bubble and valuation bubble
In the process of bubbles, prices continue to rise, people's minds is in constant change.As prices rise, those who thought a bubble in the economy, will be doubting her previous judgment, and began to think about whether it really is the basic economic factors driving the prices, if prices keep rising for years, so many people would think that those who see the prices as a bubble of experts may be wrong.And they will resolutely believe that really is the basic economic factors driving the prices, and these factors will always continue.- Robert?J?shearer
There are two of the stock market bubble: bubble and bubble valuations.Business estimates level is the most close to the business entity, and valuation levels more reflects the investor's emotion and cognition.The former is crazy investment and growth of the company and industry support, the latter is more driven by investor sentiment.The so-called "value investing" is usually focused on valuation levels, and more from the balance sheet and cash flow statement to company valuations, orthodox value investors seldom go to analyse and judge the operation status of the entity industry, let alone to predict, they usually think forecasting is a wonky.Valuation bubble is
relatively easy to identify, the simplest is to see PE level, if one has enough variety in this industry, many companies appear the phenomenon of high PE and can preliminary judgment in the valuation bubble.The characteristic of the foam is also famous economic history, although easy to recognize, investors is rational.Is affected by the dual nature of human greed and herding effect, such bubbles while happened many times, but doomed forever will continue to periodically.
Business bubble, by contrast, are much more hidden.I think as the trend of "investment" is actually more attention of business entity status and trends (probably also had a tendency to view think that investment is concernedstockTrend trend itself, namely technology, chart analysis genre).Cao Renchao, for example, he was obviously very well mastered decades of industry change, entity operating conditions, BaLao and Mr. Munger also pay more attention to the enterprise itself (but is not, of course, regardless of valuations to buy).I think if we can grasp the small to company, the trend of the industry, to the country, the trend of social development, so whether it is a long-term or short-term speculative investment, will obtain good results.Under this premise, the valuation is relatively minor, in the long term, enter when valuations will only a slight
influence on long-term performance.Munger said valuation is a pediatrician, probably is that there are more important than the valuation.
Many investment, including Davis, master, when it comes to the market if there is a bubble from the valuation to see morestock, few people will distinguish the two.This is because both Europe and the United States and China in the history of capital market, the two are usually associated relations, particularly for the market overall health.The management level, investors usually more optimistic, willing to give a high valuation;And vice versa.This is the origin of the double Davis, a situation which is the most powerful business valuations bubble and the bubble was at its peak at the same time, and at the same time to the other extreme of process;The opposite is the best time to stock market profits, also is what I often call at the bottom of the bear market to buy, sell a bull market peak.
Both born normally, but is not always occur together.Of science and technology in the late 1990 s dotcom bubble was mainly driven by investor sentiment.Electronic information industry in the bubble at the beginning of the start, when the bud is doomed to bring about a revolutionary change in the people's production and living.The nasdaq reached its peak in 2001,
many do have actual performance chip technology network of p/e ratio is as high as 60 times, in the development of foam to only a few such as Intel, cisco and Microsoft company really make money on the spire, but their PE is much overestimated future growth levels.This round bubble, the industrial operation and no large supply exceeds demand, though at the time it seems some advanced communication facilities construction, but it is still far can't satisfy people's needs, the construction of 3 g, 4 g, 5 g is still in full swing, many traditional value investors "is just a concept" label on the computer, broadband, mobile phones, Internet shopping has really entered people's life.But compared with the rapidly changing capital market, the enterprise the performance came too late really.
Especially in high-end liquor is likely to be another operation examples of bubbles.Even the most heated debate in 2012, most of the high-end liquor PE in more than a dozen times, and no obvious valuation bubble.But the liquor of low PE is built on the basis of the high profit growth, maotai, for example, a 73% growth rate in 2011 is second only to the level of 2007 in the past decade, 51% of the growth in 2012 was ranked fourth after 2003.Such rapid growth situation, even if the share price rose dramatically can also lead to lower PE.Similar, 2005 ~ 2007,
engineering machinery, cement, steel, shipbuilding are significant bubble, even though many of themstockAt the time of PE level is not high.And the pharmaceutical industry, the current bubble is not obvious, but the valuation bubble has emerged.
Onceproduced,butnot destined soon burst bubble.stockOverall market valuation bubble is easy to rapid collapse in the form of a burst of, this is determined by the investor sentiment, but for individual industries and individual companies, could use for a long time the growth to shore up its bubble, suning appliance, such as history of the past decade have been not low valuations, but still be big winners, there is a actual business performance support, because it can the higher profits next year to fill this year's high PE, which is the charm of growth stocks.But investors question is easy to take a small amount of success associated with most other enterprise, actually this kind of successful enterprise is far less than people imagine.