Investment essay (four):

        The periodic, on the choice of the roller coaster

                             Crash - on property and banking stocks

                                Li Jian

   Industry is fortune.

   The periodic, on the choice of the roller coaster.

   In a cyclical industry, it is difficult to growth rate to the stock pricing with price earnings ratio or. In this industry, the price earnings ratio is a good liar. When the price earnings ratio is low attractive, is often the starting point for the industry by Sheng Zhuanshuai; when the P / E ratio of unacceptably high, and is often the industry by decline turn flourishing inflection point.

   In this industry, the level of investor is the policy level.

   It is too difficult to accurately grasp its highs and lows. In a more sober after long dream. However, the industry has been adjusted in the middle. You buy or sell?

   On the way, if you operate according to the price earnings ratio, will fall into the financial and real estate stocks dilemma: lower more inviting, but buy more and more fall.

   Unfortunately, many people and market to work. For example: "price earnings ratio is so low, you can fall to where go to?"

   More unfortunately: more than eighty percent of the industry is a cyclical industry. Oil coal natural gas, gold and silver copper tin iron and other mineral resources, and steel aluminum cement, sugar cotton soybean rubber Coffee and other commodities, including car real estate home appliances and other consumer durable goods, as well as the aviation, ocean transportation and shipping, shipbuilding built aircraft and other heavy industry machine....... This is a big family. More let a person of love and hate and banks, they often are doing fine borrow umbrella rainy day umbrella things: large loans in the economy or real estate boom, seem to a lot of bad debts in economic adjustment or real estate adjustment; and squeeze on the economy or real estate downturn time, let the profit slide further atrophy.

   To avoid periodic, you don't have much choice.

   The industry had no way to know in advance of overproduction. Especially after 1970, paper and gold decoupling any flooding. In addition to the traditional economists looking at material supply and demand, the power of money enough to break all the balance in the short term.

   This is a fact that fills temptation: there are a lot of high throw bargain hunting opportunity to reap huge profits in the cyclical industry. The oil in the short term by more than $20 up to $147, and within a year fell to less than $34; Yunnan copper, Shandong gold, Chinese ships is 2005 to plate or a huge super bull market in 2007, of course they are varieties decline huge bear market. Sometimes you will love this industry. People are like huge profits, are willing to predict the lows and highs, brave and fled the top hunters.                  

   To avoid periodic, people one's ability and cleverness to display.

   At this moment, close the computer meditation, fancies...... .

   Those who seek only in three high growth of fast moving consumer goods, consumer service industry and high-tech industry and non cyclical industries is good person, is a strong and happy person.

   Only those in the utilities that low growth but non periodic unusually robust industry in search of cheaper goods, is conservative and stable.

                       2010.5.7. in Shanghai