Confusion about stocks

Few people rely on earnings per share to make profits, and earnings per share are generally distributed to big customers. The dividends received by retail investors are pitiful (listed companies explain to expand reinvestment). Divide the stock price by the earnings per share, that is, the price-earnings ratio. Some stocks have a price-earnings ratio of hundreds of times. This is stock trading!

You will understand after reading the following story about stock trading.

Suppose there are two people selling baked wheat cakes in a market, and there are only two people. Let's call them baked wheat cakes A and B, and suppose their baked wheat cakes are not regulated by the price bureau. Suppose they can break even every dollar they sell (including the value of their labor). Suppose they have the same number of biscuits. -Economic models are always like this, assuming a lot is needed. Let's assume that their business is very bad and no one buys sesame cakes. So they stood bored for a long time.

A said it was boring.

B said it was boring.

After reading the story, you said: boring.

The market at this time is very inactive!

In order to make everyone not bored, A said to B, Let's play a game. B agreed.

So, the story begins. ...

A spent one yuan to buy a baked wheat cake for B, and B also spent one yuan to buy a baked wheat cake for A, and it was delivered in cash.

A will spend two yuan to buy a baked wheat cake, and B will also spend two yuan to buy a baked wheat cake and deliver it in cash.

A will spend three yuan to buy a baked wheat cake for B, and B will also spend three yuan to buy a baked wheat cake for A and deliver it in cash.

……

So in the eyes of people in the whole market (including you who read the story), the price of baked wheat cakes soared all the way, and soon it rose to 60 yuan for each baked wheat cake. But as long as the number of biscuits in A's and B's hands is the same, then no one makes money and no one loses money, but their assets are "increased" after revaluation! The "wealth" of Party A and Party B is many times higher than in the past, the value has increased a lot, and the "market value" has also increased a lot.

At this time, a passer-by C passed by an hour ago and knew that the baked wheat cake was one yuan. Now he finds out it's 60 yuan. He was very surprised.

An hour later, passerby C was even more surprised to find that the baked wheat cake was 100 yuan each.

Another hour later, passerby C found that the baked wheat cake was already 120 yuan. He bought one without hesitation, because he was an investor and a speculator. He was sure that the price of baked wheat cakes would go up, and there was room for price increase. Moreover, someone gave him a "target price" that exceeded that of 200 yuan (in the stock market, he called investors and researchers for those with target prices).

Under the demonstration effect of "making money" of sesame seed cake A and sesame seed cake B, and even under the demonstration effect of passerby C, more and more passers-by buy sesame seed cake, and more and more people participate in the operation. The price of baked wheat cake keeps rising, and everyone is happy, because it is strange that no one loses money. ...

At this time, you can imagine that whoever has fewer biscuits, that is, who has less assets, will really make money. Those who participate in the purchase, who don't have sesame cakes in their hands, will really make money! And the sellers are very sorry-because the price of baked wheat cakes is still rising rapidly. ...

Then who lost money?

The answer is: no one loses money, because many people who pay high prices for baked wheat cakes hold recognized high-quality equivalent assets-baked wheat cakes! And sesame seed cake is obviously better than cash! How much interest can cash deposit in the bank earn? What's better than a sesame seed cake with soaring prices? Even everyone agrees that the demand for baked wheat cakes in the market is in short supply. Can I buy sesame seed cake futures? Then the search warrant came. ...

Someone asked: will you never lose money by buying sesame cakes? It seems so. But the world is so strange, suddenly a man named Li Zi came to the market, and Li Zi said, sometimes you will lose money! So when will everyone lose money?

Hypothesis 1: there is a price department in the market that thinks the price of sesame cakes should be one yuan each. (supervision)

Hypothesis 2: There are many baked wheat cakes in the market, and the price is one yuan each. (same theme)

Hypothesis 3: There are many goods in the market that can play this game. (question)

Hypothesis 4: everyone suddenly finds out that this is just a sesame seed cake! (Value Discovery)

Hypothesis 5: no one wants to play the game of buying and selling each other anymore! (The truth comes out)

If one day, any hypothesis appears, then on this day, people who have baked wheat cakes will lose money! Who made that money? It is the person with the least assets-sesame seed cake!

The story of selling sesame cakes is very simple. Everyone thinks that people who buy baked wheat cakes at high prices are fools, but let's look back at people in our market. Isn't this market just some so-called asset revaluation and asset injection? The principle of asset injection under the condition of high return on net assets and high asset premium is actually the same as selling baked wheat cakes. Whoever has the least assets is the one who makes money, and whose return is high!

Therefore, as an investor, we should treat asset revaluation and asset injection rationally, and fool others not to fool ourselves, especially not to fool our own money!

Asset injection under high ROE, especially asset injection such as backdoor listing, additional issuance to purchase major shareholder assets, and additional issuance. Be sure to keep your eyes open and be careful!

Because, you are likely to be a passerby with expensive biscuits!