I always remind investors around me not to be overly obsessed with long-term investment and value investment.

Don't pursue high-quality listed companies, but look for listed companies with a high cost-performance ratio.

Many people don't understand why they should do this.

Isn't the core of investment to buy a bunch of blue-chip stocks with good performance and stable growth?

In a market with asymmetric information, in a market where information spreads slowly, that's the case.

But when the transparency of market information is getting higher and higher, the cost-performance ratio of investing in high-quality listed companies will become lower and lower.

Perhaps many people don't agree with this statement, but this is an undeniable fact.

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In recent years, why do many blue-chip stocks, although the performance is good, the stock price does not rise.

The logic behind this is actually that the investment cost-performance ratio is not high.

The essence of the stock price increase is that funds drive the stock price to rise, not valuation.If capital is unwilling to buy in, then no matter how low the valuation is, it's useless.

There is a misconception in the cognition of retail investors that there is a reasonable valuation, but in fact, this so-called reasonable valuation does not exist.

The more reasonable the valuation, the less capital there is to speculate.

For example, we believe that the reasonable valuation for a high-quality listed company is a price-to-earnings ratio of 20 times.

So here comes the problem: when the stock price is at a P/E ratio of 20 times, there is no premium space for value investment funds.

They will not choose to buy in at a P/E ratio of 20 times, because they want to make money from the valuation repair.

Buying at a P/E ratio of 15 times means there is a potential return of 30%.

But they are not very willing to buy in large amounts at a P/E ratio of 15 times, because they don't think there will be so many fools willing to take over at a P/E ratio of 20 times.

It's like a paradox, I always have to leave one step earlier than others to ensure someone will take over.

When everyone thinks this way, the stock price will never reach the expected target, that is, the reasonable valuation.Because everyone believes in the reasonable valuation area, there is no capital buying, because there is no so-called reasonable space for the rise.

So, you will see a magical phenomenon, that is, the undervalued stocks are always undervalued.

What supports their rise is not the performance, but how much space there is for speculation.

When everyone follows the so-called value investment, value investment has no meaning.

Because the price must have far exceeded the reasonable value investment range.

Do you think that in this information age, the investment sensitivity of retail investors will be better and faster than that of large capital?

The value investment that retail investors see, large capital has seen it long ago.

But what it sees is not only whether the so-called value is reasonable, but how much more reasonable space there is, enough for capital operation.

This directly leads to a result, the market's recognized high-quality listed companies, the price is impossible to be cheap.

And those high-quality listed companies with cheap prices are often ignored by capital at the moment, will be at the bottom for half a year, a year or even longer, far from the time for speculation.The funds are no longer pursuing investment value, but another type of investment model, speculative value.

In this market, there is a category of stocks that are quite unique.

The listed companies behind them are not of high quality, but their stock prices are low, the themes are good, and the potential return on investment is high, but the risk is actually controllable.

It is as if there are some listed companies with average performance, but without the risk of a sudden collapse, and their stock prices are also low, with good themes.

These listed companies will occasionally be hyped up and become the darlings of the market.

Those super big bull stocks are often unearthed from this batch of stocks by funds.

The reason for this phenomenon is that the cost-effectiveness of investing in these stocks is very high.For large capital, several elements of investment cost-effectiveness are very important.

1. Potential investment returns.

The reason why capital likes to speculate on small and medium market value junk stocks is that the prices of these stocks are relatively low, but the potential for speculation is quite large.

From 3 billion, to 10 billion, there is a space of more than 3 times.

Even speculating up to 20 billion, a 6 times space, 30 billion, a 10 times space, all are possible.

If the stock price starts at a few yuan and rises to 30 yuan, there are still many following retail investors, and the return rate is very high.

For those blue-chip stocks, looking at performance for meals, the ceiling is very obvious, and a large part of the capital is unwilling to touch.

2. Potential risk range.

Pursuing cost-effectiveness means that after high returns, there are also risks.However, smart investors understand how to control risks.

There are two ways to control risks.

The first method is to estimate the downside.

For example, for a listed company that has not suffered losses, the probability of its market value falling below 2 billion is not high.

The risk is relatively controllable, which means there is ample room for imagination, and the risk-reward ratio is quite high.

The second method is to set a stop-loss point.

This means that when the loss reaches a certain level, one should cut their position and exit the market directly, thereby reducing the corresponding losses.

This method is more direct and ensures the risk-reward ratio, offering a very cost-effective option.

3. The cost of controlling the market.

Capital concerns are not only about the profit and loss ratio but also the cost of market control.The point where capital and retail investors differ lies in controlling their total costs to avoid unexpected problems.

For example, holding 200 million and trying to speculate on a company with a market value of 5 billion is extremely difficult.

Because you cannot predict whether there are any defectors among so many major shareholders.

Clearly, you want to enter the market to make a profit, but if you are sheared by others, it will be very troublesome.

Therefore, controlling the cost of the plate is also a main point to consider.

4. The purchase price is low enough.

The core of cost-effectiveness is not how good the performance is, but how cheap the price is.

Any stock has the opportunity to rise, or a period of time.

There is no stock in the world that only falls and does not rise, most of them have been brilliant.

If you want to make money, you must know how to buy when the price is low enough.Because only being cheap is the biggest advantage in the trading market, ensuring that your costs are lower than most people.

This will be of great help in trading, especially in terms of risk resistance.

5. Having enough chips.

Funds need to speculate, and another characteristic is the need for chips.

Otherwise, when the stock price is pulled up, it becomes a match for others.

So, there are two ways that funds ultimately like.

The first is the reduction of major shareholders, selling the chips to the large funds to operate at a fixed price or even a discount.

The second is to have a cyclical bottom consolidation, slowly grinding the chips into their own hands to control the stock price.

The more chips, the greater the momentum of the funds to speculate, and the higher the control rate.

6. A perfect exit plan.The last point of focus for large capital is actually the most important one: the exit strategy.

Large capital also needs to leave a way out for the funds.

After all, in case of a "stampede" event, such as another trade war, many black swans can even kill the main force.

At this time, the main force will need a Plan B, Plan C, and Plan D.

If they cannot effectively withdraw, for the funds involved, it will really become a shareholder.

Under such a big background, large capital also does not do it, because they have never thought about long-term investment.

In their eyes, investment is about cost-effectiveness, and you must look for higher and better value.

When you truly understand what is value, and whether speculation is also a kind of value, you may be able to understand why the withdrawal of funds is so important, and also realize where the problem lies in the investment you make.