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Investors Guide

 

 

 

  1. Letters to Investors
  2. Stock Investor Courses
  3. Quantitative Analysis: Financial data
  4. Qualitative Analysis: Monopoly 
  5. Cash Cow Enterprise
  6. Drawbacks of Mutual Funds
  7. National Comparative Advantage

 

Dear Investors,

 

Thank you for browsing our website, we are engaged in public stock valuation technology development and investment services. Common stock investment is full of attractive work, if run properly, the annual yield can reach 35%-80%, high quality securities yield is far higher than national debt, more than bank interest and inflation, securities investment is the quickest and wisest wealth accumulation way, Yield Comparison, figure 3-2. Although the stock is easy to trade, but the analysis work contains more than 4 disciplines, it is a higher threshold of technical work, even many successful listed company entrepreneurs do not understand the common stock valuation. We are happy to share with ordinary investors know how to analyze complex securities and make the right investments, and our technology is more worthy of investors trust and entrust. The book value of the listed company is the benchmark of the value of the stock, regardless of any enterprise, is a different asset to create economic profits, we are based on the book value and how much it creates economic profits. Here I will introduce:

 

1 Money compounding growth curve

2 stock investment Transfer concept,

3 the characteristics of high investment return enterprise

4 Choice of professional securities valuation to be your partners

First , why is compound interest growth a huge explosive force?

Investment companies rely on compound interest to add value.

we compared the annual growth of 25% and 45% of the yield, if each year to obtain 25%, the first year 1.25, the second year 1.25x1.25, the third year 1.25x1.25x1.25. And so on 30 years later is 1.25^29 =646, investors profit 646 times, if 1.25^5, if 50 years, investors profit 70064 times. A the world's wealth-growing companies have been earning tens of thousands of times more within 50 years, Averagely reach year 19%. In early years U.S. stock investment could be 45% a year, in today's better financial and corporate market environment should be able to have higher returns. A lot of business logic and success patterns can be understood through the way that compound interest increases. Even if two of the investment's compound interest rate is 5%, there will be a staggering gap in 30 years, figure 3-3.

 

We would like to see more than 45% percent of growth each year and access to many corporate financial statement and to observe social development needs.

 

Second, what is the stock investment transfer concept? It is likened to a postman's horse running slowly, for a horse to continue running. Usually the vast majority of enterprise life cycle in the downhill, a good enterprise has certain years of rapid development cycle, even if the good enterprise also has its own product cycle, high speed growth unsustainable, when the decline period comes, we dig new growth enterprises and transfer stock investment on the growth cycle of high-quality enterprises. Securities analyst's continuous learning ability and intelligence, in particular, interdisciplinary competence is the prerequisite for acquiring high returns on securities investment, which can master the changing development of industries and HIGH-GROWTH enterprises, while mastering the principle of safety margin, stable mood, that is, to buy the best rate of growth in the margin of stock price security.

 

Every time we invest in a thoughtful, investment is to analyze the future situation of major decision-making, a good enterprise investment can span many years. Even longer, if the fundamentals of a business are not reversed, they are held until the valuation is out of range. We are keen on consumer enterprises, not technology and industrial enterprises, consumer enterprises have a large market space, special international enterprises. We want investment partners to invest forever and together, to avoid a yearly settlement to achieve compounding effects, and fewer transactions can reduce tax payments. Understand and tolerate the volatility of concentrated investment, and understand this investment way to have excess investment income.

 

3rd, Innovation and Technology enterprise stock has great value. We are passionate about science and technology, but prefer enterprises with great social value. Even so, valuations must be in line with the margin of safety. Follow the "cash landing" principle of investment.

Truly stand out, valuable innovative enterprises are embodied in every 8-10 years or so of the birth of a new, too 100 years of American innovation history, electric lights, airplanes, plastics, automobiles, film, commercial machines, televisions, computers, jets, wireless communications, the Internet, new energy vehicles, virtual reality. New technology enterprise products have great charm, but the huge cash profits are very scarce, once found that we will have input. Our research covers:

1, Global technology consumer products enterprise

2, financial and financial statistics of enterprise financial profit.

3, the U.S. domestic frontier technology and technology enterprises.

 

4th, select High Professional securities valuation Investment Partners. Securities and financial institutions engaged in IPO pricing, design and issuance of bonds. Stocks are not suitable for short-term investments, and securities brokers earn commissions on trading commissions for their clients, even if you lose them. We do not do the complex business, our main industry is independent statistical analysis and investment in the world's most lucrative corporate securities. In a semi powerful and efficient market, stock prices tend to reflect the company's book value of wealth. But the market is not completely effective, we seek to analyze the reasonable valuation of high growth of securities, in the guarantee of customer principal security in the case of a substantial return on investment. Although securities trading has a variety of technologies, mastering the way to deal with it is the biggest winner (Benjamin Graham), the qualitative analysis of the business will help the trend in the next 5-10 years.

 

We negate the concept of "hedging concept, high-frequency trading and K-line technical analysis" and other pseudo concepts. We believe in financial valuation analysis.

 

Finally, limited partnership avoids the drawback of tax and large-fund diversification of investment! "Why do fund companies have more money, the lower the yield, history at 10%-15%", please read carefully the Common fund of Investor courses and non-public equity of the high uncertainty.

 

Our past investment success and failure is to ensure the success of today's valuable experience, we are very fortunate to meet you, I hope we have a pleasant cooperation!

13ROE analysis, investment logic rigorous, partnership investors readily accepted. You are welcome to become our portfolio partner.

 

Thank you!

Jim Lee

 

 

 

2.Stock Investor Courses

 

Distinguishes between investment and speculation.

Through the analysis of corporate profit changes, the shareholder's return on investment ROE and safety margin is based on the valuation of investment, other stock trading methods belong to speculative behavior. Figure 3-1, Benjamin Graham

 

 

A variety of mainstream investment products banks, bonds, private equity, stock returns comparison.

Ratio of return on equity comparison, fig. 3-2

 

 

Compound power. Compounding the value-added curve, 15% of compound interest is extremely low compared to 30%.

Note: The two-figure unit is different, each unit is 500 times and 100 times. Annual growth of 30% and 15% per year. The basic calculation of 3-2-4 compound interest increases by 30% and 15% a year. Figure 3-3

 

 

 

 

3.Quantitative Analysis: financial data

 

Quantitative Analysis: financial data measurement

What is ROE ?

The calculation formula of weighted average ROE is as follows:

ROE=P0/(E0+NP÷2+EIxMI/M0–EJxMJ/M0±EKxMK/M0)%

P0, respectively, corresponds to the net profit attributable to the shareholders of the ordinary shares of the company, and after deducting the non-recurring profit and loss, belonging to the general stockholders of the company;

NP, belongs to the company general stock shareholder's net profit;

E0, belongs to the company general stock shareholder's early period net assets;

Ei, the issuance of new shares in the reporting period or debt-to-equity swap, and so on, attributable to the Company's ordinary shares of shareholders of net assets;

EJ, the net assets attributable to the stockholders of ordinary shares of the company, which are reduced during the reporting period, repurchase or cash dividends;

M0, reporting period months;

Mi, the cumulative monthly number of the new net assets to the end of the reporting period;

Mj, reducing the cumulative monthly net assets to the end of the reporting period;

Ek, due to other transactions or events, attributable to the Company's general shares of shareholders of the net assets fluctuation;

Mk, the cumulative number of other changes in net assets occurring from the month to the end of the reporting period.

 

The following factors are effective in the analysis of stock intrinsic price fluctuation.

1, reduce debt ratio

2, increase sales of main marketing revenue

3, improve turnover

4, increase gross profit margin

5, increase net profit total, guarantee more free cash flow source.

6, increase the debt ratio, increase the financial leverage (the condition goodwill is reliable).

7, dilution and repurchase of common stock quantity

 

1, Book value, Bankruptcy liquidation, Intrinsic value, Replacement cost

The public should at least look at the book value of the shares before buying or selling their shares in an enterprise. For any particular case, the information conveyed by the book value may be meaningless or unnecessary. But before discarding the evidence, examine them. This would allow the stock buyer-if he thinks he is smart-to at least tell himself how much money he has actually paid for the company, and secondly, how much tangible resources he spends. -Graham

Book value estimate. Figure

 

2, Stock coupon yield and P/E ratio analysis. Formula: Coupon yield =1/PE, fig, 2-1

2-1 Stock Coupon Yield analysis helps:

1. Horizontal selection of Stock coupon yield

2. Comparison of risk-free rates

3. Contrasting inflation and so on

 

2-2 P/E analysis should pay attention to the dynamic P/E ratio and static P/E, pay attention to 4 financial quarter changes

1. Assuming that the 1th quarter of high revenue, the 2nd quarter can maintain year-on-year follow-up.

2. The price/earnings ratio is too low not necessarily good, some cyclical industries, when the business in the boom cycle, profits, the price-earnings ratio, as the cyclical recession, the market turned bad, then the price-earnings ratio became markedly larger.

3. Stability in the 4 quarters of earnings per share contributes to the analysis of securities.

Figure 2-3: Replace PE with stock yield calculation.

 

4. Valuation calculations, fig. 2-4




4.Qualitative analysis: Monopoly stability

 

Monopoly is the competitive advantage that enterprise managers must pursue. Managers wisdom, enterprise product innovation technology, profit control ability and many other core competencies determine long-term stable cash flow, qualitative analysis of investment can hold the enterprise in the next 5 years, even 15 years of cash flow. Quantitative analysis of financial statements, we have a number of core competitiveness (moat) systematic research.

 

Determinants of market structure (market concentration, commodity differentiation,  entry and exit barriers)

 

Market Concentration degree

Reflect the degree of market concentration, and the formation of monopolistic forces in the market is closely related. The concentration of the buyer and the concentration of the seller.

The indicators for measuring market concentration include:

1, the concentration of the industry

The most common and simplest absolute concentration metrics.

Refers to the industry's largest number of companies in the first few of the value x accounted for the market or industry share.

CRn: The industry concentration degree of the first few enterprises of the largest scale;

Xi: The value, output, sales, sales, number of employees and total assets of the first-I enterprises;

N: The largest number of enterprises in the industry;

N: Total number of enterprises in the industry.

Usually n=4 or n=8, at this point, the industry concentration is the largest in the industry, the first 4 or 8 enterprises in the concentration of the first.

The industrial market structure is divided into two types: oligopoly (cr8≥40%) and competitive type (cr8<40%). One

The oligopoly type is subdivided into extremely high oligopoly (cr8≥70%) and low concentration type (40%≤cr8<70%);

Competition type is subdivided into low concentration competition type (20%≤cr8<40%) and decentralized competition type (cr8<20%).

In the market concentration measure index, can synthesize the enterprise quantity and the scale these two decision market structure main aspect index is the industry concentration degree.

 

Factors affecting market concentration are:

1 Enterprise Scale. Large scale, concentration will improve.

2 Market capacity. Small capacity, concentration will improve.

3 Industry entry conditions. The difficulty of entry, concentration will improve.

4 market demand growth rate. Growth is fast and concentration is down.

Commodity Differentiation

1 The differentiation of goods can find their own stable market objectives, so that the market monopoly to a stable direction, even the emergence of oligopoly and complete monopoly.

2 Main methods: Commodity subject differentiation, brand differentiation, price differentiation, channel differentiation, promotion differentiation.

3 entry barriers.

Entry barrier is a kind of cost, the new enterprise must bear, the original enterprise need not undertake.

There are two categories of structural entry barriers and behavioral entry barriers.

Structural entry barriers include: absolute cost advantage, scale economy, commodity difference and so on.

Behavioral barriers to entry include: entry containment, entry into the blockade and expulsion of competitors.

Entry and exit barriers also include institutional barriers such as government laws and regulations and related policies.

4 exit barriers. Including asset specificity and sunk costs, severance costs, policy and law restrictions.

Industrial differentiation can form market entry barrier, the higher the differentiation degree, the higher the market barrier, the price differentiation is also one of the main methods to realize the differentiation of goods.

 

5.Cash Cow Enterprises

 

1, Growth but less net profit enterprises

Although some growth companies cannot provide positive cash flow, they still have financial data.

Summed up there are 5 categories: 1, strategic losses, 2, sales growth, 3, profit margin 4, business model, 5, Growth space. Strategic losses, in fact, strategic losses are not financial losses of enterprises.

Rare rigid technology change companies such as Amazon, positive investors in the past have achieved good returns, even if the Internet technology revolution after the valuation method has not changed too much, corporate finance, although the overall loss, but out of the industry monopoly status, and huge sales growth caused by invisible net profit increase. Amazon is an example of a positive investment that invests in unprofitable conditions, but we are not sure that motivated investors will be able to hold good returns for long.

2, cash sufficient enterprise

Conservative investors rely on historical financial performance to invest in cash-profitable businesses. Conservative investment methods are more reliable in terms of profitability.

 

  6.Drawbacks of Mutual Funds

 

 

Mutual fund's low yield reason analysis, understand limited partnership investment advantage.

Even the best mutual fund's annual yield is 8-15%. It cannot go beyond the standard and poor 500 stock index, which is much lower than a year's increase in many stocks.

 

The main reason is that some national fund laws provide that the mutual fund's portfolio does not allow any stock to exceed 10% of the total amount of the fund, if more than, the request within 2 weeks to reduce to below 10%, which will inevitably lead to the reduction of the Fund's diversification of equity investment, it turns out that this point, the mutual fund's income is around 10%. As mutual funds are famous and attract huge sums of money, the fund companies have to diversify to buy 50 stocks, or even 500 stocks or more, just as it can buy the entire high and low forest but cannot monopolize the tallest tree king. Big funds cannot concentrate all of their money on a handful of High-yield securities, slash investment yields and increase risk because they include too many "second-rate" stocks.

 

On the other hand, the mutual fund management fees is not linked to investment performance.

In contrast, limited partnership investments do not have such regulation, do not need to be decentralized, can concentrate on investment, our limited partnership investment approach to avoid the decentralization of large funds, we focus on High-yield securities to create more profits for partners. Partners need to understand that net worth volatility can yield high returns.

We stockroe use scientific methods to study and invest in stocks.

 

Are Private equity and venture investments a good investment?

 

The majority of the investment failure cases. Enterprise gorgeous advertising image can not replace the authenticity of financial statements, once the stock price bubble increases, small fall at any time. We have our own valuation judgment so we are not affected by the fickleness of Wall Street and the outside world. Enterprise development has just embryonic, is a concept, he only achieved geographical success, many large enterprises have the advantage to replace him. Many private equity projects failed to develop into an IPO in the next 5-7 years, with poor liquidity, loss of principal or low returns, and missed large amounts of better investment opportunities. Young enterprises lack the core competitiveness, the future difficult to test. Statistics show that a handful of successful private equity opportunities gain 25% of compound interest each year, and even if the financial statements of very reputable international non-public equity firms are bad, almost all countries have very high demands on equity investor capital, which is risky. On the contrary, compared to our portfolio, in mature enterprise securities, we invest in mature development and growth of enterprises, customer interests are guaranteed.

 

The above is the Common fund low profit reason and private equity company's high risk malpractice.

Investment chooses low risk and high yield, not high risk and low yield. Valuation is the basis of securities investment, after valuation to determine whether the price of securities is reasonable, whether there is a margin of safety.

 

The Stockroe investment service is your best choice in terms of guaranteed capital security.

 

 

 

7.National Comparative Advantage

 

One of the core issues of long-term high return investment is the national economic environment.

The national environment needs the following necessary conditions, otherwise give up.

1 National democracy and political and economic stability. (USA, Germany, UK, Japan, etc.)

2 The country's securities markets are transparent and legally and impartially regulated, valuing markets rather than speculative markets.

3 The CSRC strictly regulates the protection of information disclosure laws and protects the interests of small and medium investors.

4 The trend is unchanged over the next 50 years.

 

National Securities Names

 

 

 

 

 

 


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