Investment Summary in 2021: The Correct Way of Bargain-hunting

2021 is the fifth year of my investment. The profit of Tiger Account is-0. 23%, and the annualized income of 5 years is 28%. Every time my annual income reaches 60%, the income in the second year will be bleak. This phenomenon is also easy to understand. The stock price increase is mainly contributed by the profit growth rate of enterprises, and also comes from the change of company valuation. Most stocks, the combination of the two barely support the 60% increase in one year, and the stock price in the second year is like a spent force.

At the end of January, 2021, the yield of US 10-year Treasury bonds rose sharply from 1.071%, and soared to 1.744% in March. Capital began to withdraw from various sectors with higher risks, and almost fell at the high point near February 10; In fact, this wave also affected the consumption and pharmaceutical sectors, where A shares and foreign capital accounted for a relatively high proportion, and started a plunging mode in the first week after the New Year. Nasdaq retreated 8.5% in 3 weeks, S&P retreated 3% in 2 weeks, and stopped falling and rose in the third week. In the following nine months, S&P and Nasdaq only retreated several times in individual weeks in September and November, and they all rose all the way. The S&P and Nasdaq closed up 27% and 26.8% respectively throughout the year.

My position has reached 40% in the fourth quarter, especially Tencent, which held it from the end of 2020 to the end of 2021, with a floating loss of 3%. With the transaction of "realized profit and loss", the annual account income was-0. 23%, which underperformed the two major indexes. Current positions of US stocks and A shares:

A shares:$China Tourism Group Duty Free Corporation Limited(601888)$ 12.8%, Shaanxi Coal Industry 8.8%, Dongcai 3.5%

US stocks:$Apple(AAPL)$ 7.7%, meta 11%,$InMode Ltd.(INMD)$ 13.5%

Medium summary:$TENCENT(00700)$ 31.5%,$Alibaba(BABA)$ 8.6%


The first part analyzes several transactions that have contributed positively to the account this year.

This year, relying on the three transactions of "realized profit and loss" to increase the yield by 10.4%, it barely kept the yield of-0. 23%.

The first one: Sell Meituan at the beginning of the year, and increase the account income by +2.4%.

Since May 20, Meituan has been open for 11 months. At the beginning of 2021, Meituan was sold between HK $355 and HK $406. Reason for selling: The expectation that the Federal Reserve will withdraw from loose monetary policy is coming soon, and the valuation of unprofitable growth stocks will be more likely to be suppressed. The intrinsic value of these growth stocks is not easy to measure, and when the market risk is high, they are the first to be sold off.


Second: Sell ASME in the fourth quarter, increasing account income by +5.5%.

I started to buy Asme in January 2020, and held it for 1 year and 11 months. From the end of September to the end of November, between $838 and $863, all of them were cleared and sold. Reason for selling: too expensive. In 21 years, the annual profit was 6.6 billion US dollars, and the stock price reached 50 times the net profit of that year. The management gave the business forecast for the next four years, with annual revenue increasing by 12% and net profit increasing by 20%. Before the peak of this round of chip equipment procurement cycle, the annual profit growth of ASME was maintained at about 20%. Compared with other companies in the chip industry, this stable growth rate proves that ASME is a very excellent enterprise. I think the management's forecast is reasonable, and the profit growth rate of 63% in 21 years cannot be maintained for a long time. Based on the management's expectation of the performance in 2025, I expect the net profit in 2023 to be 9.6 billion US dollars. If it is 45 times pe, I will give the market value of up to 430 billion as the selling point. At that time, although there was a 15% difference from the selling point, I leveled Asma's position because I started to open positions.


Reflection and next steps:Asma enjoyed the two big dividends of the Fed's water release + chip rising cycle. In 2019, the Federal Reserve changed from eagle to pigeon, and cut interest rates three times that year. In 2020, it will release water and cut interest rates to 0, and start quantitative easing of 700 billion US dollars. Lithography machine, the core product of ASME, has been unable to keep up with the demand. Even in the coreDuring the most depressed period of the film industry, the "arms race of advanced chip production capacity" of TSMC, Samsung and intel did not stop. In the past two years, coupled with the mature processes of 40nm and 28nm in China, another member has been added to the purchasing army of chip production equipment. The epidemic has exposed the fragility of the global chip supply chain, and the procurement of equipment in mature manufacturing processes will make Asma's revenue and profit growth better than expected. If Asme's share price falls, it can be bought back. According to the estimated net profit in 2024 * 45pe/2=2578, the stock price will be around US $635.


Third: Band operation of Ali Hong Kong stocks increased revenue by 2.5%.

Buying Ali is a speculative act, and I thought I could use Mr. Market's brains. At the end of September, I bought Ali Hong Kong stocks between HK $151 and HK $133, and sold them at HK $171 on October 26, making a profit of 15%.After Ali's Hong Kong stock position stopped earning, I continued to keep Ali's US stock position, hoping that the remaining positions would get higher returns. As a result, after Ali's share price rebounded to a high level at the end of October, it dropped by 40%, and the remaining positions went from the highest profit of 20% to the highest loss of 28%. It was originally planned to hold a position in this transaction for 6-18 months, and I will make a resumption after all the positions are sold.


The second part: the two transactions with the biggest losses in resumption of trading

Trading was very frequent in the first half of the year (see[Resumption in the first half of 2021: If you are unwilling to hold tickets for more than one year, don't buy them]), in the second half of the year pay great attention to correct this problem. In transactions where gains and losses have been realized,The biggest loss occurred in the second half of the year, making a good bargain for the future.

This transaction lost 60%, which lowered the account yield by 3.92%. At the beginning of opening a position, I made a psychological presupposition that all this investment would return to zero. Although I realize that the risks are great, I still have a bad memory when I actually operate. 1) Before opening a position, there is no specific plan in black and white paper, only a simple requirement, which should not exceed 3% of the total position. 2) The position is slowly getting heavy. Because there is no plan, in the continuous decline, in order to amortize the cost, a total of 20 purchases were made, and the purchase price was random, and finally the position was raised to 6.5%. In the middle and late August, after reading the contents of the 10th meeting of the Central Economic Commission, I had a general understanding of the direction of government supervision. In the end, I made up my mind to stop at around $4.9 in the future.

The second loss is Shenhua H.

At the end of June, he bought Shenhua H at a cost of HK $17.1, and originally planned to hold shares and pay dividends. After deducting 10% dividend tax, the stock price increase + dividend is estimated to hold a one-year income of 15%. In August, Tencent's share price fell to around HK $450. I sold Shenhua H and started to increase Tencent's position. Fortunately, the dividend ex-dividend date is July 9th, and the dividend will arrive about 2 months later, so this investment is slightly lost. If held until the end of 21 years, with the closing price of HK $18.66, this investment will achieve a profit of 20% in half a year, which is much higher than the previous estimate. Looking at today's resumption, I made a comparison between Tencent and Shenhua H. With my investment model, I am more optimistic about Tencent's future development in a longer period.


Investment sentiment 1: The correct way to bargain-hunting is to say that there is no bargain-hunting.

Looking back seriously, I seldom bargain-hunting before.

I am a typical right-hand trader, buying high-quality growth stocks in combination with industry trends, unless they are ridiculously high, and I have been firmly holding them. This year, I encountered a rare explosion in China, and I couldn't help itching my hands. The first good future, huge losses ended; The second was Ali.

I have been reading Buffett's shareholder letter in recent months, and I was impressed by a passage in his letter to shareholders in 1987. "Mr. Market is here to serve you. Don't be tempted by him but led by him. You should use his full pocket, not his straw head. If he suddenly appears in front of you one day, you can choose to turn a blind eye or make good use of it. If you don't take advantage of him and are attracted to his foolish ideas, you may end up in a miserable situation. In fact, if you are not sure that you can measure the value of an enterprise more clearly than Mr. Market, you'd better not play such a game with him. It's like playing bridge. If you can't find the fish half an hour before serving, you are the fish. "

Buffett is talking about two things in this paragraph. First, the logic of selling. We should use Mr. Market's full pocket and sell it over-overvalued positions at high prices. Second, if you want to buy shares at a very low price and take advantage of Mr. Market, you need to calculate the intrinsic value of the enterprise.

In the actual operation, everyone likes to take advantage of "Mr. Market" very much, and is tempted by it, deceiving it as a straw bag and coveting cheap stocks.In fact, it is very difficult to take advantage of "Mr. Market", and "bargain hunting" is a difficult investment strategy. First, estimate the intrinsic value range of the company, such as the future profitability and market position of a certain business, and cash assets after deducting debts. Second, long-term money is needed, more than 2-3 years or even longer.Expecting to earn 15% or 30% to leave the table is actually gambling. It is difficult to grasp the right time to leave the table and always can't help itWant to stay at the table a little longer and earn more.


After this lesson, for me, the correct purchase is to "buy a good company at a discount price". This company itself is in line with my consistent stock selection logic, lucky industry + capable management, and when there is a "reasonable price", I took the shot. Only such a bargain-hunting, my probability of success is high. Silently, I added a "no bargain-hunting" to the "checklist".


Investment sentiment 2: Patiently wait for a good stock discount and then buy it; Hold it for as long as possible and enjoy compound interest.

Good companies should also pay attention to the buying price. The price is what we pay, the value is what we get, and any serious investor must be a value investor. Value investing doesn't mean limiting yourself to buying companies with low valuations, but buying stocks at a discount to their intrinsic value. We should choose a company like starting our own business or investing in industry, and obtain long-term, good and reliable returns by holding the intrinsic value growth of the company and the return of price to value. The difficulty in doing this lies in:

1) Calculation of intrinsic value.

It is not easy to understand industry trends and understand the company's business model, which makes it difficult to estimate the specific value of the company's intrinsic value. In my mind, intrinsic value has no clear value, only a vague range.

2) Stock price with a certain discount. When buying, the stock price is lower than the intrinsic value.

High-quality and good companies are often valued more expensive. Hope to buy a good company with a certain discount. At this time, a good company must be at a low point in the industry, even plagued by negative factors, so the stock price is relatively cheap compared with history. Can clear the clouds and find the real treasure, instead of holding a lump of "shit". Besides understanding, tenacity and patience are also very important.

3) It is very rare and special for a business to maintain long-term compound interest. Charlie Munger said: "The first rule of compound interest is never to interrupt it unnecessarily." At present, I take the third year profit * 45pe as the selling point. With this strategy, try to hold the company well for a longer time. I use China Exemption as a calculation. The net profit of China Exemption in 2024 is 22 billion. If the market value reaches 990 billion this year, Mr. Market will knock on the door with thick pockets and great excitement, and I will sell the stock to it. After all, in 2021, the highest price of China-free is 402 yuan, and it is possible to rush to 507 yuan this year. Of course, the best case scenario is that none of this has happened, and I continue to hold the exemption. After all, it is very difficult to find a company that I can understand, has a large market space and can keep increasing for a long time.

After this period of reflection, sort out the models of buying and selling.


Investment Sentiment 3: Pay attention to the repair of balance sheet, which often reflects the improvement or deterioration of business earlier than income.

When investing in Shaanxi Coal Industry this year, I looked at the assets and liabilities of Shanxi Coking Coal, COSCO Haikong, China Shipping and China Power. In the Q1 financial report of China Shipbuilding in 2021, the prepayment increased by 82%, the inventory increased by 222%, and the monetary fund increased by 28%. My guess is that the surge in deposits and advance payments from shipping companies has brought about a surge in advance payments and cash, because the ship has not yet been finally delivered and the inventory fluctuates greatly. It's a pity that I first came into contact with cyclical stocks, but I didn't hold out until Leon Lai Ming. At the end of July, I sold my position before the stock price broke out.


Investment sentiment 4: Supply-oriented products have a stable market position than demand-oriented products.

When an industry's long-term capital expenditure is insufficient, supply often cannot keep up with demand, and industry competition slows down. At present, oil and thermal coal are in a similar environment.

For its own reasons, a company's products and services form a supply monopoly, and its gross profit margin has more room for improvement. Apple hardware products, Asma lithography machine, TSMC chip foundry and 53-degree flying Maotai all have similar characteristics, while inmode, which is driven by demand alone, has worse business stability. My stock position, take the former as much as possible.


In 2022, make easy decisions with "what you know". Relax expectations and make the investment process more pleasant!

My biggest worry is that my investment life is still too short, and some views that have been correct in the past 5 and 10 years may not be correct in the future.

It is impossible to predict where the future will go, where the market high point will be and when it will fall back. However, we can roughly know "Where are you now?" . By figuring out where we are, we can look at our positions and do less high-risk actions. We know that 1) US stocks will face three major factors in 2022: contraction of Fed monetary policy, overvaluation of market and growth. Monetary policy contraction refers to raising interest rates and shrinking the table. In 2022, the US economy will grow very well, and the GDP growth rate is predicted to be 3.7-4%. Then, after the bubble is squeezed out and the tightened monetary policy is implemented, the stock market still follows the internal cause of growth. We can also know that 2) has fallen for one year, which is a low level. We also know that 3) The tight epidemic policy in China affects consumption, and it is known that the performance will be repaired after the epidemic. In China, I am optimistic about leisure tourism directions such as China Free, Boarding and Jinjiang Hotel. We can make easy investment decisions by virtue of "what we know". However, when the Fed policy will be implemented and when China's epidemic policy will relax the unknowable and unknowable things, we will relax and lower our expectations to make the investment process happier.

# 2021投资大复盘

Modify on 2022-01-12 14:28

Disclaimer: The above content represents only the personal views of the poster and does not constitute investment advice on this platform.

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