What is the essence of long term investing? What is long term investment?

Long-term investment refers to the outbound investment of enterprises that are not ready to be liquidated at any time and have been held for more than 1 year. The reason why long-term investment is different from short-term investment is not only the length of the investment period, but also the difference in investment purpose. An important difference from short-term investments is that the purpose of long-term investments is to hold rather than to **.

Classification: Long-term investments are divided into long-term ** investments, long-term bond investments, and other long-term investments according to their nature.

Long-term** investments are the purchase and holding of common and preferred shares of other companies. When acquired in cash, at the denominated cost at the time of acquisition (including purchase price, commission, taxes, etc.); When acquired in a non-cash transaction, it is valued at the fair market value of the traded item or the acquisition**.

Long-term debt investment refers to the purchase of bonds and other debt investments that cannot be realized or are not ready to be realized at any time within one year (excluding one year). Characteristics of bond investment: 1. Not only can you invest the principal, but you can also get interest income on schedule; 2. The income has nothing to do with the operating conditions of the funded enterprise; 3. The investment enterprise has no right to participate in the operation and management of the enterprise.

Bond investment is less risky, the economic benefits obtained are relatively small, and at the same time, there is generally no liability.

Long-term investment refers to the outbound investment of enterprises that are not ready to be cashed out at any time and have been held for more than 1 year. The reason why long-term investment is different from short-term investment is not only the length of the investment period, but also the difference in investment purpose. The purpose of long-term investment is to hold, not to **.

Depending on the purpose of their investment, long-term investments can be divided into the following three categories: investments that are needed to accumulate a lump sum of money for a specific purpose; Investments to participate in the business decisions of other companies; Investments to prepare for future expansion of operations.

It can be seen that long-term investment refers to the act of investing assets in projects that are not directly used by the enterprise for the purpose of obtaining investment rights and benefits. It includes three forms of long-term bond investment, long-term ** investment, and other investments.

Long-term** investments are the purchase and holding of common and preferred shares. When acquired in cash, the valuation cost (including purchases**, commissions, taxes, etc.) at the time of acquisition; When acquired in a non-cash transaction, it is valued at the fair market value of the transaction item or purchased**. Long-term bond investment refers to the purchase of bonds or other debt investments by the company that cannot be realized or are not ready to be realized at any time within one year (excluding one year).

The essence of investment is nothing more than the hope that a sum of money paid today can recover more money in the future, buy something for 1 yuan with 5 cents, or "plant a grain of millet in the spring and harvest 10,000 seeds in the autumn". Investing is essentially about buying something that is undervalued, buying something that can grow beyond everyone's expectations in the future.

Extended information: When we look at the essence of investment, we should think from three dimensions.

01 The dimension of the industry.

First, look at the business model of the industry. I often say that buying a house to see the industry, just like buying a house to see the community, you can decorate your house, but there is no way to change the environment of the community, whether it is a school district house, the atrium of the community, etc., these factors you can't change.

Second, look at the competitive landscape of the industry. We often say that the pattern determines the outcome, and the two typical companies are Midea and Gree. Air conditioning is not a very outstanding industry, but since the first war in 2005, a pattern has been formed in which Gree and Midea have a great advantage in market share.

Third, look at the space of the industry. China has followed the path of the United States in the past 100 years in the past 15 years, and can use up the amount of cement that the United States used for a century in three years. In this case, there must be some industries in China that have limited room for growth, and may even be sunset industries.

In terms of industry selection, we must avoid these sunset industries, and at the same time, we must also avoid industries that are "competing for the stream" at the beginning.

Fourth, look at the threshold of the industry. China is a very competitive country, and in industries with a slightly higher rate of return on capital and a slightly higher net profit rate, there will be 100 people who "copycat and individual plagiarism". So the threshold is very important, either the resource is exclusive, or there is a license restriction, or there is a technical advantage, or there is a brand advantage.

02 The dimensions of the company.

We're looking for companies with the best categories. Take a look at the company's internal management mechanism and take a look at the positioning of the product.

03 The dimension of management.

There are two aspects to look at management: one is to look at his ability, and the other is to look at his integrity. There are two aspects to competence.

The first is to see whether the strategy is clear and focused. Many companies will transform into other industries, and we have never touched this kind of random transformation company. The old industry can't do well, and the transformation to a new industry can do a good job.

Over the past two years, there has been largely little success among companies that have transitioned.

The second is tactical execution. For small and medium-sized companies, the key depends on the personal ability and charm of the boss. We often survey middle-level cadres to see if they worship their chairman; For large companies, the key performance indicators (KPIs) of mid-level cadres will be looked at.