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Good at thinking about this problem, I said in “Why are there more people buying big bull stocks, and fewer people really making money? “The article described a concept of” deterministic position determination “:

High certainty stocks usually refer to some big white horses. Generally, they have low volatility, are not prone to instant losses, and can increase their positions. Moreover, high certainty stocks generally do not increase much, only increasing Positions can be profitable for better returns.

On the contrary, stocks with low certainty have large volatility, which does not rule out the possibility of thunder. In order to prevent permanent losses, positions must be controlled.

So the answer is: you can buy at the bottom, but the position cannot be heavy; you can also buy after the performance is confirmed, and the position can be larger.

The final profit of these two methods may be similar. If the position bought at 10 yuan is four times the position bought at 5 yuan, it will rise to 15 yuan. The profit is exactly the same, and the investment time of the former is shorter.

However, today we want to go a step further–what if we combine these two methods?

For example, 5 yuan to buy a one-fifth position, and after the performance is determined, the stock price has risen to 10 yuan, and then add four times the position, and use a high position to enjoy a flight of “strong kinetic energy, high certainty” Isn’t time better?

This is exactly the case. This is the second type of “Four Profit Models” suitable for retail investors that I have summarized—growth and increase positions: As the uncertainty disappears, the position is increased while the stock price rises. Buy as you go, so that positions always match certainty.

(Note the premise: only the stock price that rises with certainty can be bought while rising)

More importantly, if you can’t master the technique of quickly adding positions to growth stocks, you will eventually find that the proportion of certainty species in your account will become lower and lower.

This article is the third article in the “Profit Model” series. If you have not seen the first two articles, it is best to take a look first:

The first article “Four profit models of value investment, master one can benefit for life”

Second article “Reversal of Dilemma: A company that has not experienced setbacks is not worth investing”

If the “Dilemma Reversal” introduced last week is difficult and the profit is average, the focus is on understanding the method of the company. So, “grow and increase positions” is a difficult and profitable method Not only does it require you to have a thorough understanding of corporate fundamentals, but you also need to be able to grasp the time window from quantitative change to qualitative change.

2 The critical point of accelerating performance growth

The term “grow and increase positions” is likely to make old investors think that there is a method called “floating profit and increase positions” in trend investment, such as a stock that has risen out of the cost zone after buying. Adding a position instead of taking a profit, because a rising stock will attract more investors’ attention, thereby pushing up the stock price, and the market outlook will continue to rise, which is called “forming a rising trend”.

Everyone may find it strange, why do I, a value investor, talk about the concept of a trending investment?

Because trends are equally valid for value investing. However, value investors do not look at the trend of funds and stock prices, but the trend of company performance. They also experience the process of “slow change to sharp change”. The critical position of this change is often the maximum profit. starting point.

For 2In the case of C’s company, a product became popular among the first batch of consumers, generating word of mouth, and its sales volume rose slowly. At a critical point, explosive growth may occur. This process can be seen in the “Flying Wheel of Liquor” mentioned in the article “The Smartest Investment Originating from Insights on Human Nature” I wrote earlier.

The first step: at the consumer level, the guest will form consumer loyalty, and the invitee actually passively completes the process of contacting the product once, and then there is the next consumption;

Step 2: In the restaurant, because the customer has a return rate, he also went back and ordered a few more boxes from the dealer. The dealer saw that the goods were selling well and added to the manufacturer orders for the National Day Mid-Autumn Festival;

In the third step, in terms of brand, the advance payment of National Day and Mid-Autumn Festival soared, manufacturers were full of confidence, advertising costs doubled, Spring Festival promotional activities were intensified, and efforts were made to accelerate the expansion of goods to new areas, High rebates, prompting distributors to purchase more;

In the fourth step, larger-scale advertising will reach more consumers, and the “first step” will be repeated, and the “growth flywheel” will enter the next cycle.

For 2B companies, because revenue is order-driven, there are more types of trends, and the most typical are three:

The first is the acceleration of supply-side trends, which are usually formed when capacity utilization rates break through critical points.

As for heavy-asset companies with factories, fixed costs account for a large proportion. The so-called “fixed cost” is depreciation of fixed assets, rent, and staff salaries. It is characterized by the cost of not starting work.

But the newly-launched production line in the factory needs to debug, train workers, run in production processes, and improve yield. Therefore, the actual capacity utilization rate is slowly increasing. Sometimes, a technical problem may prevent the production line from increasing production for half a year. ,

So, when capacity utilization cannot cover fixed costs, the production line is at a loss; when it is near the “breakeven point”, profits will rise slowly, but once it is far from the breakeven point, profits will quickly Promotion. Asset-heavy companies that have doubled their revenues are likely to have their profits fivefold.

The representative of A-share heavy asset cyclical stocks is BOE A, a good blue-chip technology, but the stock price often soars and plummets like junk stocks. The reason is its “heavy asset performance flexibility.” Break-even point “, performance will soar exponentially (restarted recently).

The typical case of this year’s “growth and increase in stocks” is my Hudian shares summarized in the article “How did bull stocks be made, 5000 words in-depth review of the five-year trend of Hudian shares”:

The direct reason for the increase in Hudian’s performance is the recovery of new plant capacity. The subject of new plant capacity is very common, but often fails to meet the expectations of executives. Why can Hudian continue to exceed expectations?

People who are familiar with the opening rules of new factories in high-end manufacturing must have guessed that the improvement in yield must have exceeded expectations greatly, resulting in the accelerated utilization of production capacity and the new factory turning losses ahead of schedule.

Investors often believe that only those who have strong R & D capabilities and can manufacture high-end products are considered competitive. In fact, high-end manufacturing is still manufacturing, and the core lies in manufacturing processes and management capabilities. The rapid improvement of the yield of Shanghai Electric Power indicates that the market has previously underestimated its manufacturing strength.

The second is the acceleration of the demand-side trend, which is usually a new product that can quickly increase volume and open a new market.

This type is divided into “diversified customers” and “large customers.”

If downstream customers are more scattered, this is the same as 2C companies. After some customers try new products, word of mouth spreads, triggering moreCustomers buy. Huiding Technology, a breakthrough in under-screen fingerprint technology this year, is an example. Customers have rapidly expanded to high-end models of most mobile phone manufacturers in just six months.

If the downstream is a large customer, such as the Apple industry chain, usually Apple will place a small order to see the degree of supplier cooperation. If it is good, upgrade to “second supply”, and there will be a large order. If it is still affordable, then May be upgraded to “one supply”, with each upgrade, there are sales volume.

The case of this case is Lixun Precision. My current valuation in Maotai, Wuliangye and Luxun is reasonable? “” In the article analysis of its category expansion capabilities mentioned:

Only Lixun is an exception. It relies on the apple industry chain to continuously nibble the share of other manufacturers and achieve high growth.

LX started as a connector. This was the main source of revenue 16 years ago. Later, it grabbed the antenna RF and wireless charging business from others, contributing to the profit increase in 17-18 years. By 2018, LX News also snatched acoustic products from GoerTek and AAC, including AirPods, a fast-growing large single product.

The trend of demand-side orders is accelerating. If the utilization rate of the new production line superimposed on the supply side is increased rapidly, it will trigger a super market, such as the Shanghai Power Corporation in the middle of the year.

The third is the acceleration of trends caused by industrial trends. Because it is an external factor and the focus is not on research companies, I will analyze it in detail in the fourth profit model, “Industry Trends”.

Of course, being able to analyze a “zi huyin yin” does not mean that you can grasp this investment opportunity. As mentioned earlier, this model has great profits, but it is also difficult. So where is the difficulty?

3 Principles of Ability Circle

One of the difficulties in the growth and increase position model: how to obtain information that performance is about to accelerate?

Whether it is capacity utilization, order expansion, or consumer word-of-mouth spread, this critical point requires