It is a good thing to invest in stocks, but blind investment without stock selection is definitely not advisable. If you spend 2,000 yuan every month, it will be 24,000 yuan a year and 480,000 yuan in 20 years, which is a lot of money. If there is an annualized return of 10-15%, there may be 3-5 million in funds in 20 years.
But if you don’t understand the quality of stocks and just randomly choose the target for fixed investment, you will not be able to make money, and you may even lose money. A stock represents a company, which is different from a collection of stocks selected by a fund. A single stock will have irreversible risks. Once there is a problem in the operation of a company, it may continue to plummet. If it suffers losses for consecutive years, it may even be delisted. No one wants to invest in stocks for 20 years and lose not a cent in the end, right?
So, when investing in stocks, you must choose the right company, or even worse, you must choose the right big industry track. An industry with a good general trend and a company with core barriers is indeed worthy of long-term investment.
What kind of industry is worthy of long-term fixed investment?
We must first choose the industry, and then we can choose the companies in the industry. The time period of 20 years is very long, long enough to span an era and long enough to subvert an industry. But there are some needs that have actually existed since ancient times, namely food, clothing, housing, and transportation, or what we call consumption.
The industry of food, clothing, housing and transportation is enduring, but this does not mean that the industry has always been developing and there will be no replacement. Take clothes as an example. The result of changing dynasties is the change of clothing. The result of reform and opening up is the advancement of fashion trends. Metersbonwe, which was all the rage twenty years ago, is now in decline, with the company losing money year after year.
A number of brands also encountered problems, including Guirenniao and La Chapelle. It’s not just a business management problem, but the industry is changing too fast, and the company is not worth long-term investment. Food and beverages, especially liquor, are really a better segment in the consumer industry. This industry is not only a necessity in our daily lives, but also changes slowly.
The taste of food cannot be changed in a day or two. China’s food culture has laid a good foundation for this track. The centuries-old stores and the inheritance of various craftsmanship determine that there will be many outstanding companies in this industry. They can transcend cycles and are an industry worthy of long-term investment.
About living, it is not as simple as a house. Housing is only one aspect.
Behind living is home and life. In addition to building infrastructure, cement, ceramic tiles, etc., residential buildings are more about home decoration. Home decoration, from furniture to kitchen and bathroom, from smart home appliances to smart life, as a consumer product, the home appliance industry is a good track. Finally, there is travel. Whether it is aviation, high-speed rail, ships, subways, bicycles, electric vehicles, private cars, new energy, etc., it is a good industry.
It’s just that technology is changing the travel track, and some of the subdivided tracks have reached bottlenecks, such as aviation and high-speed rail. Other tracks, such as intelligent driving, smart transportation, and new energy vehicles, are rising. Of course, there is another track in the consumer circuit that has lasted for thousands of years, which is medicine, or biopharmaceuticals.
If pharmaceutical companies may rise and fall, the entire pharmaceutical industry is constantly improving and developing. Humanity's pursuit of health has never stopped since ancient times, and the advancement of science and technology has indeed made this industry continue to progress. From the perspective of the industry itself, whether it is 20 years, 200 years, or 2000, this industry is a main battlefield and is worthy of investment.
Apart from consumption, there is another industry worthy of attention that is also enduring and is the service industry.
The service industry is very broad. The catering mentioned earlier can also be classified as a service industry, medical care can also be classified as a service industry, sending and receiving express delivery is also a service industry, and going out to take a taxi is also a service industry. Even going to the bank to deposit money can be classified as a financial services industry. E-commerce is actually the most standard service industry, an intermediary information platform spawned by it.
Those so-called O2O model platforms are also in the service industry, or the entire Internet is a service industry. As long as the demand is there, the service is there, and the industry will exist. The stronger the demand, the faster the industry will develop, and the platform companies will naturally grow stronger. As long as people's communication needs still exist, network service providers for making phone calls and mobile Internet apps on mobile phones will exist for a long time. When we choose an industry track, we keep one thing in mind, which is to put people first and find and confirm demand. As long as the demand is strong, it is a good industry track.
What kind of companies are worthy of long-term fixed investment?
It can be summed up in four words: core barriers. The industry is a race track and a hot spot, but the 20-year time span cycle will not always rise. Therefore, when the storm passes, companies that can survive are good stocks worthy of long-term investment. As an ordinary retail investor, how can we judge whether a company has core competitiveness through some clues?
We mainly look at several dimensions.
1. Core technology patents.
The vast majority of companies, as long as they are in the manufacturing industry, will basically have technology patents. The more technology patents a company has, the stronger its core competitiveness will be. To put it bluntly, technology patents are continuously researched by R&D personnel and require a large amount of capital investment in R&D.
Core technology is one of the core barriers of an enterprise. The capital value of these technology patents is the confidence and barrier of a company.
2. Core sales channels.
Any good company, except Internet companies, needs good sales channels, and the more dispersed the channels, the higher the core barriers. Establishing a sales network is not that easy, especially a diversified sales network. The more sales networks there are, the stronger the company's ability to resist risks.
Moreover, the sales network also reflects the market recognition of a company's products from one side. Therefore, the more downstream shippers a company has, the higher its core barriers will be.
3. Product acceptance.
The product acceptance referred to here is the market’s recognition of the company’s products. If it is aimed at mass consumption, it is the public's acceptance of the product. This is very important. Because the public's acceptance will not change in the short term, it is also a recognition of the company's products. Only with market recognition can an enterprise achieve long-term development.
4. Brand recognition.
Brand recognition is also the core barrier. This is not just market recognition, but more of a brand advantage. A piece of clothing that is also recognized by the market is very comfortable to wear and of good quality. The higher the brand value, the greater the market share. Brand barriers require time and capital to slowly penetrate. For the same thing, the value of the brand is obvious.
When you spend the same money, you will definitely give priority to well-known brands. This is the value of the brand and one of the core competitiveness of the company's long-term development.