Learn to invest with Buffett

Chapter 59

Chapter 9 Section 4 High turnover rate needs to pay more commission
A successful missionary lies not in the weekly turnover of seats in his church, but in the persistence of those who listen to him.Our goal is to enable our shareholder partners to profit from the company's performance.Keep in mind the often overlooked fatal danger that investors in aggregate are unlikely to generate returns that exceed the company's earnings.

----Warren Buffett
On the whole, short-term trading not only affects the investment performance of individuals, but also hinders the development of the entire economy, simply because money that could be better used to improve productivity is wasted in frequent transactions and The resulting transaction costs go up, which is to extract money from the fiscal field and eventually lead to the misallocation of money.

In 1999, the average daily turnover rate of Apple had exceeded 7 times. As a result, the holding time of its shares was less than 50 days.In 1999, Apple’s share transactions exceeded 13 billion, but in fact the company only had 1.75 million shares. Apple’s stock transactions were paid by individual and institutional shareholders for commissions and transaction price differences of 4.5 million US dollars, but in fact the annual net The proceeds were only $3.85 million.

2000年初，大众软件公司股份的平均换手时间为92天。如果假设每股是0.06美元的佣金和1/8点的交易差价的情况下，那么交易成本的综合就达到每年1.91亿美元。但是实际上公司的年收益只有6200万美元。投资者为美国在线支付的总代理费用为18亿美元，实际上美国在线的年收益都没有超过7亿美元。

至2000年2月，雅虎公司的全部股份是以每年10.8次的转手速度在股市中交易的，这说明在市场中该公司的股票是每33天就全部转手一次的。雅虎的3.98亿股份在一年中的交易次数相当于43亿的股份交易。如果假设投资者在买卖股票时需要支付0.125美元的差价及0.06美元的佣金。按这个来计算的话，这43亿股份交易的总交易成本就是7.96亿美元，这即是投资者必须要支付的交易差价和交易佣金。但事实上，雅虎公司一年的总收入还不超过1.55亿美元。这就意味着，投资者是在用5美元的交易成本来换取他们对公司的1美元的收入。

Investment motto:

This change of hands of stocks cannot create any economic value for investors, and its contribution is to bring huge profits to the stock agency industry.If investors can hold stocks for many years, the company's income will far exceed the amount of stock trading commissions.

However, if the turnover rate of stocks is too high, and this trend continues year after year, the benefits of holding stocks in society will be ignored, and more funds will be withdrawn from the production field and injected into the transaction field, Thereby replacing the opportunity to re-inject them into profitable areas.The transaction costs that must be paid to cover a dollar of income will be much greater than a dollar.

(End of this chapter)