Long-term Value Investment Strategy: The Path to Wealth Growth Across Cycles

1. Core Essence of the Strategy

The long-term holding strategy is based on the value investment concept of "time creating compound interest". By selecting high-quality assets and holding them for the long term (usually over 5 years), investors can share in the capital appreciation and dividend income brought about by the continuous growth of the company. This strategy is suitable for:

Investors seeking steady growth

Office workers who do not have time to monitor the market

Long-term fund management such as pensions

2. Key Implementation Elements

Stock Selection Criteria System:

√ Continuous ROE over 12% for 5 years

√ Gross profit margin higher than the industry average

√ Operating cash flow consistently positive

√ Dividend yield stable above 3%

Position Building Methodology:

Use the "pyramid" method for increasing positions

Increase allocation during market downturns

Control individual stock position to within 15%

Portfolio Construction Principles:

■ Industry Diversification (covering 3-5 unrelated industries)

■ Market Capitalization Balance (combination of large-cap and growth stocks)

■ Maintain 10-15% cash reserve

3. Dynamic Management Mechanism

Regular Review System:

Review financial metrics quarterly

Evaluate industry competitive landscape annually

Adjust the portfolio every two years

Selling Discipline:

◆ Continuous deterioration of fundamentals

◆ Severe valuation bubbles (PE > historical 90th percentile)

◆ Finding more cost-effective targets

Risk Hedging:

★ Use stock index futures to hedge systematic risks

★ Allocate to some defensive industries

★ Maintain a moderate bond position

4. Analysis of Strategy Advantages

Transaction Cost Advantages:

Significantly reduce trading frequency

Save on stamp duty and other fees

Reduce impact costs

Tax Advantages:

√ Long-term capital gains tax benefits

√ Differential taxation on dividend income

√ Avoid high tax rates from short-term trading

Compound Interest Effect:

◇ With an annualized return of 15% on 100,000 yuan, it can reach 1.63 million yuan after 20 years

◇ Compound growth from reinvested dividends

◇ The intrinsic value of the company is released over time

5. Essential Conditions for Success

Research Ability:

Understand financial statements

Analyze industry prospects

Evaluate management teams

Psychological Qualities:

× Do not operate emotionally due to market fluctuations

× Reject the temptation of short-term profits

× Maintain sufficient patience

Capital Planning:

Use idle funds that will not be touched for 3 years

Establish a phased investment plan

Reserve emergency funds

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