Kweichow Moutai Co.Ltd(600519) the share price returns to 2100 yuan. From the historical performance, it is easier for high-priced stocks to get out of the slow bull market, because high-priced stocks forcibly exclude some retail investors, mainly institutional investors. Even investors who buy high-priced stocks mostly hold medium and long-term shares, and do not care about the short-term rise and fall. Of course, high priced stocks must stand the test of time, and newly listed high priced stocks do not belong to this category.
Shareholders of really good companies do not want the share price to rise too fast in the short term. For example, Buffett company has had a debate on whether to split it. Many long-term investors oppose it and believe that the high share price can prevent retail investors from entering, reduce speculation and maintain the high rate of return of Berkshire Hathaway, This is completely different from the thinking mode of ordinary retail investors. After all, most retail investors hope that the higher the share price, the better, and it will soar in the short term.
The difference is that some retail investors want the stock price to rise and then sell the stock, but long-term investors are most afraid of the stock price rise, because the stock price rise will destroy the original slow bull trend, and this undervalued slow bull trend can not only prevent retail investors from entering the market to buy stocks, At the same time, it can also give existing investors the opportunity to buy more stocks according to the lower share price. Of course, there is another very important factor. Undervaluation can prevent major shareholders from reducing their holdings. Investors are most afraid of major shareholders’ reduction. If the stock valuation is very low, major shareholders will give up the idea of reducing their holdings. If they really need a lot of cash, they will consider obtaining cash dividends, and long-term investors also hope to receive satisfactory cash dividends from time to time.
Not that high priced stocks are good companies, but high priced stocks can indeed prevent retail investors from entering. For example, Kweichow Moutai Co.Ltd(600519) , investors need 210000 yuan to buy 100 shares, while many investors with small assets have less than 210000 yuan in total. Retail investors prefer speculation. If these retail investors are isolated, the company’s stock price will be more stable, If the performance is excellent, the stock price will rise slowly for a long time driven by value investors, which is the so-called slow bull. For many low-priced stocks, the same trend can attract a large number of speculators to buy. The slow bull trend is very easy to turn into sharp rise and fall. Therefore, it is said in this column that high-priced stocks are more prone to slow bull trend.
Of course, the newly listed high-priced new shares do not belong to this column, because the high price of new shares is composed of many factors, such as artificially reducing share capital, accumulating profits, or excessive speculation by investors, which may lead to the high price of new shares, but this does not mean that its future performance will continue to rise, and this is the key to slow bull.
It is not that there is no opportunity for low-priced stocks to slow down. In fact, some good companies with large enough circulation are also walking the trend of slow down. For example, Industrial And Commercial Bank Of China Limited(601398) , as an absolute Big Mac company, there is no doubt about its profit and growth, but retail investors are not willing to hold such large cap stocks. Therefore, it uses the market to prevent retail investors from entering, and the slow bull trend can be carried out according to the original plan.
Of course, other factors that can prevent retail investors from entering also exist. For example, the steel industry has always been an area that retail investors avoid. However, once the performance of steel companies is improved, they can usher in a non-standard slow bull, because the volatility of this slow bull is a little large, which is not a conventional slow bull.
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(Beijing business daily)
