In stock investment, we often see that investors like to invest together and squeeze into a hot and crowded track. However, from the perspective of long-term investment, this is an approach that does absolutely more harm than good.
In 2020, many investors pursue a kind of stock called "Mao stock". The name of Mao stock comes from Kweichow Moutai Co.Ltd(600519) This listed company. In 2020, the stock prices of some listed companies with obvious competitive advantages in their own industry will soar. So investors call this stock "Mao stock", meaning that Kweichow Moutai Co.Ltd(600519) has the same status as the Baijiu industry in its own industry.
In order to meet the needs of investors, on September 21, 2020, when "Mao stock" became a hot and crowded track in the market, the "Mao concept index" increased by 91% in 2019 and 109% in 2020, and achieved a super good performance of quadrupling in two years.
However, although the hot track seems to be full of people, it is already too crowded. Everyone knows that this kind of stock is easy to make money, and the valuation of this kind of stock is too high. In 2021, the Mao index fell by 5% and 22% from the highest point in the year, which caught many investors chasing popular tracks off guard.
risk of popular tracks
In the secondary stock market, the hot and crowded track will bring several problems. Some of these problems are obvious. For example, the valuation is too high, while others are relatively hidden. For example, listed companies with expensive valuation are easy to issue additional shares, and major shareholders are easier to reduce their holdings when the valuation is too high, and so on. but why do many investors still enjoy the hot and crowded stock investment track with so many disadvantages? Here, let's leave the stock market and look at a famous article in ancient China.
● in the Qing Dynasty, sun Jiagan, a famous Han official of Kangxi, Yongzheng and Qianlong dynasties, once wrote a short but enlightening article, which is "three practices and one malpractice". In this article, sun Jiagan raised a question, saying that everyone always felt that the tyrants in history used villains. But in fact, who wants to destroy himself?
Sun Jiagan said, "although uncle Ji's life, he is willing to govern in the face of politics. Who doesn't want to use a gentleman?" The birth of Shu Ji refers to the period of national chaos and political decline in Chinese history. Sun Jiagan said that although some historical moments seem to future generations that those in power are extremely fatuous, even in these periods, who wants to use villains and not gentlemen? "And the wise monarch and the virtuous officials. Who doesn't think that the one I use must be a gentleman, not a villain." Moreover, those in power often feel that they reuse gentlemen, not villains. For example, Zhao Gou, Emperor Gaozong of the Song Dynasty, felt that Qin Hui was a gentleman and Yue Fei was a villain to kill, while Hu Hai, Emperor Qin II, also felt that eunuch Zhao Gao was a gentleman.
So why does everyone want to use a gentleman, but in the end they often misuse a villain? "Without him, use talent instead of virtue." Those in power only use talented people, only capable people, only people who can show current performance, and do not ask whether they have morality, which will eventually lead to villains in power.
Sun Jiagan said that the villain has three advantages over the gentleman. "The language is right, the gentleman is slow and the villain is flattering. When running around, the gentleman is clumsy and the villain is open. When the lesson is hard, the gentleman acts alone and is ashamed of his speech." In short, it means that villains will be obedient, do things, and ask for credit. These three advantages lead to villains being more popular than gentlemen. Therefore, those in power are confused by the various advantages shown by villains, and forget the great disadvantage of villains' immorality, which leads to the decline of the confused world: "as for the combination of villains and the separation of gentlemen, how can their suffering be better than words!"
Similar to the difference between gentleman and villain mentioned by sun Jiagan, there is a similar difference between popular and crowded stocks and those unpopular but valuable stocks. for popular and crowded stocks, although their risks gradually increase with the influx of capital and the rise of valuation, which is easy to harm the long-term investment return, in the short term, they are often more popular than unpopular and valuable stocks.
First of all, the prices of popular track stocks rise all the way in the short term, and even give people the illusion that buying is making money. Secondly, when a class of popular track stocks continue to rise, the public opinion analysis in the market tends to stand on the side of such stocks and blow them to the sky, but ignore the obvious risks. These popular public opinion analyses even give people in them the illusion that heaven and earth work together from time to time, and those who win the hearts of the people will win the world.
Finally, because such stocks have a better reputation, investors are more willing to invest in such stocks and funds with heavy positions in such stocks. Think about how easy it is to launch a fund to invest in Mao companies in 2020 and a fund to invest in new energy companies in 2021, and you will understand what I mean.
In fact, not only the publicly traded stock market, but also the primary market for direct investment in enterprises. popular commercial racetracks are always sought after by investors and capital, but popular at the same time often means crowding, and crowded industries often make investors who participate in them lose more than they gain in retrospect many years later.
For example, in the primary market in recent years, many industries have once become the darling of capital and become very popular but crowded tracks, such as mobile charging treasure, shared bicycles, online car hailing, hot pot catering, group buying, shared wardrobe, shared office, new energy vehicles, metauniverse, etc. For these popular industries, as long as many primary market investors see that the industry is hot enough, they think it must be worth investing, so they flock in, but in the end, it is often unsatisfactory.
why is the online car Hailing industry competitive
In fact, we need to make a lot of detailed research on whether we should invest in an industry or an enterprise, rather than simply saying "this track is popular". Whether an industry is worth investing needs to consider the entry threshold of the industry, the stickiness of customers, the scale advantages of enterprises, regional advantages, technological change and other very complex factors. The competition pattern of enterprises in an industry is full of different situations.
● for example, online car hailing and online shopping seem to be very similar. As an intermediate platform company, the online car Hailing platform connects countless customers on one end and countless drivers on the other. At the same time, the same is true of the online shopping industry. The platform connects countless customers and businesses. However, from the perspective of the development of these two industries, the competition in the online car Hailing industry is far more cruel than that in the online shopping industry. Whether it is the international online shopping platform Amazon or China's online shopping platform, its industry stability is higher than that in the online car Hailing industry. Why?
In fact, there is a big difference between the online car Hailing industry and the online shopping industry. Online car hailing in one city often rarely goes to another city, and customers in one city don't often go to another city. In other words, the vast majority of online car Hailing consumption scenarios occur locally. This means that the national companies in the online car Hailing industry are actually pieced together by countless regional companies, and their network effect and scale effect are not so strong. However, consumers in the online shopping industry come from all over the country, and merchants also come from all over the country. A consumer in Shanghai can often buy things from Wuhan. Therefore, the network effect and scale effect of online shopping industry are far stronger than that of online car Hailing industry. This also leads to the leading enterprises in the online shopping industry. Compared with the leading enterprises in the online car Hailing industry, their competitive advantage is relatively more stable.
They all purchase goods and services on the Internet, but due to the different nature of a small consumption region, there will be such a huge difference between the online shopping industry and the online car Hailing industry. However, when many primary market capital is investing, is it too hasty to consider only whether it belongs to a popular track?
However, like the secondary market, investors in the primary market will also be encouraged and tempted by a variety of short-term factors when chasing popular tracks. For example, companies with popular tracks tend to tell better stories and do better ppt. It seems that the prospect of the industry is better, and capital also prefers to inject capital into PE and VC funds investing in popular tracks. However, while chasing popular tracks, investors are bound to pay higher prices and often face more cruel commercial competition.
Therefore, what investment needs is calm, objective and rational. It is the so-called "independence without change, weekly travel without danger". The correct way to invest is to analyze the essence of business clearly, understand all aspects of all walks of life, and bet on investment when market opportunities are appropriate. Chasing those popular and crowded tracks is an unwise move that seems surging but is actually full of hardships.
(the author is the chief investment officer of Jiuyuan Qingquan Technology)
(E company)
