A simple investment method is the best method.

If you always do what is obvious or everyone is doing, you will not be able to make any money.
For rational investment, mental attitude is more important than skill.
　
This is one of Graham's first two sentences in smart investors. In my opinion, the first sentence illustrates how we should focus on the blue chip market? What should we do when the Chinese stock market is in a place where listed companies are sucking money? What should we do when many people speculate in the short term? The second sentence shows that Graham's investment method is very simple, but it is difficult to understand. Even if you have mastered the method and technique, but have not refined the spirit of value investment, you cannot make any money.
Graham's simple investment method is summarized into six words: quality, valuation, and operation. The details are as follows:
I. Quality-What quality stocks are worth investing in
It should be said that Graham does not have a high requirement on the quality of the stock. Buffett even calls the Graham-style stock "cigar cigarette ". In general, geolu has the following requirements on the quality of the target stock:
　
(1) external feature requirements: the general idea is "scale advantage, industry dominance is inversely proportional to the degree of low prices of stocks ". Ge lao proposed the following stock options, but you need to make sure that: first, in terms of scale
Leading stocks with overwhelming advantages and dominant position in the industry; second, growth stocks with clear prospects and a strong grasp of growth; and third, important stocks with relatively low rankings in the industry; 4. other stocks are very cheap.
　
(2) financial security requirements: there are at least two major indicators: the asset-liability ratio is less than 50%, and the speed ratio is greater than 1. In particular, Ge lao believes that financial security is mainly determined by the ability to pay. At the same time,
Ge lao attaches great importance to the determination of assets. He believes that the differences between companies buying stocks in the business and financial sectors regarding assets are the main sources of stock market risks. Therefore, only by ensuring that assets are authentic, reliable, and accessible to customers
Only by looking at computing can we draw a conclusion on whether the finance is secure.
(3) management requirements: Graham's requirements for management come from a commercial principle that allows others to use your money on the condition that you can understand and exercise very careful control over his actions, or you can trust your abilities unreservedly.
Based on this principle, the two fundamental issues that shareholders are concerned with regarding management are:
1. Whether the interests of external shareholders are appropriately recognized; 2. whether the management is efficient. In short, it is credibility and capability.
How to evaluate the credibility of the management layer is not clearly described, but it can be viewed from three aspects: first, the continuity of dividend distribution; second, the authenticity and timeliness of information disclosure; third, check whether there are any misoperations in the past.
The old competency of the management team has put forward three clear criteria: first, whether there is a satisfactory return to shareholders for several years in the period of economic prosperity; the second is whether the marginal profit of sales can reach the marginal profit of the entire industry; the third is whether the growth of earnings per share can reach the growth level of the entire industry.
Ii. Valuation-valuation of high-quality stocks
Margin Security Theory is the core theory of Graham's investment and the core theory of value investment. Although the valuation methods are different, there is only one objective: to find the margin of safety.
Graham's valuation method is as follows:
1. Ensure data reliability. Is
Therefore, it is very important to separate abnormal profits and losses from normal business results. Abnormal projects mainly include: (1) sale of fixed assets; (2) sale of securities; (3) occurrence of the due capital
Discounts or premium; (4) Income from life insurance policies; (5) tax rebates and their interest (or vice versa); (6) litigation success or failure; (7) the current decrease in the book value of inventory assets; (8) the book price of accounts receivable
Value temporarily reduced; (9) continued non-commercial property costs.
2. estimate the value of an enterprise by price-earnings ratio. The price-to-earnings ratio is different from the price-to-earnings ratio of the stock statement: A. The stock income is the average revenue of the next seven years, not the past, not the present. However, its prediction is based on the actual data of the past. B. The neutral price-earnings ratio is 12, the maximum value is 20, and the minimum value is 8.
3. Adjust the valuation with assets. A. when the total amount of assets (excluding intangible assets) is less than the valuation, the amount exceeding 2 times is reduced by 1/4; B. net current assets (net current assets deducting current liabilities) when the value is higher than the value, the valuation is increased by 50%.
4. Set the margin of security to 33%. That is, when the estimated value is less than 1/3 of the market price, it is safe. The bubble margin (negative margin of safety) is set by yourself.
Graham drew special attention to the following points for stock valuation:
1. Quantitative analysis must be supplemented by qualitative considerations. Quantitative indicators are useful only when the qualitative investigation results of enterprises are supported (I understand that they have the quality listed in the first part.
2. The current income should not be the primary basis for evaluation. On the contrary, it will become an opportunity for rational investors to take advantage.
3. Average income and income trend: the trend may be unreliable and lacks a computing scale. Do not believe that favorable trends will never go forward, or that bad trends are hopeless. Therefore, careful analysis and investigation are necessary.
4. deficit is a qualitative rather than quantitative factor. If an average value contains several years of deficit, the indicator is doubtful. It will be a useful supplement to the segmentation of the years of recession and boom.
5. Intuition cannot be a conventional weapon of analysts. The future analysis should be justified and cannot be guessed out of thin air.
6. Huge profits are often just a flash. Competition and technological changes are threats at all times.
7. Every factor that determines income must be thoroughly examined to find potential signs of future changes.
3. Operation-observe operation discipline with a good attitude
For real value investors, the greatest truths are simple, and "when you are cheap, when you are expensive" means all the operations. As a matter of fact, Ge lao did not propose a complete operation method. I summarized the following according to the relevant content in the book, but in practice, I may have to return to the following sentence: the best of luck, the best of mind.
(1) fully understand the investment target. "Understanding the value of securities is the same as understanding the products you make or operate ". The loss of financial security outweighs the gain. As long as the stock quality is poor, even if the price is worth investing, it should not be considered.
(2) firmly enforce the "margin of safety" principle when purchasing stocks. Action is taken only when reliable Computing shows that the company is likely to produce considerable benefits. Stay away from low-income and high-loss adventures. Taking the shortest period as the basis for observing the company, this means that the margin of security in normal periods needs to be further improved. "Negative margin of security" can also be used in the decision to sell.
(3) investment should be considered as a combination operation, and risk dispersion measures are the guarantee to achieve satisfactory average results. This is not in conflict with Buffett's relatively concentrated investment. Buffett generally holds 20 stocks in different industries.
(4) use your knowledge, experience, and courage. If you have come to a conclusion in practice and you know that your judgment is correct, follow it, even if others have doubts or disagree.