have many problems, the cost is greater than that of fuel cars, and they are not preserved, whoever buys a new energy car is a fool."
A few decades ago, a mobile phone expert expressed pessimism about smartphones. His reason was that smartphones consume a lot of electricity, are prone to damage, and generally become slower after two or three years of use. Mechanical phones save electricity and are resistant to falls. He believed that no one would change their mobile phone every two or three years.
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Hisense TV manufacturers vigorously developed laser TVs a few years ago and took a wait-and-see attitude towards OLED. The company believes that OLED TVs have shortcomings such as short screen life and high price. Unexpectedly, as a new technology product, OLED has developed rapidly, and OLED products are very popular with consumers. This has made Hisense TV rush to develop OLED TVs, which has avoided the company's performance from continuing to decline.
From these cases, we can see that insiders in the industry may not be able to understand the future of their own industry. New technologies and products have many problems that need to be solved in the early stage. The current photovoltaic power generation and new energy vehicles still have some technical and application problems, which are far from as perfect as traditional cars and traditional energy. However, we cannot deny their advantages and broad prospects because of this.
New energy vehicles can break the technical monopoly of Western traditional car manufacturing in our country. The rapid development of electric vehicles has made our country the world's largest car exporter. Moreover, the development of new energy vehicles and photovoltaics can solve the problem of our country's excessive dependence on oil imports and serious restrictions on energy use.
Now, many families in rural areas have achieved photovoltaic power generation and can store it themselves. For the early development of new technology, we investors should embrace it. No technology in the world is perfect from the beginning, and we should not deny new technology because it has some flaws in the early stage of development.
With the continuous progress of human science and technology, the cost of new energy and new energy vehicles will become lower and lower. Looking at the world with a developmental and exploratory perspective is the best investment view. Therefore, I never dare to easily deny a new technology, even if this technology seems a bit unreliable.
Although the success rate of investing in "new technology" in stock fund investment is not high, the odds of winning are high. Once new technology becomes the mainstream technology in the future, the investment returns it brings to us may far exceed three or five times, and the future profit of three or fifty times, three or five hundred times is possible.The article I published yesterday titled "Be a Tailor, This is the Right Way to Trade" has led some fans to believe that the stop-loss mentioned in the article is seriously inconsistent with my previous articles on value investing. Some even said, "Didn't you say that good companies should be bought more when they fall? How can you propose a stop-loss here?"
In fact, this article discusses the essence of investment from the perspective of fund management - making a lot of money with a little loss.
Value investing also needs to follow the investment principle of "making a lot of money with a little loss", or the rule of "cutting losses and letting profits run". This is the golden rule of investment.
Of course, good companies should be bought more when they fall, but stocks suspected of being bad companies must be stopped immediately! Buffett once invested in a shoe-making company and soon found that the company's core competitiveness was lost and was beaten by our country's shoe factories, so Buffett immediately stopped the loss and sold.
The stock god Buffett has made many stop-loss cuts in history, including cutting meat from HP, IBM, Delta Airlines, and so on. Why cut meat? It is to reduce losses. The ultimate goal is to achieve "making a lot of money with a little loss", that is, to make more when making money and less when losing. In this way, the final investment results can be more substantial.
It can be seen that value investing also needs to control the amount of loss. Selling stocks that may continue to lose a lot and controlling the amount of loss is also a part of value investing. Not long ago, Munger reduced half of Alibaba's shares after Alibaba's stock fell by 40%. This is a typical stop-loss cut, and the purpose is to achieve "making a lot of money with a little loss" by tailoring one's own account to achieve long-term overall profit.
There is a 10% stop-loss example in the article "Be a Tailor, This is the Right Way to Trade", which may be the reason for the fans' doubts. The article cites this example from the perspective of short-term trading to illustrate the importance of "not entering the dead ground" or "tailoring the account", and does not extend to long-term value investing.
Here, I want to reiterate: long-term value investing also needs to tailor the account, also needs not to enter the dead ground, and also needs to stop loss. However, the stop-loss of long-term value investing is different from that of short-term trading. The stop-loss of long-term value investing is based on the changes in the company's fundamentals as the basis for decision-making, in order to control the amount of loss. The stop-loss of short-term trading does not look at the fundamentals, but at the extent of one's own stock floating loss, in order to control the amount of loss.
"Making a lot of money with a little loss" is the basic principle of all investment methods in the world, just like the wheels of new energy vehicles or bicycles are round, and there has never been an exception.
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