Snowball Special Issue No. 015: Looking for Ten-fold Stocks

Chapter 4 Lost Growth Stocks
One is better every day, Huang Jianping, general manager and partner of Shanghai Litan Investment Co., Ltd., published on August 2013, 8 Many people say that good stocks are never cheap, so they are keen on so-called growth stocks. how many people?Including me once.

（1）巴菲特在1988年买入可口可乐是在15倍市盈率，1998年涨到50倍，2012年又回落到18倍。1998年-2012共14年，可口可乐的市值零增长。

(2) No matter how good a company is, its performance fluctuates, or even regresses.When the performance is not improving, the short-sighted market will push it into the abyss. Therefore, buying at a low valuation is the first principle of investment, and don't be confused by the so-called growth.

(3) Looking after the fact and looking ahead are two different things. What should happen may not necessarily happen, and what happened now may not necessarily happen in the future.

(4) I believe there are people who can think that they have eaten the sweetest part of sugarcane, but I also believe that the probability of long-term success is not too high.

(5) Regardless of whether it is a growth stock or not, the requirements for the margin of safety are the same, and the discount for growth stocks is often more. The key points are the identification of the business model and the judgment of the ability to create future cash flow.

(6) Companies with different cash flow growth capabilities can eventually be converted into different intrinsic values, and the difference in quality is reflected in the degree of premium.

(7) Regarding the view that "a good company will not give you an excessively high margin of safety", our ready-made teacher is there. For example: when Buffett bought the Washington Post in 1973, its price-earnings ratio was about 8 times, and its market value was about 1. 4 million yuan, but Buffett believes that its intrinsic value is about 5 to [-] million yuan, and it turned out that he was right.This begs the question, why didn't the market see this at the time?That's because the Washington Post was in trouble at the time, and the market was short-sighted, and most people didn't have Buffett's in-depth understanding and patience for business.

I used to be keen to buy so-called growth stocks at high prices for a while, but later found that it is impossible for human beings to do it. A large number of funds and institutions are closely tracking and looking for growth stocks, tracking trends, focusing on the short term, but the performance is not good. , small investors have no information advantage.

Wonderful comments:

Daqi Zhong:
Ha ha, a good company will not give you an excessively high margin of safety.Let me make another analogy. A company A has maintained a growth rate of 5% in the first five years. In the first year, the performance per share is 35 yuan, and the stock price is 1 yuan.Obviously, we should buy this company with a PE of 25 times. Five years later, the company's performance per share will be 25 yuan.

In the next five years, the growth rate will be reduced to 5%. At this time, you will have an opportunity of 20 times the price-earnings ratio, which is 15 yuan. Would you like to buy at 67.5 times or 25 times?The point of view of many value investors is "I will buy it when it is cheap", but they do not know that the cheap stock price at this time may be twice as high as the stock price when it is expensive.So what exactly is cheap?What is a margin of safety?Let’s go back and say that Luzhou Laojiao’s price-earnings ratio was as high as 15 times in 2005, but now the price-earnings ratio is only 100 times.May I ask whether the Luzhou Laojiao in 5 is worth investing in, or the current Luzhou Laojiao is worth investing in?

The answer is self-explanatory.But still the same sentence, to accommodate every point of view that benefits people, the most suitable investment strategy for individual investors must be investment in growth stocks.

(End of this chapter)