Preface This is an inspiring age, value investment will be claimed King again!

Nowadays China and the entire world are going through an unprecedented "New Age" . You see on newspapers "China Concept" , "Ten-year Big Fortune" , "Eight Decades of Bull Market" which are spoken by nearly everybody. It seems that value inveslment has been made marginal., Nevertheless value investors remain calm. Duan Yongi , and Lin Yuan , the two domestic representatives of value investment showcased us what outstanding calmness amongst mania is; while Li Ka -cheng and Buffett outrightly sold their handsomely appreciating H shares. It seems that these people are doing things against historical trends and value investment totally has nothing to do with large sum of notes. Well , let' s just listen to the warning made by Father of Stock Analysis , Benjamin Graham 50 years ago, "New Ageism thinks that no matter how high the price is, a blue chip is always is a secured target for investment一this idea is just an excuse for crazy gambling under the name of investment."

The idea of value investment is always abandoned in a bull market while gets popular again in a bear market. Inspired by the repeated teachings of great masters , we are trying to reinvigorate the consciousness of value investment among Chinese shareholders so as to avoid future regrets and pains.

Each stock disaster turns to be the beginning of the revitalization of value investment; each bear market stands for a good chance for value investment to claim gains. Chinese economy is surely going to play a big Tole on the world stage, but a too high p/e ratio in the stock market means that the risk of bubble blast is increasing. Currently the rising Chinese stock market is backed by excessive fund; as the interest rate goes up and trade achieves balance, the future of Chinese stock market is rather volatile , just like a frustrated balloon. At this moment , we need to stand by the side of Buffett and Li Ka -shing and safeguard value investment with bravery.

The web stock bubble at the tum of the new century proved the etemal charm of value investment and broke those New Age and New Economy myths. No matter the market is bull or bear, the value investor is always the final winner. He picks up the treasures discarded by the masses in the gloomy panic of a bear market , and watches cautiously in a bull market and is ready to abandon those unfavored stocks. People who act with craze in a bull market get temporary paper wealth only and never claim genuine fortunes.

This book exploits the unparallel wits of the four masters and showcases their investment experiences and magnifies these experiences in the Chinese stock market background. It aims at showcasing value investment and telling Chinese shareholders what investment is and what value investment us. Practices of 60 years have proved that the value investment school will reap long-lasting profits and the final victory.

We have Graham , Buffett, Soros and the lately Peter Lynch. The trace of the value investment chain could be found in China as well. Graham started stock analysis and told us that the aim of value investment is to seek hidden value; the knowledgeable and practical Buffett presented the idea of intangible value on the basis of hidden value thus incorporated market patent into the value investment system; although Soros is not a formal student of value investment, he gets the essence of it. In his investment history, he found out those currencies of which the price is severely far away from its value and used alchemy and made a fortune of billions; Lynch is a genius. He detected the new dimension of value investment and revitalized the teaching of Fisher and focuses on growth which actually means promoting the time dimension of value to a practical level. "Hidden value + intangible value + growth value = the latest value investment" 一-this formula is an distillation of the soul of investment by Graham and Buffett and is also the new value investment system that this book is going to present to the public.

Relying on these masters of value investmeot, we proclaim for 2008 stock market: value iovestment will be the King again!

Authors

2007-12-27