There is no value investing in A-shares, only the cycles that keep recurring.

At the beginning of 2021, people were still talking with relish about value investing, discussing the story of Moutai, and counting the white knights in the market.

But who knew that danger had already quietly approached, and value investing would soon become a laughingstock.

By the end of 2021, when new energy stirred the last round of value investing, both CATL and BYD were considered the leading enterprises to take over China's technology.

Both listed companies had once gloriously reached a market value of a trillion yuan.

Now, they have both been cut in half, with only half of their market value left to sway in the wind and rain.

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And the one that is truly qualified to challenge Moutai's position is still another state-owned enterprise, China Mobile.

The stock market of value investing seems to have changed a version after the Spring Festival of 2021, and has gradually moved away.

When people stop talking about value investing, when foreign capital clamors that A-shares have no value, and when Da Xiao begins to persuade stock investors to return to their families, everything has changed, and value has been deeply buried underground.

The year 2023 is about to pass, and in two months, it will be the third anniversary of Moutai's peak.How are those who were trapped on the mountain top by the big white horse doing?

Many so-called big white horses have fallen by more than 50%, and some have even been cut by 70-80%.

Where has value investing gone?

Why did the stories that everyone was talking about suddenly stop being told?

Looking back from now, there were two points in the value investing that was talked about at the time that have been proven wrong.

First, the high growth of performance has been proven wrong.

There are many listed companies whose performance has been proven wrong, among which the more typical cases are listed companies such as Gold Dragon Fish and Haotian.

At that time, everyone thought that the performance of these consumer leaders would be maintained for a long time with a double-digit growth every year.

But in 2021, it was slapped in the face.

Not only did Gold Dragon Fish not grow, but the net profit in 2021 fell by -43%.The situation for Haitian is slightly better, with the growth rate plummeting to 4% in 2021, and a negative growth of -7% occurred in 2022.

Not only has the high growth in performance been proven false, but the sustainability of performance growth is also difficult to maintain.

This fully illustrates that there is no track that guarantees a harvest regardless of drought or flood.

Even Moutai, which can still maintain double-digit growth at present, will face challenges time and time again in the future and needs to prove its long-term growth potential by itself.

Secondly, the bubble valuation has been proven false.

As long as the performance can grow, no matter how high the valuation is, there is no bubble. This was the underlying logic of many funds when they were speculating on large white horses.

Looking back now, it is how ridiculous it was.

Value investment itself should have value, and undervaluation is a form of value.

When the stock has been speculated to the sky, and Moutai's price-to-earnings ratio is 70 times, talking about value investment must be a false proposition.

No matter how good the listed company is, if the price exceeds expectations, there is also a bubble.After all, it takes 70 years to earn back the current market value, and certainly no one would be willing to invest. The market value must move forward with valuation repair.

Companies that are hyped up to be very expensive, with uncertain high growth in performance, are not value investments, but rather looking for someone to take over the position.

In the three-year market, there are a bunch of companies that have been told stories, and they have found a group of people to take over the position.

Among those who take over the position, there are not many retail investors, but public mutual funds have played an important role.

Behind this, there is a group of retail investors who are even less experienced in investing, who have been led into the ditch of value investing, and have turned the boat over properly.

In fact, value investing has never disappeared, but the foundation of value investing is gone in the current market.

Many people only see the result of value investing, which is that some stocks have risen sharply in a long cycle.

But they have not understood the foundation of value investing, what it is.

The three elements of value investing are the foundation that supports the entire value investing system.Factor 1: Lower Valuation.

The foundation of value investing is actually low valuation.

What is high growth, high prosperity, in fact, cannot be completely counted in the category of value investing.

As long as it is undervalued, even if it is not high growth, it is still value investing.

A stock that is worth 10 yuan, and the current price is only 5 yuan, is it considered value investing after buying?

Of course it is.

When the current price, for various reasons, is lower than the market fair price, it is the time to have investment value.

Some people may ask, why would something worth 10 yuan be sold to you for 5 yuan? There are many reasons behind this.

For example, during a big bear market, the stock was mistakenly killed, creating a low valuation area.

For example, a sudden negative impact on the stock price in the short term, but in the long term it did not have a big impact on the company.Low valuation is the foundation of value investing. Once low valuation no longer exists, value investing also ceases to exist.

Element 2: Stable Growth.

Value investing must have stable growth.

This stable growth does not necessarily have to be 30%, 20% every year; even if it is only 5%, as long as it is stable, it is good.

There are even some companies that do not grow in the long term, as long as their performance can be stable, they also have the foundation for value investing.

A company with a market value of 10 billion, which can earn 3 billion every year without growth, would you invest?

There are definitely people who would invest, after all, the return on net assets is very high, 30% every year.

If it pays dividends every year, then the dividend rate must also be very high.

Therefore, ROE is much stronger than the so-called net profit growth rate.

Any listed company that can make money stably every year is a high-quality listed company, with the foundation for value investing.Companies with high growth certainly also possess value, but the value they represent is not the same as the value we refer to in the concept of value investing.

The value of growth is the dividend of corporate expansion, which is not entirely equivalent to the value dividend.

Stability is the foundation for judging a listed company, and it is also the foundation of value investing.

Element 3: Adequate funding.

For the logic of value investing to hold, there is another very important point, which is funding.

Many people often overlook this point, but in fact, it is crucial.

Many stocks actually have the foundation for value investing, but they just don't rise.

Suddenly one day they rise, not because the fundamentals have changed, but because there is capital entering the market.

The essence of the market is the supply and demand of funds, or rather, the supply and demand of chips.

In a market lacking liquidity, there is no need to talk about value investing, because there is no money, how can there be the possibility of exploring value?It's as if the market is devoid of people to collect gold, then the gold you've mined can only be treated as scrap copper and iron and set aside for now.

Why does value investing experience significant growth in some years, while being neglected in others?

This is not just a matter of valuation, but more so determined by market capital.

The cycle of value investing is actually quite close to that of the index.

The years 2007, 2015, and 2020 were all years of high discussion about value investing.

The reason for this phenomenon is that the results of value investing must be verified in a bull market.

In a bear market, there is no such thing as value investing; no matter how good the stock, it will fall as it should, because capital has the final say.

It is essential to understand that the market is always oscillating between investment and speculation, and any theory has its times of applicability and inapplicability.