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昨日阅读1小时。 总阅读时间108小时
Invest Like a Guru – How to generate higher returns at reduced risk with value investing 2017(Charlie Tian)
https://bbs.pinggu.org/thread-6755810-1-1.html (Page 115-132)
Failures, Errors, and Value Traps
阅读到的有价值的内容段落摘录
You can easily lose a lot of money in the stock market by buying when the market is exciting and optimistic, then selling when it is distressed and in a panic. Or by playing with stock options and futures or by buying on margins- if you do, you can lose money with almost any stock. Even if you are a long-term investor in a relatively peaceful bull market, you can still lose money by buying the wrong companies—ones that are on their way to failing or that may survive but will never reach a point to justify the price you paid. Next, I summarize the signs that may indicate you are buying a wrong company. The warning signs that follow are focused on the business behaviors of a company. If you recognize any of these signs related to the company’s business operation, you may want to avoid buying at any price.
These are usually young companies in hot industries. Their products are typically involved in revolutionary technology that is disruptive and can have enormous impact on society. Many ambitious young entrepreneurs start companies within the field because the technology is promising; it changes people’s lives, so investors are excited about its bright prospects and buy into the future of the technology. As the technology matures, it becomes evident that it did change people’s lives. But the field is too crowded. Few companies will become profitable and survive. Those that do can create immense wealth for their investors, whereas most other investors lose money because their companies cannot turn a profit. Many more may never
have any meaningful revenue. Beginning and amateur investors can easily get into this situation, like I did when I started out. I bought into fiber optics because the technology was so promising and suggested the brightest future. The technology did dramatically increase the speed of the Internet and made possible many applications, like video streaming, mobile Internet, and online gaming, but the surfeit of companies just couldn’t generate a profit and could never justify their past valuation. This happens once every few years in new fields, and it occurs more frequently now than in the past due to the acceleration of technology and innovations. In the past century, it was the flight industry, the automobile industry, semiconductors, digital watches, computer hardware, software, the Internet, dot-coms, and fiber optics. For this century, it has so far been solar technology, biotech, social media, electric cars, and so on.
Starting in the mid-2000s, with the support and incentives of governments from the United States to China, solar technology was booming. The technology was promising because it is clean and cannot be depleted, and we seem to be running out of oil and gas. The advance of technology has lowered the cost to more economically viable levels. It is revolutionary. Even Thomas Edison once said: “I’d put my money on the sun and solar energy. What a source of power! I hope we don’t have to wait until oil and coal run out before we tackle that.” Hundreds of solar-panel companies popped up worldwide, many of them publicly traded, and it seemed to be a wonderful opportunity for investors to participate in the booming new technology. Investors bid up the stock prices and created new wealth.
Competition is brutal, and it is also global, as with any new technology, new investments poured in, adding more to the competition; the technology then advanced quickly, and the crowded field produced much more capacity than the market can digest. For example the price of solar panels collapsed, there is no winner, Suntech Power and SunEdison are bankrupt. First Solar and SunPower both lost more than 80 percent of their market values from 2008. SunPower is still losing money. SolarCity, a relatively new player that lays solar panel on people’s roofs and has visionary entrepreneur Elon Musk as its chairman and largest shareholder, cannot make it alone and has merged into another of Musk’s companies, Tesla Motors. Tesla has its own problems. It has never made a profit, either, and its losses are mounting. It is also in a similarly hot field that more players are entering. It is now rumored that even Apple is planning to make cars. It feels just like the fiber optics bubble I so painfully experienced. Don’t get me wrong. Solar energy did have a bright future. It still has. It is becoming more cost-effective and its market share has increased. As a former scientist and inventor, I am not against new technology and innovations. New technology and innovations improve people’s lives. They just don’t make good investments.
阅读到的有价值信息的自我思考点评感想
An experienced value investor can recognize most of the bad business behaviors, but unfortunately for value investors, a price bargain is often so attractive that it blinds them from looking at the long-term prospect of the business value. This price bargain can be a value trap in which the business keeps eroding value. Value investors lose far more money by falling into value traps than by paying too much to buy stocks. Even some of the best value investors can tumble into value traps. Berkshire was a value trap at the time of Buffett’s purchase, which eventually cost him and his partners $100 billion.5 Sears. In value traps, the stock price does usually look cheap relative to the earnings, cash flow, and especially the assets of the company. These assets can be real estate, patents, the brands, the collections, or the businesses the company owns. But the company has lost its competitive advantage and is on the path of permanent decline in its earnings power. It may seem that even if the company does not earn any money, its stock price is still a bargain relative to the assets it owns. But in reality, there is rarely a catalyst that can force the company into a quick liquidation. The first choice for management is always to turn the business around. The process can drag on for years, and in the meantime, the value of the business continues to decline. Even if it enters a fire sale, the assets can rarely fetch prices close to their worth, and the liquidation cost can also eat into a large percentage of the proceeds.
In summary, selling put options can be an effective way to reduce the share cost. But do remember:
• Work with short-term put options.
• It works well when market volatility is high.
• Do so only with the companies you want to buy and that you have the cash to buy.
• You may lose the investment opportunity altogether if the stock price goes up.
Otherwise, stay away from options, margins, and shorts.
Charlie Munger said that anyone who considers it simple is stupid. But we can look for situations that are relatively simple, a company with a business that is easy to understand, and an industry that changes relatively slowly and has a minimal regulatory risk. Buffett said that in investing, you don’t get rewarded more by working on difficult moves like in gymnastics.
He uses three jars—“yes,” “no,” and “too-hard”—when he looks at each investment opportunity. Most of the ideas belong in the too-hard jar. If it still sounds too hard, don’t get discouraged. You can participate in the long-term prosperity of good business and achieve satisfactory returns by investing in a basket of great companies. And it is really simple.
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