Several ways of thinking about value investing that traders must know!! 1、 Investing is doing business Buffett said that buying stocks is buying companies. I want to say that investing is essentially doing business, buying stocks is partnering with major shareholders to do business. Choose what to do, when to do it, and with whom to do it. There is not much difference in making money between buying stocks and opening a restaurant. The purpose of investment is to make money through dividends from the company's profits, but coincidentally, stocks have good liquidity and we can also make some profit from the valuation. 2、 Weak thinking We must strive to understand enough, but we are always not understanding enough. We have always been the weak in the market. How can the weak protect themselves? 1) Choosing a company with a good business model can reduce a lot of operational risks and minimize risks; 2) To ensure that the valuation is sufficiently low, there should be a safety margin, and the price in the valuation takes into account various risks; 3) Although we are fundamental investors, we also need to look at the candlestick and see what the market is thinking, whether there is anything I haven't seen or don't value enough. We need to believe in ourselves 80% and doubt ourselves 20%. 3、 Winning rate and odds The fundamental winning rate comes from the business model and competitive landscape, while the fundamental odds come from the growth potential. The low valuation determines the winning rate and odds in terms of price. The most perfect opportunity is certainly something with a good business model, large growth potential, and low valuation. Of course, such high win rate and high odds opportunities are difficult to encounter. Most of the time, some compromises need to be made. 4、 Sunken costs and opportunity costs Investment focuses on future opportunities and has nothing to do with the past. How much money was bought, how much the stock went up and down, how much was lost and how much was earned, all have nothing to do with whether to buy or hold it. What affects investment decisions are the potential opportunities, risks, and odds of winning in the future. Sunken costs do not participate in investment decisions, opportunity costs are the core element of decision-making. 5、 Zero thinking I have always had a zeroing mindset. If a certain position is zeroed, how much impact it will have on me, and how much money I am willing to lose to bet on such an opportunity, it will naturally form a very concrete feeling about the size of the position. So when faced with opportunities with different win rates and odds, some of them I am willing to bet with 1% of my net worth, some I am willing to bet with 10%, and especially huge opportunities I am willing to bet with up to 30% of my net worth. 6、 Understand enough how to define Duan Yongping's standard for understanding is to understand its free cash flow for the next 10 years. My standard for understanding is to have a micro level perception of its core competitiveness and growth potential, and to be able to perceive changes as soon as they occur. If the spring river warms the ducks, being a duck is enough to understand. Encouragement together!