Investing in Top-Five Way


李 剑

Investing in Top-Five Way

------On Selecting Stocks from the Industry Point of View

             1.Exclusive consumption (top brands);
2.Fast-moving consumption (repeated demand);
3.Mass consumption (broad market);
4.Luxury consumption (high price);
5. Addicted to consumption (loyal customer base).
In order to view the long-term benefits in different industries, I did a classification that was based on 288 category by <Guide for Industry Classification of Listed Companies>,published by CSRC April,2001.And the two months’ job has summed up about 4000 listed companies from A stock and HK stock market, which include those listed in 1990.The result re-verified the rule: there is no regular pattern in short-term transaction, or maybe distinguished in market value; but the long-term investment does make a difference in different industries.
“The key is selection! You made a point on stock selection in product (unique, demand, fast-moving, growth in price& production), why not figure something out like industrial conclusion?” asked one of my friends, that's why I did this tough job. I can’t do it hastily but a lot of work, just like Siegl, author of <The Future for Investors>.
Well, there are other reasons for myself. I highly respected and committed practice the philosophy and methods in value investing, but there is still misgiving in my mind about the 8 years’ portfolio: mainly Moutai, Changyu, Yanghe, Yunnan Baiyao, Dong-E E-jiao, Tong Ren Tang Technologies, Shuanghui Development, First Food, Mengniu, Li Ning, Nike, Aier Ophthalmology, CNPC, China Merchants Bank, SPD Bank, HKEx as well as China Life,is there any significant omission when I pay not a single glance to so many stocks? Did I make the best portfolio when my selection was so concentrated in a few industries? Further more, why are some of them showing far from what we expected?
I have collected a lot of data during the further research and gained many inspirations. So let’s just generally share what I sensed because I'm not able to design so many tables. Hope it helpful to those who have invested for years.
Nov.12th,2010  Shanghai
Li Jian

Words translated by CCJK


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