Chapter 1 graham: the logic of the stock market is very poor, with many timid shareholders running around, buying it as stock prices rise, and throwing it away as if stock prices had fallen without brains. In other words, the stock market is not a heavyweight, allowing the value of each security to be accurately and fairly recorded according to its particular quality. On the contrary, it should be seen as a voting computer where countless independent shareholders make their own choices, which are determined partly by their analysis and partly by their perception at the time. Chapter 1 1 1 2 british economist walter baghot: there's a lot of writing about financial panic and fanaticism, but there must be certainty: at a certain time, many stupid people have a lot of stupid money. Some economists have developed a way to avoid blind speculation: no one who cannot prove to the chancellor of justice that he knows how to deal with £100 is allowed to own £100. In the gap between the financial panic, these people are particularly rich in money (the blind capital of the country) and full of desire: it wanted someone to swallow it, and there was a surplus; it wanted to find the man, and there was speculation; it was swallowed, and there was panic. 2. The more absurd market behaviour becomes, the greater the opportunities for business-oriented investors; smart investors profit from other people’s stupidity, not fall into it. How? Stock prices are bought when statistically and historically cheap, and when they are fairly high. “let others pursue speculative profits! The use of our methods may not allow you to earn more wealth, but you can have good profits without causing great losses”. Chapter 1 of the investment sciences chapter 14. V. Risk management – value investment places the bet on the possibility that the market will eventually discover and correct its mistakes. However, the risk that the market may persist in this error for a long period of time, or that other surprises may suddenly become involved, is an unavoidable risk for any equity investment. In sum, the future of companies and stock markets is fraught with variables, and no one can predict their changes successfully, so investors should manage risk and preserve capital. 1. Diversification of investments. Investors should always invest at least 25 per cent on government bonds and equities, the remaining 50 per cent of which can be distributed between bonds and equities, depending on their price changes: selling stocks to buy bonds when stock prices are high, selling bonds to buy cheap stocks when stock prices are low. Investors should leave the stock market when the stock market index yields less than quality bonds. • stock profits of 500 per cent must be sold, or if they do not reach 50 per cent in two years, even if they are lost. 2 holding at least 30 different stocks. 2. Use of arbitrage and hedging methods in securities transactions. 3. Careful use of financial leverage to avoid situations where stocks are forced to sell. 4. Limit investment to a few corporate shares that are understandable and almost certain to appreciate. Chapter 1 of the investment law
