Lead:

The concept of value investing is not complicated, real value investors never predict the bottom of the stock market, let alone where the top is, the only principle they buy and sell stocks is that the price of the stock is lower than its intrinsic value, and investing in it and holding it for a long time will obtain higher than the average market return. What value investors want is not to get rich overnight, but to pursue a stable, long-term high return, and to make money with compound interest.

The reason why value investing is so loved by global investors is inseparable from Warren Buffett's becoming the world's richest man through value investing.

From 1965 to 1994, Warren Buffett's investment performance increased by an average of 22.9% per year, nearly 12 percentage points higher than the Dow Jones index. In other words, if anyone invested $10,000 in Warren Buffett's company in 1965, he would have received a return of $9 million by 1994: whoever chose Buffett would be on the rocket of fortune. Warren Buffett has become the world's greatest investor with his in-depth understanding and grasp of value investing.

Before 2000, when investors around the world were keen to buy shares in Internet companies, the Internet was still a new concept and people were optimistic about its potential. Therefore, in the NASDAQ market in the United States, the price of the stock of an Internet company with a turnover of $200 million and a loss of $100 million is often several times the price of a stock of a general company with a turnover of $1 billion and a stable income of $100 million.

Warren Buffett did not invest in the stocks of any Internet companies. When asked why he doesn't invest, Buffett uses only one sentence: because he doesn't know about these companies, he doesn't invest. Warren Buffett did not catch up with this feast of wealth, and in the annual report released in 2000, it showed that Buffett's investment performance had declined, from a profit of $2.83 billion in 1999 to $1.557 billion in 2000, and doubts began to appear. However, there is no inextinguishable bubble in the world, after 2000, the Internet bubble burst, global investors have suffered huge losses, the originally high stock price, in the absence of profit expectations, fell worthless, the stock market is full of miserable sorrows. At this time, Warren Buffett's performance rose against the trend, showing the strong vitality of value investment.

In fact, the concept of value investing is not complicated, real value investors never predict the bottom of the stock market, let alone where the top is, the only principle they buy and sell stocks is that the price of the stock is lower than its intrinsic value, and investing in it and holding it for a long time will obtain higher than the average market return. Their criterion for choosing stocks is the margin of safety criterion, so if the trading market closes tomorrow, is the company's stock still worth buying? If it's worth it, buy it. Value investors are not like those stock speculators, they do not need to get rich overnight, but pursue a stable, long-term high return, and make money with compound interest. Warren Buffett's annual yield is just over 20%, which is not high, but people can get this income every year.

Another aspect of value investing is long-term holding. Warren Buffett has said that it is foolish to buy a stock and expect it to rise the next day. On average, he holds each stock he invests in for 8 years.

Warren Buffett always looks for a company that he really understands, and he expects it to have a satisfying long-term development prospect, managed by honest and competent managers, and finally buy at an attractive price point. He argues that when we invest, we think of ourselves as business analysts, not market analysts, nor macroeconomic analysts, not even securities analysts.

When he invests in a company, the most important thing is to look at it from the perspective of a businessman. So, as a general investor, you should ignore market analysis or opinions on macroeconomic trends and focus on the company and industry of your choice. Everything you do, like a real business owner, understand where the strengths of the business are, know what he will do next, and understand its management.

Some people may ask, as a small investor, with limited funds in hand, limited amount of information to receive, and even limited time to invest, how can you buy and own a business like Warren Buffett? It seems that this fact can give us the most direct and convincing excuse to give us peace of mind and ignore the intrinsic value of the business. In fact, small investors also have advantages that Buffett does not have, and we have a wide range of freedom to choose stocks. In addition, it is much easier for you to buy stocks, you don't need to negotiate with others, Mr. Market will give you an offer every day, and the only issues you need to consider are the company and the price. Have a good understanding of the company you want to hold the stock for, rather than listening to someone talking about it one night and follow the trend to buy it.

Many people know about value investing, but it takes some unusual skills to master it. Since it is a long-term investment, it takes decades of perseverance. The average investor should have the time and patience, and at the same time have a unique vision and a good attitude, and use value investment in exchange for more profits.