Investment Perspective Series (01): Purchase price is extremely important—indeed, it largely determines investment returns!

On Saturday, March 1, 2025 (market closed), I screened and selected 10 stocks using the 'Dividend Three-Factor' strategy, planning to allocate approximately RMB 100,000 evenly across them to establish a live trading portfolio B. Simultaneously, I set up a parallel paper-trading portfolio named 'Little Streetlight' on Xueqiu (Snowball) for comparative analysis. There was one key difference: on March 1, the 'Little Streetlight' paper-trading portfolio was fully established in one go (i.e., all 10 stocks were purchased at market prices on the first trading day, March 3), whereas Portfolio B—the 'Dividend Three-Factor' live portfolio—was built gradually, stock by stock, only when each reached its pre-defined target purchase price. Here is the cost basis detail for 'Little Streetlight': Here is the cost basis detail for 'Dividend Three-Factor' Portfolio B: For example, take 'Haixing Co., Ltd.': 'Little Streetlight' bought at 14.49, while 'Dividend Three-Factor' Portfolio B bought at 13.11. That small difference alone has caused 'Little Streetlight' to underperform Portfolio B significantly over nearly three months. Having shared this case, let’s now analyze the underlying logic and reasons. From a value-investing perspective, a stock’s price fluctuates around its intrinsic value and tends toward mean reversion. If you buy above, at, or below the intrinsic value line, naturally, purchasing below that line gives you the highest probability of superior long-term returns. Of course, in the schematic above, the intrinsic value line is drawn as a horizontal line—ignoring the fact that a company’s intrinsic value may grow over time. Yet even if a company’s value is steadily increasing, an excessively high purchase price means you’ll need many years of value growth just to offset the initial overpayment—thereby dragging down your long-term return. This is precisely why investing legends like Warren Buffett and Peter Lynch remain skeptical about hot sectors or popular stocks. High-growth industries, trending sectors, and widely followed stocks are so heavily pursued that they almost perpetually trade at elevated valuations. Ordinary investors rarely get the chance to buy at reasonable—or even low—prices. Take Kweichow Moutai, Haitian Flavoring & Food, CATL, or Pien Tze Huang, for instance: by the time these stocks entered mainstream investor awareness, their valuations were already at dozens or even hundreds of times earnings. I’ve held Haitian’s stock for nearly six years, waiting patiently for a price near RMB 12—but it remains far off. I doubt I’ll ever see that price. A good purchase price, in essence, embodies the concept of a 'margin of safety.' If a stock’s intrinsic value is RMB 1, buying it at RMB 0.5 provides a cushion—even if our estimate of intrinsic value is imperfect. Suppose we estimate intrinsic value at RMB 1, but from God’s-eye view it’s actually only RMB 0.8; even then, buying at RMB 0.5 still yields profit over the long term. And if, by luck, the true intrinsic value turns out to be RMB 1.2, long-term returns become even higher.

Which stocks are worth buying in the second half of 2025?

Note: All views expressed herein reflect personal opinions only and do not constitute investment advice! What qualifies as a 'stock worth buying'? It’s one with strong potential to multiply manyfold in value. Examples include Kweichow Moutai over two decades ago—or CRRC back in 2014. A truly promising stock must have robust, tangible growth drivers, be trading near its historical bottom, and offer a safe, low-risk opportunity to accumulate shares at bargain levels. Currently, I am most bullish on the following 10 stocks: 1. 605196 — Huatong Cable China’s sole manufacturer of specialized deep-sea cables rated for depths of 10,000 meters. Supplied core cable systems for the manned submersibles Jiaolong and Striver. Its technology leads global peers Nexans and Prysmian by an entire generation. Nexans’ market cap stands at €8 billion; as for 603758—I truly have no idea what a 'reasonable' market cap would be. Recall how Zhongtian Technology surged after China’s breakthrough in deep-sea exploration exceeding 10,000 meters. 2. 002812 — Enjie Co., Ltd. Global leader in new-energy battery separators. Holds a dominant 60% share of the global wet-process separator market, supplying core materials to CATL, BYD, and LG Energy Solution. Its technology leads Asahi Kasei and Toray by at least five years. Asahi Kasei’s market cap is USD 20 billion; for 002812—I truly have no idea what a 'reasonable' market cap would be. Recall how CATL soared following China’s rise in the lithium-ion battery industry. 3. 002407 — Do-Fluoride Chemicals Leading Chinese fluorine chemical enterprise. Masters the world’s most advanced production technology for electronic-grade hydrofluoric acid, achieving purity levels at the ppt (parts-per-trillion) grade—supplying critical materials to TSMC and SMIC. Merck’s market cap is €200 billion; for 002407—I truly have no idea what a 'reasonable' market cap would be. Recall how Jiangfeng Electronics surged after China broke through foreign restrictions on semiconductor materials. 4. 002955 — Honghe Technology Global leader in intelligent interactive display devices. Tops global sales of smart education displays and delivers intelligent education solutions to over 100 countries. Its technology leads Seewo and Promethean by a full generation. Visionox’s market cap is RMB 80 billion; for 002955—I truly have no idea what a 'reasonable' market cap would be. Recall how Visionox surged amid China’s nationwide rollout of education informatization. 5. 002202 — Goldwind Science & Technology China’s undisputed leader in wind turbine manufacturing. Holds the world’s largest market share in wind power and boasts the globally most advanced 16MW offshore wind turbine. Its technology leads Vestas and Siemens Gamesa by a full generation. Vestas’ market cap is DKK 300 billion; for 002202—I truly have no idea what a 'reasonable' market cap would be. Recall how Mingyang Smart Energy surged following China’s rapid expansion in the wind power industry.

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Community Trust & Investment Co. acquired 53,097 shares of Linde PLC valued at approximately $25.2 million. The industrial gas giant reported strong quarterly earnings, surpassing estimates with $9.29 billion in revenue.

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