[Reprint] What is bottom-up stock selection?

"Bottom-up" method of stock selection is mainly from the specific listed companies to choose, as long as you find a good company, immediately buy, and hold in the medium and long term, do not pay attention to the short-term fluctuations in the market! Its advantage is that after all, we buy stocks is to buy the company, not exactly buy the trend. This type of stock selection method in our country in 2001-2005 bear market due to the selection of stocks like Suning Electric, Guizhou Maotai and so on and brilliant! It has become the stock selection method of many public and private fund managers! Everyone is familiar with and admire Mr. Buffett's stock selection method is the "bottom-up" approach! Adhere to value investment! Decades as one day! Gained a lot of returns! Bottom-up stock selection method is mainly needed to analyze the listed company's gross margin, return on net assets, price-earnings ratio, etc., and at the same time to examine the company's business model and development space. The "top-down" method of stock selection is to analyze the macro-economy, through the overall market cycle and the characteristics of the industry, to make a choice. This choice is not only a simple choice of listed companies, more importantly, is to choose to enter the position ratio, if you think the macro-economic bad, even if a good company is not to buy, adhere to the light strategy, seems to be more in line with the trend of investors' operational thinking! Take this type of stock selection method of fund managers in 2008 completely ran away from the trend, made a positive return performance! As the name suggests, "on" of course, a larger range of industries, "down" is naturally more specific enterprises, fund research will start from the fundamentals, only those who have the ability to win and prospects of the industry, the enterprise will finally enter the stock pool 'in the stock market when the tide is rising, we are see a flush, but top-down stock selection (mainly large industries) performs better because it attracts more eyeballs, and when the stock market ebbs to reveal really good companies with management capabilities (belonging to a variety of small industries), bottom-up selection makes more sense. Bottom-up stock selection also avoids the "valuation pressure problem". Investors don't even need to look for valuation pivots and China-specific valuations from the macro. As long as the investor looks for and judges the company's profitability and management level, and then decides whether or not it should be held, then the investor ends up choosing a stock that has Chinese characteristics and is in line with universal investment principles. If one chooses a large type of company, it is important to consider changes in profitability and factors such as capital expenditures and capacity additions, so that the company will gain higher profits, position and advantage in the upward cycle. And for many consumer goods companies and small types of industries, it is about choosing companies with management capabilities and competitive advantages. But bottom-up stock selection goes against our conventional wisdom, and it requires investors to be able to be patient. Because we all subconsciously have the desire to chase fads. Now the Chinese calendar is very popular in foreign countries, now in the stock market is also particularly popular, such as feng shui masters say "golden pig year" do not invest and "gold" related stocks, such as metal and financial, and the snake year is inauspicious investment year and so on. In addition, every once in a while, the market is always popular different stocks, concepts and stories, such as a Tianjin plate concept by the speculation, a moment of Olympic concept by the speculation, a moment of network stocks are sought after, a moment of military concepts occupy the front page of the media. Most investors are also willing to follow the footsteps of the popular. Chasing the popular can become a fashionable person, but chasing the popular in the stock market is difficult to achieve success, do not want to chase the popular investors, and not necessarily have to choose a certain industry, but to understand the doorway, and enduring loneliness.