title: [Book Sharing] Lying Down Wins, Life is Unfair: Gu Yu's Strongest Stock Investing Secrets
published: false
date: 2022-01-14 00:00:00 UTC
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canonical_url: http://www.evanlin.com/reading-stockfish/
---
Lying Down Wins, Life is Unfair: Gu Yu's Strongest Stock Investing Secrets
Author: Gu Yu
Publisher: Smart Rich
Publication Date: 2021/03/24
Language: Traditional Chinese
#### Book Recommendation Website:
- Books.com.tw: [Purchase URL](https://www.books.com.tw/exep/assp.php/kkdailin/products/0010885819?utm_source=kkdailin&utm_medium=ap-books&utm_content=recommend&utm_campaign=ap-202201)
# Preface:
This is the first book I finished reading in 2022, but I've actually been reading it halfway through for a long time. I have the same problem with books on investment and financial management, which is that it's hard to finish them all at once. Maybe if the stock market goes up a lot today, I'll want to read the relevant chapters, and if there's a correction, I'll also look at how to deal with stocks that are trapped. I bought this book because after watching related YouTube channel content, I found that the speaker was really informative, and the way he explained stocks wasn't through technical charts, but by seriously studying the fundamentals and the targets for stock investing. It's similar to my own approach, so I thought I'd buy it to read. As a result, I found that because I have an engineering background, I also analyze stocks like an "engineer," seriously studying the company's financial reports, and rationally analyzing the meaning behind each number and its future impact. If you are an engineer and want to invest long-term, I recommend you read this book.
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# Content Summary and Thoughts:
Gu Yu, a stock investing expert who left the workplace at the age of 41, believes that compared to individuals, companies are more efficient at making money. If that's the case, why not give the funds to the company and let the company make money for you? As for what kind of company can make money for you? It's best to find a company whose name is rarely heard of, but which is making a lot of money. Once this kind of company is discovered and made public, the stock price will be completely different. As long as you can find this kind of promising company and hold it for the long term, it will bring you substantial profits. As for how to do it? Don't worry, Gu Yu has extracted the essence of stock investing over the years and put it in the book, explaining it from the shallow to the deep, hoping to help everyone find a good company that can make you money non-stop.
## Chapter Outline
### Basic Training
First, analyze the rules of "stock investing" and analyze the type of each reader through four analysis diagrams. Different types.
Manage finances before managing debt, don't let debt become a major variable in investment.
- After deducting fixed expenses from your monthly salary, you can consider investing with other expenses.
- After deducting relevant applications from the year-end bonus, you need to first save a portion of it to invest in yourself. Then invest in stocks.
Here, the fees that will be incurred in the relevant entry and exit locations are also taught:
- Price difference
- Buying commission
- Selling commission
- Securities transaction tax
- Earnings or losses: That is, the price difference minus all related fees.
Although the above related knowledge is basic, it is also very important.
### Beginner's Guide
Next, this section begins to be more detailed about the relevant investment numbers, and there is a lot of basic knowledge worth learning:
- First move: Continuous ten years of cash dividend distribution
- Investors who invest in stocks and want cash flow are concerned about the generation of cash dividends.
- This condition is very important.
- Second move: It is recommended that the general stock investment target have `ROE > 8`
- ROE (Return on Equity): An indicator of money rolling money, the proportion of the overall company's return that shareholders will bring when they invest one dollar.
- `ROE = Net profit before tax / Total shareholders' equity`
- Third move: The proportion of main business revenue exceeds 80%
- Stock investors are concerned about long-term "stability" and therefore have a stable and continuous "main business revenue."
- Fourth move: Corporate operations are based on people's livelihood
- As a stock investment target, it is recommended to be a target that is not affected by market fluctuations and grows steadily.
- Related targets:
- Finance: The big rise at the beginning of 2022, finance is the last stick. Fubon Financial 2881, Mega Financial 2886.
- Telecom: Chunghwa Telecom 2412, Taiwan Mobile, Far EasTone
- People's livelihood stocks: Da Taipei Gas (9908), Demai, Da Tong Yi.
- Data exchange: Kuan-Miao 6183
To screen stock investment targets, some indicators can be used to screen stock investment targets:
- Corporate Golden Bell
- Operating cash flow > 0, free cash flow > 0
- Debt ratio < 60%
- Stock investment black horse moat:
- EPS growth rate: EPS = Net profit after tax / Number of outstanding common shares
- See through the financial report
- Company's three highs: gross profit margin, operating profit margin (>10%), net profit margin after tax
- Price-Earnings Growth Ratio (PEG) = Price-Earnings Ratio / Net Profit Compound Growth Rate
- `< 0.8` Growth momentum is underestimated
- `> 1.5` Stock price growth has already exceeded growth momentum
Many related values are mentioned in this chapter.
### Advanced Investment Studies
Build an undefeated team:
- Need to have low volatility stocks
- **Need to have high growth:** 0050 or 2330
- **Focus on stability:** Da Tong Yi and other people's livelihood stocks.
- **Protect profits:** Bond-related investment targets
High dividend yield plus low volatility ==> is a higher probability of winning stock allocation strategy
#### Dividend Myth:
- Choosing stocks with high dividends is not the point, but companies that can successfully fill the dividend.
- Being able to fill the dividend is the real thing in the bag
- High dividends may cause fluctuations in the stock price (pay attention to the dividend fill rate).
#### 4 Valuation Strategies;
- The first method: Find the bottom price that is difficult to fall below
- Gordon Zero Growth Model:
- `Reasonable valuation = Dividend / (Required rate of return - Earnings growth rate)`
- Second calculation method:
- `Reasonable valuation = Net asset value x (Return on equity / Required rate of return)`
- Second method: Dividend yield method: `Reasonable valuation = Cash dividend / Expected dividend yield`
- Third method: Price-Earnings Ratio method: `Reasonable stock price = Expected price-earnings ratio x Earnings per share (EPS)`
- For stocks with a relatively low dividend payout ratio, the price-earnings ratio method can be used to calculate the stock price. (e.g. 2383 TPC)
- Expected EPS estimation method:
- Fourth method: `Cash value per share = (Book cash - Total liabilities) / Total equity`
#### After buying, use 6 indicators to regularly review:
The father of German securities, Kostolany: "The stock price is a dog, and the financial report is the owner who leads the dog. No matter how far the dog runs, it will eventually return to the owner's side."
After buying fixed deposit stocks, you still need to have 6 indicators to regularly review.
- ROE > 10% or 12%
- Negative cases:
- 2014 Da Feng Electric fell below 8%
- 2013 HTC ROE fell to a negative value.
- Operating profit margin > 0%
- Operating cash flow > 0
- Valuation is not overvalued
- `Expensive price = Cash dividend / Lower bound of dividend yield range (3%)`
- `Cheap price = Cash dividend / Lower bound of dividend yield range (6%)`
- But if ROE continues to grow, the valuation can be adjusted accordingly.
- Can you sleep peacefully with the stock in your arms
- Try not to choose stocks with large fluctuations.
- No negative news.
- 2012 Lih Chen's bad debt crisis
Related advanced methods are all built on a lot of data.
### Undefeated Operation Techniques
- Global monetary easing, interest rates lowered, funds flow into Taiwan stocks
- Long-term continuous rising targets (any point is a stock investment opportunity)
- Maintain a cash ratio and increase positions as appropriate.
- The pain points of stock investing at high index levels.
- Common stock investment problems:
- Investing in ETFs
- Regular fixed amount to create wealth
### Investment Field Team
- Finalize the list of stock investment targets to observe
- Set the screening targets
- Database query related data
- Compare strengths and weaknesses in the same industry
### Investment Mindset Studies
- Avoid impulsive investment
- Investment decision table
- Create investment notes (refer to [Gu Yu's Non-Trading Investment](https://stocksardine.com/%E6%95%99%E5%AD%B8-%E6%8A%95%E8%B3%87%E7%AD%86%E8%A8%98-%E6%80%8E%E9%BA%BC%E5%81%9A%EF%BC%9F%EF%BC%9F/img_3100/))
- Write down the target price for stock investment first, so you won't panic when the stock price changes.
- Divide long-term investment accounts
- Three don'ts and one must:
- Don't choose popular stocks
- Don't buy at high prices
- Don't check every day
- Must be based on the company's sound financial condition.
## Thoughts:
Gu Yu, who also has an engineering background, writes stock market operation books that are like specs. There are explanations of many basic values, and there are also the mindset adjustments that we often have as beginners in the stock market. Each rule is written like an operation manual, clear and orderly. It feels very familiar to me, who has an engineering background. I feel that many places can also echo the problems I often make, such as:
- Seeing a large drop in stock investment, I always feel that I should sell first and then buy back. But the truth should be to confirm the company's fundamentals and then increase the position when the price is low.
- Seeing a large amount of profit being given back, I want to take it in my pocket first. It is often easier to encounter the situation where the stock price rises after selling. (Shipping)
- Buying popular targets affected by the economy, I can't sleep well every day (again, shipping stocks)
- I have also started writing investment notes, and I will give myself a proper reason for each buy and sell, and review my reasons.
- Through investment notes, I can catch my own conceptual blind spots, and I will also strengthen my related knowledge based on my mistakes.
- Investment notes have also been changed to mostly record why I sold (buying is mostly changed to regular fixed amount).
I highly recommend everyone to read this book, especially if you also have an engineering background. You must read this book.
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