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the shanghai composite index is approaching 2,700 points, trading volume is declining again, and pessimism is approaching its peak.

some investors said that investing in a-shares is particularly difficult, for example, the existence of factors such as short bull and long bear, policy interference, etc., exacerbates the difficulty of investment. but as zhang yao, the value investment tycoon who made "2000 times in 20 years", once said: "investment is difficult everywhere, not just in china, most people can't invest well. the past few decades have been a period of rapid economic development in china, and it has been a golden period for making money in the securities market. to say that investing in china is difficult is to not truly understand investment and corporate development."

if we look at it from a cross-sectional perspective, the a-share market as a whole is a positive return market that outperforms inflation: from september 2005 to september 2024, there were 1,200 companies that have been listed for more than 20 years. if these companies were regarded as an investment portfolio, then the cumulative dividends of this portfolio over the past 20 years would be 5.8 trillion yuan. the current total market value of these companies is 22.2 trillion yuan, while 20 years ago, the total market value of these companies was only 3.2 trillion yuan. however, the cumulative amount of continued investment from additional issuances over the past 20 years is 6.9 trillion yuan.

it can be roughly calculated that in the past 20 years, this combination has brought investors a cumulative return of 5.6 times, with an annualized compound return rate of about 10%. considering that the current valuation is at a historical bottom, the actual return rate of a shares in the past 20 years is better than the apparent statistical data.

at the same time, excellent listed companies have brought rich returns to long-term investors. among these 1,200 companies, about 20% have not raised funds since their initial listing, and they rely entirely on endogenous growth. if these companies are regarded as an investment portfolio, the cumulative dividends of these companies in the past 20 years are 1.27 trillion yuan, and the current total market value is 5 trillion yuan, while it only cost 644.2 billion yuan to buy this portfolio 20 years ago. this means that the top 20% of excellent companies have brought investors 8.7 times the return in the past 20 years, and the annualized compound rate of return in 20 years is 12%.

among the companies with endogenous growth, china merchants bank, kweichow moutai and gree electric appliances alone have distributed dividends of 746 billion yuan in the past 20 years, accounting for 23% of the total market value of a-shares in september 2005.

so, what exactly causes the discrepancy between investors’ general feelings and market statistics? as buffett often says, the capital market is a place where misconceptions can easily breed everywhere. inappropriate entry and exit points, chasing hot stocks in hot industries, lack of long-term psychological and financial preparation, lack of ability to evaluate listed companies, lack of discipline to strictly abide by the circle of competence, etc., lead to the discrepancy between the a-share market returns and investors’ feelings.

these three companies have distributed 746 billion yuan in dividends in 20 years

from an industrial perspective, the past 20 years have been a golden period for the development of china's economy and listed companies, and the profitability of outstanding a-share listed companies has not been bad.

over the past 20 years, although some companies have shrunk or even delisted, more companies have grown stronger. this is what buffett said, "flowers will bloom and weeds will wither." the impact of failed companies is getting smaller and smaller, while the proportion of excellent companies is getting larger and larger.

in 2004, the net profit attributable to the parent companies of all a-share listed companies was 153.8 billion yuan. by 2023, the net profit attributable to the parent companies of these companies that have been listed for more than 20 years will be 1311.4 billion yuan, a 7.5-fold increase in net profit and an annualized growth rate of 11% over 20 years.

however, due to the continuous investment of funds raised from private placements, the annualized profit growth rate of these companies is actually relatively discounted.

some excellent listed companies even provide returns that are not inferior to the best listed companies in buffett's investment portfolio, but it is very rare to find people who can treat investment with the right attitude like buffett.

the market value of kweichow moutai was 23.5 billion yuan in september 2005, and the company has paid out a total of 271 billion yuan in dividends over the past 20 years. this means that if a very far-sighted investor bought kweichow moutai in september 2005 and held on to it, the dividends he received from kweichow moutai would be 11.53 times the original purchase cost.

"buying stocks is buying companies", here is the concrete answer. dividend income comes from the profits generated by the listed company itself, not from the game of buying high and selling low, and has nothing to do with market fluctuations.

in 2023, kweichow moutai's net profit attributable to shareholders of the parent company was 74.7 billion yuan, while in 2004, the company's net profit attributable to shareholders of the parent company was only 800 million yuan. in the past 20 years, kweichow moutai's net profit has increased by more than 90 times, and kweichow moutai's stock price has also increased by nearly 100 times in the past 20 years.

compared with the famous kweichow moutai, weixing is just a traditional enterprise that produces zippers and other clothing accessories. its main business has not changed in 20 years. weixing's market value in september 2005 was 500 million yuan. in the past 20 years, the company has paid a total of 4 billion yuan in dividends. in the past 20 years, it has continuously invested a total of 1.8 billion yuan in additional issuances. the current market value of the company is 14.3 billion yuan. roughly speaking, the company has brought 30 times the return to all investors in the past 20 years.

the real dividend income comes entirely from the growing profitability of listed companies. in 2023, weixing co., ltd.'s net profit attributable to shareholders of the parent company was 558 million yuan. in 2004, the company's net profit attributable to shareholders of the parent company was only 25 million yuan. in 20 years, the net profit has increased 21 times.

similarly, fuyao glass is a traditional manufacturing company that mainly produces automotive glass. the market value of fuyao glass in september 2005 was 6.6 billion yuan. in the past 20 years, the company has paid a total dividend of 28.2 billion yuan, and has not issued additional shares to raise funds in 20 years. this means that the dividend income received by an investor who has held the shares for 20 years is 4.3 times the original purchase cost. if capital gains are included, the return on the investor's investment in fuyao glass for 20 years is 22 times.

the earnings of listed companies themselves are the basis for investors to make profits, and they have little to do with market fluctuations. fuyao glass's net profit attributable to its parent company was 400 million yuan in 2004 and 5.6 billion yuan in 2023. the company's net profit has increased 13 times in the past 20 years.

statistics show that nearly 30 top companies have not raised funds from the capital market in the past 20 years, but have relied on endogenous growth to provide investors with rich returns. the cumulative dividends they have distributed in the past 20 years are more than twice their market value 20 years ago. among them, gree electric's cumulative dividends in the past 20 years are 21 times its market value 20 years ago; kweichow moutai's cumulative dividends in the past 20 years are 11.53 times its market value 20 years ago; shanxi fenjiu, china merchants bank, tbea, daan gene and other companies' cumulative dividends in the past 20 years are more than 4 times their market value 20 years ago.

just three companies, namely china merchants bank, kweichow moutai and gree electric appliances, have distributed dividends of 746 billion yuan to investors in the past 20 years.

the capital market is a place where misconceptions breed

over the past 20 years, the shanghai composite index has changed from 1,100 points to today's 2,700 points, and has experienced two rounds of bull and bear markets. the bull market generally lasts for more than a year, while the bear market can last for three to four years or even longer. the investment process is full of twists and turns. if investors do not inject immunity to market fluctuations in advance, it is easy for them to rush in when they should not be optimistic, and to sell out desperately when they should not be pessimistic.

in the same environment, zhang yao was able to create a return of "2000 times in 20 years" because he not only had the right concept of capital market fluctuations, being fearful when others were greedy and greedy when others were fearful, but also he was able to correctly assess his own circle of competence and the value of listed companies, and strictly abide by the discipline of value investing. he said: "as for the core issue of investment, different types of investors have different understandings. for value investing, it is to truly understand the key points and principles that buffett often emphasizes and put them into practice."

the capital market is a place where misconceptions can easily breed. among them, the biggest misconception is to buy stocks that everyone wants to buy and sell stocks that everyone wants to sell. when the technical side is strong, the stock price hits a new high, and the trading volume continues to increase, investors buy stocks and sell stocks when the stock price falls in despair and pessimism.

this concept of ignoring intrinsic value has led investors to chase hot stocks in hot industries, or to buy frantically at the peak of the bull market after realizing it belatedly. buying stocks that are more expensive than their reasonable value, once the bubble is unsustainable, some companies will never return to their peak, and investors will suffer permanent losses.

most investors are trend investors, not value investors. as buffett once said, "many people know benjamin graham, but what is confusing is that few people really follow his example in investing. we describe our investment strategy in detail in an easy-to-understand way in our annual report, and investors can easily follow the investment. however, investors are only interested in: what stocks should i buy today? just like graham, we are well-known, but few people follow us."

graham said, “it is strange that some investment methods are so rarely used, considering the number of professional investors in the securities market, even though they are obviously effective. our career and reputation have been built on this incredible fact.”