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Evergrande Automobile's good news stimulates a surge of 86%! Can it be bought?

Published: Apr 28, 2024
Updated: Apr 28, 2024

The golden era of real estate has come to an end and will not return. It is unlikely that the real estate market will reach its previous peak levels within decades. The reasons are that urbanization in our country is nearing completion, the demographic dividend is fading, and the real estate industry will no longer rely on high leverage for development as it did in the past. Low leverage, no leverage, real estate companies will take as much land and build as many houses as they have funds, which will be the main tone of the development of the real estate industry in the future.

At present, the country's measures for old and dilapidated houses are to repair rather than rebuild. This indicates that there will be a large supply of old and old houses in the future market, and the future demand for new housing will be moderate, with a large number of old houses available for people to live in.

The annual normalized sales amount of the real estate industry in the future may only be about half of that during the golden decade of real estate. The real estate industry is likely to develop moderately in the future.

What is market speculation? Market speculation has a significant characteristic - considering only the upper limit of a matter, without considering its lower limit.

For example, Evergrande Automobile's stock price soared by 113% on May 27, mainly because a big buyer came. Evergrande Automobile said that a big investor intends to buy 29% of the company's shares, which is not a small number, indicating that this investor is quite optimistic about the future of Evergrande Automobile.

This mysterious buyer not only buys shares but also lends money to Evergrande Automobile, allowing it to continue its electric vehicle business.

As soon as this major event was announced, the speculators in the market began to take action. Once they started speculating, the stock price is prone to fluctuate in the short term. Small and medium investors, seeing these news, think that Evergrande Automobile may have a chance, so they suspend selling, and the stock price becomes easy to rise and difficult to fall.

In the final analysis, it is because people think that Evergrande Automobile may be saved this time, and it may continue to build cars in the future, so the stock price has soared. What is this? This is market speculation. People who buy Evergrande Automobile during the surge only consider these favorable news of Evergrande, without considering or rarely considering the difficulties that Evergrande Automobile will encounter in the future. For example, can the company get enough financial support? What is the company's technical strength? What will be the result of competition with other new energy vehicle companies? And so on.

If these lower limit issues were all considered, Evergrande Automobile would not have risen so much. This is the irrational performance of the market - speculation.What is investment? Investment is about considering the lower limit of a thing, not its upper limit. For example, what is the minimum value of this stock? What is the minimum profit this company can make this year? How many years can this company survive at the very least?

If we always consider the lower limit of a stock or a company in the stock market, then our risk will be much smaller, and it will be difficult for us to be deeply trapped. For instance, one year, during a bear market, the share price of Wangfujing was only a few tens of yuan. Suddenly one day, it announced that it had obtained a duty-free license, and the market rushed to grab shares, and the stock price quickly rose more than twice.

Why did the stock rise so much? Because the market is valued according to its development space upper limit. As a result, it took several years for Wangfujing's duty-free business to truly land, and only last year did a duty-free store of Wangfujing open, and the performance was not ideal. Now, Wangfujing's stock price has fallen back to a few tens of yuan.

It can be seen how unreliable it is to buy stocks based on the upper limit of the development of things. Those who were optimistic about Wangfujing's duty-free business and bought Wangfujing's stock at more than 60 yuan, if they have been holding, have now lost about 80%!

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