Investment! There are many kinds of investment tools: 1. Stock 2. Gold 3. Real estate. * * * Buffett's "5+ 12+8+2" method can be roughly summarized as five investment logics, 12 investment points, eight stock selection criteria and two investment methods. 5 investment logic 1. Because I regard myself as the operator of the enterprise, I become an excellent investor; Because I regard myself as an investor, I become an excellent business operator. 2. A good enterprise is more important than a good price. 3. Pursue a consumer monopoly enterprise all your life. 4. What ultimately determines the company's share price is the company's substantial value. There is no time to sell the best enterprises. 12 investment point 1. Take advantage of the stupidity of the market to make regular investments. 2. The buying price determines the rate of return, even for long-term investment. 3. The compound growth of profits and the avoidance of transaction costs and tax burden have benefited investors immensely. I don't care how much a company can earn in the next year, only how much it can earn in the next five to 10 years. 5. Only invest in enterprises with high certainty of future income. 6. Inflation is the biggest enemy of investors. 7. Value-oriented and growth-oriented investment concepts are interlinked; Value is the discounted value of the future cash flow of an investment; And growth is just a forecasting process to determine value. 8. The investor's financial success is directly proportional to his knowledge of the investment enterprise. 9. The "margin of safety" helps your investment in two ways: first, it buffers possible price risks; Secondly, you can get a relatively high return on equity. 10. It is foolish to own a stock and expect it to rise next week. 1 1. Even if the chairman of the Federal Reserve secretly tells me the monetary policy for the next two years, I will not change any of my actions. 12. Ignore the ups and downs of the stock market, don't worry about the changes in the economic situation, don't believe any predictions, don't accept any inside information, and only pay attention to two points: a. What stocks to buy; Buying price. Eight investment criteria 1. It must be a consumer monopoly. 2. The product is simple, easy to understand and promising. 3. Have a stable business history. 4. Operators are rational and loyal, and always put the interests of shareholders first. 5. Financial stability. 6. High operating efficiency and good returns. 7. Low capital expenditure and abundant free cash flow. 8. The price is reasonable. The two investment methods are 1. Punch the card for life, and the following figures are checked once a year: a. initial return on net assets; B. operating gross profit; C. debt level; Capital expenditure; E. cash flow. 2. When the market overestimates the price of holding stocks, short-term arbitrage can also be considered. In a sense, punching cards and holding shares for life constitute the most unique part of the Ba-style method. This is also the most attractive part. [Edit this paragraph] Buffett's financial management method: "Three Want and Three Don't" The following is the "Three Want and Three Don't" financial management method that is the essence of Buffett's investment philosophy: invest in enterprises that always put the interests of shareholders first. Buffett always favors those enterprises that are stable in operation, pay attention to integrity and have high dividend returns, so as to avoid stock price fluctuations to the maximum extent and ensure the preservation and appreciation of investment. As for those enterprises that always want to squeeze the blood and sweat of investors through rights issue and additional issuance, they are all turned away. We should invest in resource monopoly industries. Judging from Buffett's investment composition, road and bridge, coal, electricity and other resource monopoly enterprises account for a considerable share. This kind of enterprise is generally the first choice for foreign capital to enter the market for mergers and acquisitions, and its unique industry advantages can also ensure stable income. We should invest in enterprises that are easy to understand and have good prospects. Buffett believes that all stocks invested should be self-aware and have good industry prospects. Unfamiliar and unpredictable enterprises are not tempted even if they are hype. Don't be greedy. During the period of 1969, the whole Wall Street entered the stage of crazy speculation. Faced with a record stock market, Buffett calmly sold all the stocks when the stock rose to 20%. Don't follow the trend. In 2000, so-called network concept stocks appeared in stock markets all over the world, but Buffett said that he did not understand high technology and would not invest. A year later, global high-tech internet stocks collapsed. Don't speculate Buffett's mantra is: it is foolish to own a stock and expect it to rise the next morning. [Edit this paragraph] Billionaires are tempered like this: Buffett's financial habits reveal the secrets of today's financial world. Mr. Bill Gates, Chairman of Microsoft's Board of Directors, and Buffett, an investment tycoon, have long been firmly in the top two rankings. They once gave a speech at the University of Washington in Seattle. When a student of Washington University Business School asked them to talk about the way to get rich, Buffett said, "This is the power of habit." Putting eggs in one basket now people's financial awareness is getting stronger and stronger. Many people think that "don't put all your eggs in one basket", so even if a financial asset is risky, it will not be completely eliminated. But Buffett believes that investors should put all their eggs in the same basket, as suggested by Mark Twain, and then observe carefully. On the surface, Buffett seems to disagree with everyone. In fact, neither side is wrong. Because financial tips are not universally applicable. For example, Buffett is an internationally recognized "stock god" and naturally has the confidence to hold a small number of stocks in a heavy position. However, due to the limitation of their own energy and knowledge, it is difficult for ordinary investors to have professional and in-depth research on the investment target. It is wise to diversify your investment at this time. In addition, Buffett's centralized investment strategy is based on centralized research and centralized decision-making. With limited time and resources, the success rate of making more decisions is naturally lower than that of making less investment decisions, just as the only child always gets more care and grows stronger than a family with many children. Don't do business if you are not familiar with it. There is an old saying in China: "Do not do business if you are not familiar with it". Buffett has a habit of not making unfamiliar stocks, so he always only buys stocks in traditional industries and doesn't touch those high-tech stocks. At the beginning of 2000, at the peak of internet stocks, Buffett didn't buy it. At that time, everyone agreed that he was behind the times, but now looking back, the Internet bubble buried a group of crazy speculators, and Buffett once again showed his steady investment master style and became the biggest winner. This example tells us that before making any investment, we should conduct thorough research, and don't make a hasty decision before we know it thoroughly and want to understand it. For example, now everyone thinks that the deposit interest rate is too low, so we should find ways to invest. When the stock market is depressed, many people want to speculate on stamps, foreign exchange, futures, real estate investment and even "small yellow croaker". In fact, the risk of these channels is not necessarily lower than that of the stock market, and the operation difficulty is greater than that of the stock market. Therefore, it is safer to save money than to invest blindly before you are sure. Long-term investment has been counted. Buffett has invested in every stock for no less than 8 years. Buffett once said: "Short-term stock market forecast is poison, which should be placed in the safest place, away from children and investors who behave like children in the stock market." What we see is that many people chase up and down, and finally only contribute fees to brokers, but draw water with a sieve. We might as well calculate an account. According to Buffett's lower limit, a stock is held for 8 years, and the trading fee is 1.5%. If you change shares once a month in these eight years, you will spend 12 months in one year, 1.5%, 18%, and the static expenditure without compound interest will reach 144% in eight years! I don't know, but when I am startled, the devil is often in the details. Buffett recommends investors to read. Buffett's ability to make money envies people who are keen on investing. How can you get even a little of this ability? It may be helpful to spend some time reading the books recommended by Buffett to investors. Securities analysis (Graham). Graham's classic is a must-read book for professional investors. Buffett believes that every investor should read this book 10 times or more. A clever investor (Graham). Graham wrote it specially for amateur investors, and Buffett called it "the greatest investment book ever". How to choose growth stocks (by Fisher). Buffett called his investment strategy "85% Graham, 15% Fisher". He said: "With Fisher's skills, you can understand this business ... and make wise investment decisions." Buffett's letter to shareholders: a course for joint-stock companies. This book collects and sorts out the essence paragraphs in Buffett's letters to shareholders over the past 20 years. Buffett thinks this book is a first-class work to sort out his investment philosophy. Autobiography of Jack Welch (by Jack Welch) Autobiography of the first CEO in the world. Global managers regards it as "the Bible of CEO". In this book, the management secrets are revealed for the first time: how to upgrade GE from the tenth to the second in the world in just 20 years, and its market value has increased by more than 30 times, reaching 450 billion US dollars, as well as his growth years, successful experience and business philosophy. Buffett recommended this book like this: "Jack is Tiger Woods in management, and all CEOs want to emulate him. Although they can't catch up with him, they can get closer to him if they listen to him carefully. " Won (Jack Welch). Buffett said that "with Win, there is no need for other management work". Although this statement seems exaggerated, it also proves the weight of this book. Books such as "Win, CEO Tell You" and "Influence" are all narrated by combining viewpoints and examples. If you want to master the skills in a short time, you just need to copy down all the bold titles in the book, because those are the author's summaries of various cases, so a thick book contains these contents. But if you think this is the essence of this book, you are wrong. The real cases in the book and the author's life experience are the selling points of this kind of books. Anyone can master the skills, but the experience is different. If you take the time to read every example in the book, I believe you will get more valuable things. Finally, Buffett summed up his daily work like this: "My job is reading". Buffett's divine power should come from reading. [Edit this paragraph] Although Buffett's management wisdom is organized in a company system, we regard shareholders as partners. Charles Munger and I (vice chairman of Berkshire Hathaway) regard our shareholders as owners and partners, while we are managing partners. We believe that the company itself is not the ultimate owner of assets, but a channel connecting shareholders and company assets, and shareholders are the real owners of company assets. Warren Buffett and Charles Munger follow the owner-oriented principle, while we are self-reliant. Most company directors put most of their personal net assets into the company. Charlie and I can't guarantee the business results, but we promise that if you become our partner, no matter how long it takes, our wealth will change with yours. We have no intention of taking advantage of you through high salary or stock options. Our long-term economic goal: to maximize the average annual growth rate of intrinsic business value per share. We don't judge Berkshire's economic significance or performance by its size. Our measure is the growth value per share. In order to achieve the goal, the first choice is to directly control all kinds of companies that can bring stable cash flow and continue to provide higher than the market average. Our first choice is to directly control all kinds of companies that can bring stable cash flow and continue to provide higher than the market average. Secondly, we mainly buy some shares of these companies through our insurance companies. We will report the income and important data of every major investment. Due to the dual objectives of our country and the limitations of traditional accounting methods, traditional accounting methods have been difficult to reflect the real business performance. As owners and managers, Charlie and I actually turn a blind eye to these data. However, we will report to you the income of every major investment we control, as well as those data that we think are important. The book performance will not affect our business and capital allocation decisions. When the M&A cost of the target assets is similar, we would rather buy assets that are not reflected on the books but can bring in $2, rather than assets that can be reflected on the books and have an income of 1 USD. We seldom borrow money. When we borrow money, we try to fix the long-term interest rate. It is better to give up some opportunities than to borrow too much. Charlie and I would never sacrifice even one night's sleep for an extra percentage point or two. We will not let shareholders pay to satisfy the management's desire. We will not ignore the long-term economic laws and buy the whole company at artificially manipulated prices. When spending your money, we will be as cautious as spending our own money, and we will fully weigh the value you can get by diversifying your investment directly through the stock market. No matter how noble the intention is, we believe that only the result is the test standard. We constantly reflect on whether the company's retained earnings are reasonable. The test standard is retained earnings per 1 USD, which should at least create a market value of 1 USD for shareholders. So far, we have basically achieved this. Only when the gains and losses are equal can we issue common stock. This rule applies to all forms of issuance-not only mergers and acquisitions or public offerings, but also debt-to-equity swaps, stock options and convertible securities. Every stock represents a part of the company, and the company belongs to you. Whatever the price, we have no intention of selling the high-quality assets owned by Berkshire. You should know very well that this is the same as Charlie's mentality and may damage our financial performance. Even those businesses that we think are unsatisfactory, as long as they are expected to generate cash flow and we are satisfied with their management and labor relations, we will hesitate to sell them. We will honestly report the performance to you, emphasizing the events that have positive and negative impact on the valuation. Our principle is to report to you the real situation we want to know with an empathetic attitude. This is our obligation, and we will never discount it. We will only discuss securities trading within the scope permitted by law. Although our strategy is open, there are few good investment ideas, which may be acquired by competitors. Similarly, we should also pay attention to the confidentiality of products and the planning of corporate mergers and acquisitions. So we generally don't talk about our own investment ideas. We hope Berkshire's share price is reasonable, not overvalued. As far as possible, we hope that every shareholder of Berkshire will gain or lose in proportion to the rise and fall of the intrinsic value of each share of the company during the holding period. Therefore, Berkshire's share price and intrinsic value need to remain unchanged. I hope it is 1: 1. [Edit this paragraph] Buffett famously said that I became the richest man in the world because I spent less money. 1. I am a realist. I like what I am doing now and have always believed in it. As a thorough practical realist, I am only interested in reality and never have any illusions, especially about myself. If your thoughts are exhausted, you can speak eloquently! He is a genius, but he can explain one thing so simply and clearly. At least at that moment, you fully understood what he said. His parents told him that if he can't say anything nice to a person, then don't say anything. He believes in his parents' teaching. It is obvious that he has always been confident in what he thinks and is ready to defend his ideas at any time. 6. One of the reasons that attracts me to work is that it can let you live the life you want. You don't have to dress up for success. 7. For me, investment is both a sport and an entertainment. He likes to "catch rare fast-moving elephants" by looking for good prey. 8. Don't think about anything else at work. I'm not trying to jump over a seven-foot railing: I'm looking everywhere for a one-foot railing that I can jump over. (Realist) 9. Go where they want to go, not where they are now 10, if our most important route is from Beijing to Shenzhen, we don't need to get off at Nanchang and take a side trip. 1 1, please ignore if something bad happens. 12, it takes 20 years to win a good reputation, but 5 minutes is enough to destroy it. If you understand this, you will do things in different ways. 13, if we can figure out the problem fundamentally and think clearly, we will never screw things up! . 14, the habitual chain is always too light to be noticed before it breaks! 15, I have never doubted myself. I have never been discouraged. 16, I always knew I would have money. I never had a moment's doubt about it. 17, in the final analysis, I have always believed that my vision is far superior to everything. 18, in life, I am not the most popular person, but I am not the most annoying person. I don't belong to any kind of person 19. In life, you are lucky if you choose the right hero. I suggest that you all try your best to choose some heroes. 20. How to define friends: What will they hide from you? 2 1, anyone involved in complex work needs colleagues. 22. If you are a duck in a pond, the water surface rises due to heavy rain, and you begin to float in the water world. But at this time, you think you are floating, not a pond. Philosophers tell us to do what we like, and then success will follow. I don't want money. I think it's interesting to make money and watch the value increase gradually. 25. Going to the office every morning feels like going to the church to paint murals! 26. Integrity, diligence and vitality. Besides, if they don't have the first quality, the other two will destroy you. Admittedly, you should think deeply about this problem. 27. The key to life is to find out who works for whom. 28. A Harvard university student asked me who I should work for. I replied, go and work for the person you admire most. Two weeks later, I got a call from the dean of the school. He said, what did you say to the children? They all became self-employed. 29. What's in your head is called "garbage" before it's sorted out! Can you really explain to a fish what it is like to walk on land? For fish, a day on land is worth a thousand years of empty talk. 3 1, when the appropriate temperament is combined with the appropriate intellectual structure, you will get rational behavior. 32. Learn to buy 1 yuan for 40 cents. 33. How much money makes little difference to you and me. We won't change anything, except that our wives will be better off. There are always bad elements in human nature who like to complicate simple things. 35. The risk comes from not knowing what you are doing. 36. Only when the tide is low will you know who is swimming naked! 37. Successful investment is essentially the result of internal independence. Never ask the barber if he wants a haircut! With my ideas and your money, we will do well. 40. You have to use your own brain. I have always been surprised that so many people with high IQ can imitate without brains. I didn't get any good ideas in other people's conversations. 4 1, tractors come out as horses and cars come out as blacksmiths, which is boring. 42. Anything that cannot move forward forever will stagnate. 43. People are either born with this talent or always know everything. But hard-working people have such a gift. They look for and choose mispriced bets in the world. When the world offers such an opportunity, smart people will be keenly aware of this bet. When they had the chance, they made a big bet. No betting the rest of the time. It's that simple. 44. He believes that IQ is the key to making a good investment, emphasizing judgment, principle and patience. I like simple things. 46. Do your best. You should discover the advantages of your life and investment. Whenever an accidental opportunity comes, that is, you have a full grasp of this advantage, you go all out and put all your eggs in one basket. 47. Whether others agree or disagree should not be a reason for you to do right or wrong. We will not feel at ease because of the approval of the big shots or most people, nor will we be worried because of their opposition. If you find a situation that you know very well and you know all the relationships, then you should take action, whether it is normal or abnormal, and whether others agree or disagree. He especially likes reading biographies. 49. All men's misfortunes stem from the same reason, that is, they can't live in the same room safely. 50. Institutions of higher learning prefer to reward complex behaviors rather than simple ones, but simple behaviors are more effective. 5 1, time is the friend of excellent (happy) people and the enemy of mediocre (painful) people. 52. I work (live) with emotional people. When I found myself in a cave, the most important thing was to stop digging. 54. His greatest advantage is: "I am rational, many people have higher IQs, and many people work longer hours, but I can handle things rationally." You must be able to control yourself and don't let your feelings affect your thinking. 55. There are two kinds of information: information you can know and important information. And the important information you can know only accounts for a very small proportion of the whole known information! 56. It's no use running if you go the wrong way. What I have done is to set up a cooperative enterprise, and I will manage the business and put our funds together. I promise to give you a 5% return, and then I will take 50% of all the profits! 58. Choose a few stocks that can generate higher-than-average returns in the long-term tug-of-war, and then concentrate most of the funds on these stocks, regardless of the short-term ups and downs of the stock market, stick to holding shares and win steadily. You know, when you play poker, someone will have bad luck. When you look around, you can't see who will be unlucky, and that is yourself. We also have fear and greed, but we are afraid when others are greedy, and we are greedy when others are afraid. My success is not due to my high IQ. I think the most important thing is rationality. I always compare IQ and talent to the power of an engine, but the power of output, that is, the efficiency of work, depends on rationality. There is only one secret to getting rich by investing in stocks. After buying the stock, lock it in a box and wait patiently. If we have firm long-term investment expectations, then short-term price fluctuations are meaningless to us unless they can give us an opportunity to increase our holdings at a cheaper price. I think investment students only need two classes to teach properly: how to evaluate a company and how to consider market prices. You must endure the temptation to deviate from your guidelines: if you don't want to own a company for ten years, don't consider owning it for ten minutes. Investors should consider the long-term development of enterprises, not the short-term prospects of the stock market. The price ultimately depends on future earnings. In the investment process, just like in baseball, if you want the scoreboard to keep rolling, you must keep your eyes on the stadium instead of the scoreboard. The price is what you pay, and the value is what you get. Evaluating the value of an enterprise is partly art and partly science. Understanding the basic composition of accounting statements is a way of self-defense: when managers want to explain the actual situation of enterprises to you, they can do so through the provisions of accounting statements. Unfortunately, when they want to play tricks (at least in some industries), they can also achieve their goals through the provisions of accounting statements. If you can't recognize the difference, you don't have to do it in the asset selection industry. How to determine the value of an enterprise? Do a lot of reading: I read the annual reports of the companies I care about and the annual reports of their competitors. Every time I look at a company's cost-cutting plan, I don't think it is a company that really knows what cost is. Doing everything in a short time is not feasible in the field of cost reduction. A really good manager won't wake up in the morning and say that today is the day I plan to cut costs, just as he won't decide to take a breath after waking up. Working for the person you admire the most will not only get the salary, but also remind you in the morning. Aside from other factors, if you do a job just because you are happy, then this is the job you should do and you will learn a lot. He (successor) must have the characteristics of independent thinking, emotional stability and deep understanding of people and institutional behavior. If you want to know why I can surpass Bill Gates, I can tell you that it is because I spend less money, which is the reward for my frugality. [Edit this paragraph] The first rule of Buffett's value investment: the principle of competitive advantage is good for companies to have good stocks: those big companies with clear and easy-to-understand business and excellent performance, managed by a group of management with extraordinary ability and considering the interests of shareholders, are good companies. The most correct company analysis angle-if you are the sole owner of the company. The most critical investment analysis-the competitive advantage and sustainability of enterprises. The best competitive advantage-an enterprise economic castle protected by a wide moat. The best measure of competitive advantage-the return on shareholders' equity exceeds the industry average. Superstar enterprise's source of excess profits. American Express's economic franchise: stock selection is like choosing a wife-the price is not as good as that of the company. Choosing a stock is like choosing a husband: mystery is not as good as security. Three sources of modern economic growth: the second law: cash flow principle. Value comparison between newly-built pharmaceutical factory and acquired pharmaceutical factory. Value evaluation is both art and science. Valuation is the ability to estimate a husband: the more money you earn, the more valuable you are. The discounted value valuation of enterprise's future cash flow is the valuation wife: the more conservative, the more reliable. Buffett mainly uses the rate of return on shareholders' equity and the growth rate of book value to analyze the future sustainable profitability. Valuation is to evaluate love: the simpler the more correct the third rule: the principle of "Mr. Market" is greedy when others are afraid, and the value law of the market when others are greedy: it is often ineffective in the short term but often effective in the long run. Buffett's Empirical Research on the Price Fluctuation of American Stock Market (1964- 1998) In the behavioral finance research of Forrest Gump in the Market, six stupid mistakes that investors in the securities market often make are found: Sun Tzu's Art of War Market: Using the Market Instead of Being Used by the Market. The fourth law: the principle of margin of safety. The margin of safety is "buying insurance": the more insurance, the less possibility of loss. The margin of safety is "hard bargaining": the lower the purchase price, the greater the possibility of profit. The margin of safety is "fishing for big fish": the fewer people, the higher the possibility of fishing for big fish. The fifth law: the principle of concentrated investment. Centralized investment is monogamous: the best, the best and the least risky. Five factors to measure the risk of company's stock investment: centralized investment is family planning; The fewer stocks, the better the performance of the portfolio. Concentrated investment is gambling: when the probability of winning is high, make a big bet. The sixth law: the principle of long-term holding. Long-term holding is a tortoise-rabbit race: compound interest can overcome everything for a long time. Long-term holding is a pledge of eternal love: lifelong companionship with the company you like. Long-term holding is to grow old together: giving love is more than affectionate happiness 10000 times. A good company can make it clear in one sentence (Coca Cola). A good company can make it clear in one sentence (net marriage). Finally, I will tell you in a minute how, where and to whom we should use Buffett's value investment strategy. Another investment principle of Buffett is: fear when others are greedy; Greed when others are afraid. Also, I suggest you watch the rich dad series!