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MindMap Gallery Common Sense Investing (USA) Burton Malkiel

Common Sense Investing (USA) Burton Malkiel

"Common Sense of Investment" is a sincere work created by two Wall Street masters for ordinary investors. It aims to help investors make better investment decisions, ensure the safety of funds, and lead to investment success. The book provides the most effective basic rules for investment, returns to the essence of investment, and delivers complex investment principles to readers in a short, concise and easy-to-understand way.

Edited at 2024-11-03 21:10:39

HudsonC

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Common Sense Investing (USA) Burton Malkiel

HudsonC

Recent works View more works>>

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Outline

Chapter 5 Investment Real Estate
- 12
PlotWizard
Chapter 7 of the Consultation and Evaluation (2024) contains error-prone points (red letters)
- 11
PlotWizard
Investment system construction
- 8
PlotWizard
Stock basics
- 20
PlotWizard
cycle
- 16
PlotWizard
The most important thing about investing
- 8
PlotWizard
Jiang Hu talks about The Mind of Value
- 1
Mason·Carter
Strategies and methods for finding investors
JackTyler·881
Smart investor core mind map
MM

"Common Sense Investing" (USA) Burton Malkiel

financial management

1. Save money

Reduce expenses below income

The purpose of saving money is not to be harsh on yourself, but to give yourself more options in the future

Stay away from credit cards

Establish the concept of compound interest

Compound interest is achievable, but it requires patience

The earlier you start saving money, the better off you will be.

Avoid impulse spending

After discussing it, decide not to be alone

Don't compare

Suppose you are the only one who knows that you are buying this thing and no one else knows about it, would you still buy it?

2. Index funds

An index composed of some relatively good stocks selected by the market to represent the market, such as: S&P 500, Shanghai Composite Index, Shanghai and Shenzhen Index 300

This index fund outperforms most active funds such as stocks and bonds.

Only a liar can accurately end the market in a bear market and start in a bull market every time - Bernard Baruch

Star fund managers are only shaped by cycles, not that they have stock picking talent.

First of all, Buffett believes that the best time to never sell a stock is to never sell it. Secondly, after purchasing a large amount, he will provide the company with a lot of business advice and resources.

Buffett emphasized in his will that he would invest 90% of his inheritance in index funds without the need for a fund manager to manage them.

Buffett believes that indexes are a big trend

Let’s summarize the advantages of index funds (also known as guaranteed mediocrity)

First, investing is simple and you don’t need to evaluate thousands of active funds as extensively as investing in active funds

Secondly, index funds have lower management fees and taxes

Finally, index funds perform predictably, and you do lose money when the stock market declines, but you don't lose more than the market average.

There will always be people who can't resist the fun of investing in stocks, but remember one principle: don't use your livelihood money to speculate in stocks. It is better to buy an index fund and leave it alone. This is a more reliable approach.

3. Diversified investment

Don’t put all your eggs in one basket, no matter how stable the index fund is, there will be unexpected situations (Enron case)

Don't over-invest in the industry you are engaged in. This will cause your own industry to appear everywhere in your eyes and reduce your alertness and objective judgment.

bond

That is, the bond issuer lends you money and gives you a bond as a certificate, indicating that they owe you money and will pay it back in the future.

The most stable ones are national bonds and corporate bonds.

There is an inverse relationship between bank interest rates and bonds, with national interest rate-raising bonds falling and national interest-rate-cutting bonds coming on the market.

gold

Gold is a good safe haven

The more chaotic the world becomes, the more valuable gold becomes.

fixed investment

If the stock market is going up with great momentum, then you will definitely make more money by buying at one time.

If the stock market is low-end, or even going down, then the risk of fixed investment will be much smaller

However, according to past market rules, in any case, the income from fixed investment is much higher than the income from direct purchase.

You have to buy a fund of ¥100,000 every month. Then when the fund rises, you buy less, but when the fund falls, you buy more. It seems that the amount you buy every month is the same. But the number of fund shares you buy each month is different. The more fund shares you buy when the market falls, the more opportunities you have to make the right decision.

Fixed investment is to overcome the greed and fear in your heart. Don't use up all the bullets in your hand at once, because now is not the best time.

Leeks means that when the stock market rises sharply, many people enter the market, and when the stock market falls sharply, many people flee. In fact, it should be the other way around. You should buy when the stock market is down and sell when the stock market is rising. They tried their best to buy when the stock market was rising, and wanted to wait for another wave of gains to sell in order to obtain more profits. However, what happened was a sharp drop, and in the end they were either trapped or cut out.

portfolio adjustment method

Your investments are either stocks or bonds. There should be a ratio between stocks and bonds, such as 6:4

The stock-to-debt ratio should be adjusted every year

For example, at the beginning of the year, if you find that the technology stocks you bought last year have grown very well, and now the ratio has become 7:3, then you sell the stock and buy bonds. In other words, stocks have fallen sharply, but bonds have done well, so sell the bonds and buy stocks.

This is also about overcoming your inner greed and fear, and using such a fixed ratio to reduce your own irrational judgments. Once people see a stock growing well, they will be reluctant to sell it, so this ratio is to force you to Sell high and buy low.

4. Avoid mistakes

When choosing a fund, you need to minimize fees. Celebrity fund managers have very high fees. However, the actual situation is that there are no powerful people in the stock market. The reason why he is a star is because he is lucky, so he can choose the fund manager with the lowest fee. , because everyone is the same, even from the data point of view, in the end, the most profitable fund is the fund with the lowest fee

When you need money and need to sell stocks, should you sell stocks that made money or stocks that lost money?

In fact, we should first sell the stock that we lost money on. This will reduce the chance of our own losses.

Don’t be arrogant. No one has the ability to predict the market. The predicted market patterns you can discover and master will be invalid.

The regular pattern that you can discover will eventually be discovered and mastered by everyone, and once everyone discovers and masters it, the law will no longer exist.

The best way to respond to the direction of the market is not to look, see or listen. I just buy these stocks or funds and keep them there, waiting for changes.

Research from the Haas School of Business at the University of California, Berkeley, shows

Collecting 80,000 predictions from more than 300 experts over a 25-year period, the conclusion is that the experts’ predictions narrowly beat random results.

Ironically, the more famous the experts, the less reliable their predictions are.

The future is unpredictable

Someone asked Morgan, can you predict the future market direction?

Morgan said: "All I know is that the stock market will fluctuate, no more"

Graham (Teacher Buffett)

You two gentlemen need to figure it out.

Mr. Value

Mr. Market

And we can see from the data that every time the stock rises very crazily, a large amount of money enters the market, but when the stock is depressed, no one dares to buy it.

Stock trading, the most effective way is to take less action and don’t take action. Once you buy it, you will forget about it for 20 years before you remember it.

Everyone who buys stocks hopes that the stocks will rise. Buffett asked: In the next few decades, do you want to buy stocks or sell stocks? If you want to make stock investments and make net purchases in the next few decades, then you should not hope that he will. Fall?

KISS investment method

keep it simple sweetheart

Start saving regularly as early as possible

Reasonably save taxes and save money better

Prepare emergency funds

Be sure to buy insurance

Diversification Strategies Reduce Anxiety

Avoid credit card debt

Ignore short-term noise and Mr. Market

Learn to buy index funds

Choose mainstream products and avoid unusual items

Four good friends during volatile market times

Learn to invest

Diversified investment

portfolio adjustments

Core part indexation

China’s investment is mainly in real estate. This is a fact. There is no right or wrong. 59.1% of China’s household assets are financial assets owned by real estate, accounting for only 20.4%. Among them, cash and bank financial management are mainly used. Really liberalizing Only 3% goes to the stock market, but it will definitely increase in the future, because the country has clearly stated that housing is for living and not for speculation, so real estate cannot be the main investment area. Then your funds must have an investment outlet, and then we must build a more Standardized, more efficient stock markets. Why can many active funds in China outperform the index? The author said that if the market is complete, you cannot make money by relying on news. If the market is incomplete, then some people do internal trading, some are market makers, and some people may make money if they have news, so some people will outperform the index, but It will be even more difficult in the future because China's market will definitely become more standardized.

Investing is difficult not because of how complicated it is, but because we lack patience and persistence

Ultimately it depends on your cognitive level and ability, but the core is still luck