After Lin Shi got off work, he came to the post station to get a courier, which was a book on stock types that he had bought before.

There is no doubt that as a loyal fan of value investing, the five books this time are all about value investing, and some are about financial philosophy, and Lin Shi even bought books on the "falsification" theory that Soros often mentions in "Financial Alchemy".

However......

This kind of book is philosophical, Lin Shi just read it and started to read it when he had a headache, he can understand the "falsification" theory, but there is a famous example in the falsifiability theory, which says that when we observe that all the swans are white, we can draw the conclusion that "the swans are white" and use it to guide practice, which is a scientific conclusion. The reliability of this assertion does not depend on the number of times it is re-tested, but on falsifiability, i.e., if a black swan is found, the original assertion is overturned.

The "theory that God created man" cannot be falsified, because even if science provides a clear and thorough mechanism for explaining every step of human evolution, it cannot rule out the possibility that an unknown force designed man. Conversely, as soon as fossils of humans of the same age as dinosaurs were found in rock formations, the theory of evolution would immediately go bankrupt. In fact, the rock formations determined by the theory of evolution before the emergence of humans are increasingly excavated and analyzed by archaeologists, but no reliable evidence of human fossils has been found, which disproves the reliability of the theory of evolution.

That is to say, what cannot be falsified, you can't say that he is wrong, Lin Shi suddenly thought of a particularly terrifying example, suppose that when we were sleeping, there was a ghost staring at us intently, and when we opened our eyes, it returned to nothingness.

Can this be falsified? Of course not, so you can't say that this kind of thing is impossible......

Lin Shi knew this theory because he had read all of Soros's "Financial Alchemy".

Though......

From the beginning to the end, I only understand a falsification theory, about the reflexivity theory that Soros said, Lin Shi can't figure it out, and it is possible that he has not been in the financial circle long enough, Lin Shi can feel the essence of this book, but Soros seems unwilling to explain it in layman's terms......

Soros's core investment theory is the so-called "reflexive theory". In simple terms, reflexive theory refers to an interactive effect between investors and the market.

Soros believes that the relationship between the financial market and investors is that investors anticipate market trends and act accordingly based on the information they have and their understanding of the market, and their actions actually affect and change the original trend of the market, and the two constantly influence each other. Therefore, it is impossible for anyone to have complete information, and investors will also have a "bias" against the market due to individual problems that affect their perceptions.

Lin Shi can only be understood literally, that is, the original stock price has deviated due to human prejudice? But this also doesn't seem right, human prejudice is innate, and no one can eliminate prejudice.

Or is it understood that Soros uses people's biases to cause stock price fluctuations to make money? No matter how you understand it, Lin Shi feels a little winding, compared to this theory related to philosophy, the intrinsic value that Buffett said and the theory of buying 10 yuan with 5 yuan are much simpler.

This time, Lin Shi's book list includes "Principles", "Hedge Fund Wizard", "The Most Dangerous Trade: Shorting", "Stock Market Genius" and "Conjectures and Refutations"

As his position gets higher and higher, when he is selling, he only needs to learn "Dow Theory", "Gann Theory" and "Elliott Wave" to deal with investors who are obsessed with technical analysis.

When he was an analyst, Lin Shi's technical analysis method could not provide any use, and as a fan of value investing, he also rejected this kind of stock selection method that only looked at charts in his heart.

You only need to think about it to figure it out, how many of the hundreds of millions of shareholders in the entire China have made money by looking at the charts? On the contrary, the authors who publish technical analysis books make a lot of profits, and every time the stockholders lose money and make mistakes, they blame the mistakes on their own lack of learning, but they don't know that this method itself is wrong, and it is important to learn well or not?

Looking at charts in a bull market, 70% of the correct rate, and 20% of the correct rate of looking at charts in a bear market, in the long run, no one can make money with technical analysis, and there may be retail investors who say that institutions make money from technical analysis.

But......

Where is the amount of people's funds, which step is not tens of millions or hundreds of millions of funds in operation? In other words, they don't need to use technical analysis at all because of their financial advantage, they are graphic makers!

Lin Shi felt that the speculative atmosphere of the stock market this year was much lower, and it was useless to speculate on small theme stocks, and the big ones were suspended for verification, resulting in most of the funds pouring into white horse stocks and pseudo white horse stocks, and the media felt that this was the advent of the era of value investment, so they published all kinds of articles to frantically instill this idea to shareholders.

And some shareholders also made a sum of money after buying this kind of stock, so they recommended it to other stockholders, under the continuous influence of the two......

A number of beautiful, performance-passed, unilaterally rising stocks were born, and when the large-cap blue-chip and mid-cap blue-chips that Lin Shi saw rose, the term "American Beautiful 50" almost reflexively appeared in his mind.

One of the main characteristics of the Pretty 50 is that it has stable earnings growth and also has a high PE ratio. These stocks were seen as high-quality growth stocks to "buy and hold" and were a significant driver of the bull market of the early seventies. Because these companies are perceived to be very robust, even over a longer period of time, these stocks are referred to as "one-time choice" stocks, meaning that once you decide to buy a stock, you don't have to worry about investing your finances.

The outbreak phase of the beautiful 50 market was from July 1970 to December 1972, which represented the 50 largest companies in the United States by market capitalization, and the stock price repeatedly hit new all-time highs, and people were blinded by madness, not realizing that disaster was coming...

Crashes always come with the market going crazy. The United States plummeted in 1973, and the "pretty 50" were "caught and shot one after the other", and the people who owned these stocks lost 90% of their funds. Warren Buffett's most famous example is that he retreated in time and liquidated everyone's entrusted investments in the market before the crash, when he told his partners that he couldn't find undervalued varieties to invest in, and they were too expensive.