Buffett's long-term holding theory is also based on this stock selection idea.
There are many long-term bull stocks in history, and there are many examples in both international and domestic markets. Coca-Cola in American history, Apple and Baidu now, Tencent Holdings in Hong Kong market, there were few long-term bull stocks in the domestic market before 2000, and most of them were mainly restructured stocks, such as Zhong Yan Industry and Yi 'an Technology. Only in 2003 did more long-term bull stocks appear, such as China Ship, Kweichow Moutai and Suning Appliance. In just over two years from the end of 2008, there have also been long-term bull stocks with an increase of more than 5 times or even 10 times, 20 times and 30 times. Among them, Zhongheng Group, Sanan Optoelectronics, Sany Heavy Industry, Guodian Nanrui, Jinyu, etc. are more eye-catching, and Zhongheng Group ranks first in the increase by 30 times.
It can be clearly seen that the long-term bull stocks that emerged after 2003 include both restructured stocks and long-term bull stocks that rely on the company's own main business development and continuous improvement in performance.
This is the beginning of a real bull market in China, that is, 2003 is the first year of a long-term bull market.
Moreover, we can see that many long-term bull stocks have gone through the big bear market in 200 1-2005 and the super bear market in 2008, such as Yunnan Baiyao and Sany Heavy Industry. Among them, Yunnan Baiyao did not increase much in two years, but for a long time, 18 has increased greatly since its listing, basically only rising but not falling.
Having said that, I just want to explain a problem, that is, long-term bull stocks are the only choice to make big money. What should I do?
(1) The performance continues to grow.
The continuous growth of performance is the only factor to ensure the continuous rise of stock price. Any theme, as long as it can't bring about the continuous growth of performance and performance, will not be the basis for the long-term bullish stock price.
This is the commonality of long-term bull stocks.
(2) Industry or sub-industry leader.
Companies that can become long-term bull stocks are mostly industry leaders. This leader means that they have great advantages over similar companies in terms of industry scale, competitiveness, cost and gross profit margin, or they have outstanding advantages in expansion and replication.
For example, Sany Heavy Industry's domestic and overseas expansion and performance growth advantages can be seen in machinery stocks.
(3) Accept market verification.
This is the necessary discipline for choosing long-term bull stocks.
Any stock is not a random guess who is a long-term bull stock. Under the premise that it may become a long-term bull stock after studying the fundamentals, long-term bull stock must be verified by the market. This verification is to see how its market outlook continues to perform after a relatively large-scale market crash. If we can continue to be firm, we can increase trust, otherwise we will reduce trust. After many market verifications, long-term bull stocks will be gradually established.
The implication is that if a stock only rises by 10%, 20%, 50% or even doubles, you can't be sure it is a long-term bull stock. Long-term bull stocks that combine fundamental research and trend selection are generally stocks that have begun a long-term bull market journey. It can also be said that you can't buy it at the starting point of long-term bull stocks, and you can only buy it at 1 or double it.
(4) Long-term bull stocks have nothing to do with the industry.
Some friends say that long-term bull stocks are non-cyclical industries and are biased. (It can only be said that long-term bull stocks are more common in non-cyclical consumer industries. Long-term bull stocks are independent of the industry, and only the continuous growth of the company's performance is the only criterion for choosing long-term bull stocks. As for the stock price and P/E ratio, the lower the better, of course, but the company doesn't have to care about the purchase price.
As long as it is not bought when the market is extremely overvalued.
The long-term bull stocks listed above include Sany Heavy Industry in cyclical industry, Yunnan Baiyao in non-cyclical industry and Suning Appliance in non-cyclical industry. It can be clearly seen that long-term bull stocks can appear in both cyclical and non-cyclical industries.
(5) The emergence of systemic risks is an excellent opportunity to explore long-term bull stocks.
After the centralized release of market systemic risks, such as the emergence of the international financial crisis in 2008, it is an excellent discovery point for long-term bull stocks. At this time, you can compare companies in various industries with similar companies in the industry (and this comparison should run through the whole research process). Only in the process of systemic risk release, the company's performance did not decline significantly, and the company quickly recovered its sustainable growth ability, so that it would have the texture of long-term bull stocks.
And those companies whose performance has fallen sharply in the release of systemic risks in the market and cannot recover their growth ability in the later period are doomed to miss out on long-term bull stocks.
The above is the stock selection idea of long-term bull stocks that rely on the development of the main business and the continuous growth of performance.