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The five stages of company growth!


Many people who study stocks will analyze the fundamentals of the stock, such as viewing its performance report, PE, PB, PEG, debt ratio, dividend ratio, cash flow, ROE, EPS growth, etc. I don't know if you tried it. After performing many basic analyses, you will feel that the prospects for a particular stock are very good. 

You have even read the analysis reports of many large banks, or listened to the analysis of many market participants and obtained a consistent high evaluation. 

Then, you will think that this stock will grow in the future, so you buy it and think that you can use this stock to create a better future from now on, and the final development of the story is the opposite of the fact that the development direction will eventually Put you in trouble or lose money.

I will not deny the importance of basic analysis, because, in addition to focusing on technical analysis, I am also very concerned about the company's basic factors. I am an investor focused on investing in super stocks. 

The reason why super-strong stocks are so powerful is usually that they are high-growth stocks and have strong growth as an important engine for their stock price soaring, so some people think that I am only purely technical short-term trading, which is a big misunderstanding.

Since I focus on investing in high-growth stocks, why don’t I focus on the company’s fundamentals? When I first came into contact with stock investment, I studied so-called basic analysis or value investment, and I was very addicted to it. Of course, we have to study a lot of basic analysis, classic analysis between classics, security analysis. However, my qualifications may be limited and my understanding is too low. I have stepped into the so-called "basic analysis" trap and lost too much money in the past, which made me realize later.

 It turns out that as a retail investor, if we lack what I want to talk about before conducting basic analysis, then the five main periods of company development, namely the main premise and framework of the analysis, no matter how deep your analysis is, how many do you have, In the end, the investigation and study could not grasp the key to the problem. 

The conclusion is that this is even contrary to the actual results. Simply put, it is losing money. For a set of methods to be effective, they need to be used in the correct scene. If the usage is incorrect, even using the correct method will not work, so I agree with the importance of basic analysis, but the basic factors I study are not necessarily the same as most people think, at least the first step is when I study the basic factors Time, it is necessary to take advantage of the five main periods of company growth.

As a basis for analysis and a blueprint, let us look at the five main periods of company development. The first period is called the emerging period. During this period, some companies hope to benefit from trends, scientific research, and innovative products or services, changes in policies, changes in human habits, etc. 

To enable these companies to achieve breakthrough growth, then at this time, the company's stock price will begin to take off, but its basic factors may not necessarily look very bright, it may be that its PE is still high, or its earnings per stock are still negative. 

The company will still lose money, which is normal, especially for some technology companies, pharmaceutical companies, or biotechnology companies. Because the stock price reflects the future, as long as the market expects it to have breakthrough growth, then you can see the basic factor data at this time.

 The numbers in the performance report are not important at all, and none of them can prevent their share prices from rising. Even if you do a lot of homework, you may not even know or think about it now, why the market expects a revolutionary outbreak in the future, because everyone’s knowledge, contact, and imagination are very limited, such as everyone’s mobile phone now There are at least two lenses, three lenses, four lenses or more. Driverless cars are also developing. Any car needs to be equipped with more than 10 onboard lenses.

The second stage is a period of rapid growth. During this period, the company's profit growth began to be confirmed by the facts. Their revenue growth or profit growth has been greatly improved and has repeatedly broken analyst expectations. 

During this period, the company will launch some unexpected new products and services, so that the market expects that it will continue to grow in the future, and even become an industry leader, so the actual example of the company immediately. 

As we all know, Apple achieved outstanding performance in November 2018. The company's growth rate has reached 41%, it can be seen that it is the strongest growth in the past, but with such strong growth, the stock price began to decline.

 If you buy it at this time, it will be painful. Because it fell sharply afterward, you can check that when its profit growth is still negative, or when the growth is very slow, the stock price can gradually rise. But during the strongest growth period, the stock price fell sharply, so have you seen the trap of basic analysis?

That is to say, if you lack what I said above, then the five main growth periods of the company, the macro framework, and the entire prospect, no matter how thorough your analysis is, and how much research and research you have done, you can eventually miss it The essentials.

 The conclusions drawn are contrary to the actual results. In short, this is a loss, because you used basic analysis at the wrong time and the wrong usage scenario. Even if the analysis is correct, it will be invalid. Many people lack this macroscopic vision. 

After studying basic analysis for ten to twenty years, they all lost money and learned nothing. At this time, I know someone will argue with me, that is to say, Apple's stock price will then reach a new high.

However, when its profit growth rate reached a three-digit growth rate, the stock price fell steadily. So, when do you need to know the reason for its decline because its performance indicates that it will lose money this quarter? 

You have to wait until it drops to $10. You will know that if the profit growth at the time of purchase is still very good at this time, that is, when the stock price is still 50-60 US dollars, you will buy it until you know that at the moment, it has lost more than 80%. 

Before calculating, you may be confused during this process. When the stock price falls, if you continue to guide the commodity, then you will lose more. Is it finally in stock? What about recovery? There is no such thing. At the $10 position, it can still fall to $3, which means it has fallen by 80% and can still fall by another 70%. 

Let us look at another example. When Jingdong's profit growth is still 360%, its stock price has begun to reach its peak, but when the profit growth is -48%, the stock price bottomed out and rebounded.

Then, you may not understand why falling stock prices lead to good performance, but the stock price rises rather than performing well. What you need to understand is that if it shows strong growth, but if the growth is lower than market expectations, the stock price may also fall sharply. 

Similarly, the performance may show negative growth, but if the performance is better than the market, the stock price may also be sharply expected to rise. You may think "you can say anything". That's right, the most important thing is the market, not you. 

Regardless of the market, it can be explained. This is the game rule of the stock market. If you do not follow it, you have to bear the consequences yourself, which is to lose money.

So I can only give each comrade a suggestion. In the stock market, don't trust yourself too much. We are just retail investors. Even if a person has hundreds of millions of dollars in capital, he is just a small stone in front of the market, which is insignificant. If we want to survive and make money in the stock market for a long time, we must learn to be humble, don't believe our judgment and analysis too much, and accept that the market is always correct. 

Because of everyone's company foundation, performance report, and company value everyone's interpretation is different, everyone has their insights, and everyone has different scales to measure value. Even among large banks, their interpretation may be very different. 

Explain that positive funds exceed negative funds, and stock prices will rise, and vice versa. Therefore, the share price increase is the result of collective interpretation. If you rely on your opinion and believe that the stock price will rise, then assuming that the stock price is indeed rising, is this your explanation correct, or are you lucky to be on the market side? If it is the latter, you will always be in a fierce battle because you may not be so lucky every time.

We continue to say that the fifth period is the recovery period. The recovery period does not necessarily happen, so don’t have false expectations. In other words, there must be a recovery period after the decline period. Because of this during the recovery period, the company may have improved its fundamentals due to improvements in its business strategy or economic cycle and may have the opportunity to resume growth in the future. 

At this point, the market will revalue the company. Let's take a look at the actual example. This is just Jingdong I just saw. On the contrary, it bottomed out after a negative growth performance, and then you will know that it turns out that in the next few quarters, growth has rebounded and has returned to growth momentum. As a result, its share price has resumed growth. 

Let's look at Apple again. Similarly, during periods of negative performance growth, stock prices resumed their growth momentum. When it rises to a very high level, it will know the reason for its rise, because then it has resumed good growth.

What should be done at the actual application level? If you are a long-term follower of my comrades, then you should realize that this is a picture of the company's five major growth periods, which is the best time to buy stocks mentioned in it. Congratulations, if you have this consciousness, then you are right. 

The company's emerging and growing periods are stock prices. In the second phase, the maturity phase is the third phase, the decline phase is the fourth and first phases, and the recovery phase is when the inventory re-enters the second phase from the first phase. 

If you say this, you will immediately understand why I always say this and what I have been doing in practice. It's just that I chose the stocks in the second stage, that is, the stocks in the long-term ascending stage, that is, the super-strong stocks, that is, the stocks with high growth rate, and then buy. At other stages, I will not touch these stocks because these stocks do not belong to me.

For stocks in the emerging stage and growth stage, we should actively do more, and for stocks in the mature stage. I think it's better to wait and see the changes. When it is confirmed that the stock is entering a falling period, it is a good time to short stocks.

 If the company has a chance of recovery, it can do more, so I think it is necessary to make a basic analysis of the basic premise of the growth cycle of the macro company in the emerging period, growth period, and recovery period. During maturity and decline, use basic analysis to analyze when stocks should be purchased.


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