Recently, the enrollment of the college entrance examination has come to an end, and students are busy volunteering and waiting for the admission notice.

There is a very interesting phenomenon. Many candidates see their scores and think they are good, but after reading their scores, they find that they can't sign up for an ideal school at all.

This is a process that everyone has gone through.

The final important thing in the college entrance examination is not the score, but the ranking. During the college entrance examination, everyone discussed enthusiastically about whether the topic was difficult or easy. In the end, it was found that the difficulty had little impact.

This is the essence of society.Competition。You have to compare your achievements with others before you know whether they are good or bad.

This is not the case in any business.

Including making investments, one person said that he had earned several times from the stock market. It sounded like this person was very strong. After all, the stock market lost eight times and made one profit, and it was good to earn several times.

But you have to ask when this person started investing.

If he entered the market in recent years, he is a real expert. But if he says, he is a veteran investor who entered the market in the 1990s. Then this person can only be regarded as a rookie. Most of the stocks in the 1990s have risen more than 10 times, while if this fund is used to buy a house, it has risen dozens of times.

This just leads to a little thinking, and it is becoming more and more difficult to make a lot of money in stock speculation.Is it also related to the competition in investment?If it is,What is the competitive advantage?

A cruel market

Before entering the stock market, many people have thought about a question: why can I make money when I enter the stock market?

In fact, the competition in the investment industry is far more than people think. Take stock public funds as an example. as of today, the total number of registered funds is about 1238, and of these 1238 stock funds, 676 have negative annualized returns, and if the condition is set to outperform treasury bonds, that is, the annualized return is more than 4%, 895 funds are substandard. (dividend has been considered)

Who is the fund manager? Most of them graduated from famous universities and started with a master's degree. And equipped with a strong trading team, research team, any basic information, even inside information, they can receive one step faster.

However, the cruel reality is that in such a group of people, many of them can not get the ideal income in the end.

So what is the reason for those small investors whose research ability, trading ability and information access ability are not as good as their ability to win in the market, or to beat these fund managers and achieve better results than them?

Of course, some retail investors may think that it is not easy to earn 4%. It is done by half the trading limit. But in the long run, the tide goes up and down, ups and downs, and in the end, the accounts of retail investors are probably worse than most fund managers.

Gain is a temporary gain, loss is a loss all the time.

Just like the results of the survey: retail accounts have eight losses, one even and one profit, and only 10% of them make money, while the probability of making money for public funds is about 40-50%. Generally speaking, the disadvantage of retail investors is still very obvious.

The source of competitive advantage

The stock market is so cruel, in fact, most people should not enter the stock market in the first place.

At least if you don't understand why you won, it's impossible to win. Many people don't know their competitive advantage, and it's probably just luck.

In my opinion, the core competitive advantages are two:

One is to transcend the cognition of most people on some levels.

The second is to stay away from the public and emotions.

When an investor can construct these two advantages, he will have the opportunity to achieve a high return on investment and beat fund managers who are better than themselves in all aspects.

In fact, the market has been repeating a cycle:

Low-income groups learn the investment methods of high-yield groups-- "buy relevant targets--" the relevant underlying stock price rise verification method is correct-- "more investors choose this investment method--" the overall investment style of the market converges-- "long-term returns decline--" short-term failure of the investment method.

Think about it. When your returns are low and your performance is poor, you will choose to refer to the experience of those high-yielding investors and then buy like them. But in the end, the model fails, the stock loses back, and we have to learn the methods of other masters, and so on.

This is the mechanism of all investment markets, and this process has been repeated countless times since ancient times.

Along this process, we can find out who can make money and who can't.

People who make money are those who have been ploughed for a long time and have been kept for a long time, and when their model or target is recognized, they can eat from beginning to end and enjoy the biggest increase.

And the least profitable ones are the investors who follow the investment methods or learn from the investors who see the way to make money.

This confirms the above two advantages. But in fact, not many people have these two advantages at the same time.

Take fund institutions as an example, it is easy for them to do so on the first point, to understand the industry better and understand the company better, but on the second point, they are often foolish, which is caused by their mechanism: annual performance rankings, pullbacks need to be liquidated, and they have to do some trading that follows the public and is hot-headed. For example, chasing hot spots, buying at a high level, falling sharply, and refusing to hold for a long time.

This is why half of the fund managers lose money.

The ranking mechanism of the fund industry always exists, and as long as it is recognized that this loophole exists in the huge capital investment model of the market, investors can construct their own advantages according to the second point. Then it is relatively not difficult to get a good return in the market.

Unfortunately, most individual investors fail to do the second point, even more emotionally than institutions. The first point cannot be done, and the second point cannot be done. It is inevitable to lose money.

Of course, investors can't rely entirely on the second advantage and make money from an anti-Volkswagen trading model without knowing anything about the company, otherwise they will be smashed to pieces on some logically broken stocks.

Go back to the present

The current market seems to attach too much importance to the first advantage and ignore the second advantage.

Over the past 16 years, there have been more voices of value investment in the market, fewer investors talking about technology and trends, and people began to discuss profits, cash flow, and even business models.

The idol of many fund managers is no longer Xu Xiang, but Buffett. Most fund managers now do not dare to say that they are not engaged in value investments.

In fact, I also agree with value investment, but as mentioned above, the market has a circular mechanism, and it seems that the model of value investment is somewhat similar.

Moreover, the level of public awareness has been improving, and the first advantage of many investors is becoming less and less obvious.

From 16 years to now, in the value investment dimension, at the beginning is to look at PE,PB, underestimate, this most superficial price index can make money.

After that, everyone's model converged, the pe,pb method failed, and began to turn to ROE, cash flow, future growth rate, in-depth study of the industry, mining information in order to make money.

Then, these deep indicators begin to fail, the value model begins to upgrade again, to the business model, to see through the nature of these enterprises in order to make money.

Over the past few years, investors have been learning and rising, but at present, there seem to be many such smart people in the whole market. The first advantage is getting weaker and weaker. The specific performance is as follows:Value investors can hardly find targets with high long-term returns.。

This also explains why the white horse premium is so high now, it is not necessarily a kind of newspaper group behavior, but according to the value investment method, it is these stocks that can be bought, so people can only buy these stocks, resulting in a premium for these stocks until they reach the low point of long-term returns.

But just like one truth: if the market is full of investors who play the same way as Buffett, Buffett's return on investment will quickly drop to the average return of the market, which may be exactly equal to the risk-free return of US stocks.

Since the new century, Buffett's yield is not high, always have money, can not wait for the panic moment that used to be.

Nothing else, everyone has learned, the margin of safety, the business model, the moat.

Value investment is a good method, but when most people understand it, the rate of return is often not high, which is the inevitable law of nature.

Conclusion

Finally, it is suggested that we should formCompetitive thinking。

Don't be isolated in your own system, look more at the cognitive level of most people in the market, and know in which dimensions you already have an advantage. Know what mistakes your current opponents, the majority of the market, are making.

I particularly agree with what Feng Liu said, to find the consensus of the market, and then make a reverse investment decision. This is an obvious way to start from the second point. If you stay away from the public, you must first know what the public is doing.

Many investors work hard to learn all kinds of knowledge and study all kinds of problems, but they don't make any money. They just don't recognize the consensus of the public and forget that they are studying. At the same time, everyone in the whole market is doing research and learning.

There is another point, we should look at the problem with a sharper mind:

For example, compare the increases of all stocks with the increases of the industry and the index, and look at the relative increases. Many stocks only rise with the rise of the big market. It is popular to say: they have been picked up. For example, stocks that have risen by no more than 20% since the beginning of this year are all unpopular in the market, so it is necessary to ask, what is the reason for not being liked?

Through the relative increase, we can clearly understand where the current consensus in the market is and which stocks are really rising.

And if you compare your net worth and index trend with the GDP growth rate or M2 growth rate, if you lose over a long period of time, it may not be suitable for investment.

In addition, we have to integrate all the investment targets, including real estate, bonds, and equity, into the target basket and observe them with the same mindset. Also try to see if you can form the first and second competitive advantages on this. If you only look at stocks and ignore real estate, the relative returns have lagged behind in the past decade.

When you fully understand the comparative advantage in competition, you will find that there is a basis for making money by investment, not by luck.

Back to the original question:In the increasingly competitive stock market, why can you make money?What are your strengths?