View rise and fall with equity thinking


Different mindset brings different result to individual wealth. The main income of the poor is salary, while the expenditure is food, rent, taxes and other daily necessities. In addition to salary, the income of the rich includes interest income from various equity, creditor's rights, real estate and other assets.

The rich attain assets while the poor and the middle class attain debts, which reflects the different mindset. Poor people tend to pay more attention to their current profits and losses, while rich people tend to value their assets in the future.

This is also the difference between cash thinking and equity thinking. Let me explain more about this?

what is the purpose of buying funds? many people may say, to make money for children's education funds, for their own pension, for future housing, etc. However, some people will say, to hold shares or stock shares of promising companies. The former is called cash thinking, and the latter is called equity thinking. Investing with equity thinking is also a core point of value investment, which is mainly reflected in the following points:

1. Focus on own shares and underweight short-term price fluctuations

With cash thinking, the market value is equal to how much money you have, and the real-time rise and fall of stock prices are directly related to your bank account.

If we think with equity mindset, the rise and fall of price are just different forms after the purchase of equity shares of a company. No matter how much it falls, the shares we hold can’t be changed.

In another perspective, high-quality assets held at low prices can bring more margin of safety for investment, so falling is a pleasant thing.

Focus on your own shares, and you won't care about the so-called floating losses and trapping.

2. Naturally forget the cost price

With equity thinking, there is no such concept like stop-loss and stop-profit. Our goal is to share the bonus brought by the growth and development of a successful company.

Our investment only focuses on two core issues: whether the internal value of the company we hold shares will become higher, and whether our shareholding in this company can be increased, that is, whether we can continue to invest.

Buffett once said that as long as the moat and business situation of the company remain unchanged, his choice is never to sell the shares. His selling principle is mainly to consider whether the investment logic has changed, whether the current price is more expensive or there is a better investment target.

3. More receptive to long-term investment

The long-term performance of high-quality companies must grow upward. After buying good equity, you don't need to deliberately consider giving up, unless you need to use money, of course. The earnings of the stock market are inherently uncertain in the future.

Sometimes with different mindset, your focus will be changed, and you won't feel so bad when you encounter a sharp fall again. during a sharp decline, investors of equity thinking need to consider: whether the assets are still high-quality assets. If not, do you need to take the opportunity to replace it, and what are the cheaper but good-performance assets.