Civilization, Modernization, Value Investment and China.

My teacher, Charles Munger.

Lu Li, a Chinese-American investor, is the founder and chairman of Himalayan Capital.

"China Buffett" gave 35 pieces of advice to young investors in China.

Article 1

The first characteristic of value investors is that they don't mind being a minority, but they feel comfortable being a minority. There is a natural feeling that the judgment of things is not influenced by others' approval or opposition, but purely based on your logic and evidence.

the second

We should invest a lot of time and energy to become an academic researcher, not a so-called professional investor. To cultivate yourself as an academic researcher, detective and even journalist, you must have insatiable curiosity to explore the working principle of everything.

Article

An excellent investor must be an excellent entrepreneur, and he must have a very strong interest in the operation of the whole enterprise. You should have an innate, natural and heartfelt curiosity and interest in business itself, and let interest guide your investment, rather than doing research for investment.

Article 4

You must be honest and don't deceive yourself, because it is the easiest to deceive yourself. So look at the world as it is, not as you want it to be.

Article 5

In the short run, the market is a voting machine, and in the long run it is a weighing machine. How to value in the short term has little effect on value investors. For them, short-term is more of an opportunity. If you pay special attention to short-term performance, you are obviously not a value investor. As a value investor, the market exists to serve you, not to guide you what is right.

Article 6

The real value investor will tell you clearly that there is no way to predict the cycle, and he will not predict it. Once you enter the cycle forecast, you will find that there are short cycle, medium cycle and long cycle, from a few years cycle to a few hours cycle. When you start to think like this, you are no longer a value investor.

Article 7

In the most successful case of my investment, the source of knowledge is not the annual report, but some other knowledge, which makes me make judgments different from the market on some other issues and gain some real and unique insights. But how knowledge is interrelated, you don't know in advance, so people should be honest with themselves and do according to their own interests.

Because everyone's ability circle is necessarily different, and everyone's interests are different, so we should move forward honestly according to our own interests.

Article 8

How far a person goes is related to many things at first, but after a long time, it is actually most positively related to your personal interests. Your driving force, your strong interest in something, will give you a strong motivation to go on when you have achieved a lot of success and stop thinking about money, so that you can go further.

Article 9

The recognition of value investment is not high, and it has always been a niche. When you find that everyone in this market says that they are value investors, it must be their understanding.

One of the first problems faced by young investors is how to build their own capability circle from scratch.

Article 10

Start from a simple, truly understand a very simple enterprise, start from a small, simple business, and guide you to study more and more complex enterprises according to your own interests. At this time, knowledge is built up bit by bit and honestly.

Article 1 1

Your circle of abilities is different from that of your best friend and everyone else. The more unique your competence circle is, the more opportunities you will seize. When others form a kind of * * * knowledge, you will have a very unique and distinctive view. When this different view shows unique business opportunities, it is precisely when you really shine.

Article 12

The existence of the market is to find the weakness of human nature. When you overestimate your ability, and then happen to be very lucky in the market, such as winning the lottery suddenly, this is the most terrible. It is easy for you to enter a vicious circle, and finally this market will definitely beat you. The market is cruel and real.

Article 13

Any simple enterprise is not easy and very difficult. When you find that some people do better than others in difficult industries, then you can understand what the competitive advantage is and where it comes from.

What are the specific methods of learning value investment? Value investment will eventually be implemented in the learning of each specific enterprise. What are the basic research methods for different enterprises? What are the misunderstandings and minefields?

Article 14

How to find investment ideas? Look for ideas in the process of reading every book. You can look at celebrity biographies, physics and history, which can inspire you. Look for opportunities while reading, and if the opportunity comes, go all out to study.

Article 15

What book is better to invest in? If there is one thing that is positively related to the investment results, it is that the number of times you read the company's annual report may indeed have a lot of positive correlation with investment knowledge.

The more you know about the enterprise, the more you know about the history of the enterprise, the more you know about the industry, and the deeper the analysis, especially thinking about the enterprise from the owner's point of view in a correct way. In fact, reading in this area will have many positive relations with your future investment judgment, sensitivity and grasp of opportunities.

Article 16

If you learn knowledge in an honest way and in a scientific way, it will generally show a trend of accumulation and growth. Of course, after you enter such a situation, your judgment and grasp of opportunities will indeed get better and better. If you use the wrong method, such as learning K-line, it is useless to learn more.

Article 17

There are many research methods, and the seller's research report can also be read, because there are also some data, and they will also make a more objective answer. But you have to analyze it carefully and rationally, judge which facts can be understood and which conclusions can be drawn with a critical eye and an objective way. Be sure to use logic to push, rather than imagination and your hope to do the middle grafting.

Article 18

Enterprises that were excellent in the past may not be excellent in the future. There are still some enterprises that have been excellent for some time and may become more and more excellent in the future, so there is usually no general theory. Every specific case should be analyzed in detail. But also be fully aware of the changes in the technological and economic environment.

Article 19

Knowing a company is a long-term thing, not a few days, weeks or months. It is often based on years, and some even have to study 10 for more than 0 years to have the right to speak. So if you really study it thoroughly, you can bet.

Article 20

Excellent investment targets will appear in all industries. As long as this industry exists for a long time, there will be many.

Even if the industry itself is not growing enough, it will maintain a certain growth rate, because we cannot do without it. If the competitive pattern of this industry has formed a high degree of integration and further integration, then these enterprises will also become excellent investment targets.

2 1

Value investment itself does not have to invest in a specific industry, such as consumption or finance or technology. There is no such difference. Value investment is a way of thinking, a set of code of conduct and a set of forecasting methods, which has nothing to do with what kind of industry to invest in.

Article 22

Why do you want to invest in this company? If you can find the smartest person in the world, who is many times smarter than you, and who holds the opposite opinion, you can argue with him and argue better than him. If you can think of everything about this problem, you can make a decision.

This is everyone's different characteristics. If you are not so fond of criticizing yourself, you may need to find such a partner in your investment.

Article 23

Even if you can't find the problem again, there may still be blind spots. Therefore, value investment is a long-term accumulation process, and there is no shortcut. It takes a long time to be an excellent investor, demanding and anti-human. So long-term study and long-term accumulation are very important.

Article 24

To truly understand value investment, there are several books that must be read. The first book is Graham's Smart Investor. Followed by Buffett's biography, such as "Buffett Biography: The Growth of an American Capitalist" written by Roger lowenstein. To study Baman, you should also read Poor Charlie's Collection. Securities analysis is also a must-read classic.

It's closer to us. To understand some experiences of growth companies, you can read How to Choose Growth Stocks by Philip Fisher. Michael Porter's Competitive Advantage clearly lists the main trends of competition and can be used as a basic introductory book to study long-term competitive advantage.

An important concept of value investment is the margin of safety, so it is very important to choose enterprises with "moat".

Article 25

The margin of safety is very important. When considering all kinds of things, even if the probability is small, your investment can still be guaranteed. This is a more reliable investment. Including plague, including major economic crisis, and even war, should be within your consideration.

Article 26

When buying, you need a relatively large margin of safety. Once you buy it, you will know more about the company. At this time, there will be some changes in the calculation of value and price, and your ability to predict the future will also change. At this time, the price range you can tolerate should be more plentiful.

Article 27

The situation of selling can be roughly summarized into the following three types.

First, if you make a mistake, sell it immediately.

Second, when there are other better investment targets, the price-value ratio and risk-return ratio are not as good as the new target, they will also be sold.

Third, there has been extreme differentiation between price and value. No matter how the company grows in the future, it is difficult to prove such a price. At this time, you will also need to sell it, because your opportunity cost has turned into cash.

Article 28

If a company has a strong moat, excellent sustainable profitability and is in an advantageous position in the competition, then generally speaking, its good aspects will protect itself. You don't need to think so clearly, and you don't need to make any preparations. So to really prepare for the future is to prepare for the bad situation. Good things don't need preparation, just accept them.

Article 29

The amount of investment should be small, the investment time should be long, and the stakes should be large when the investment is large or small.

Article 30

Even if you are particularly sure, you can't be 100% correct. All you get is a high probability. But if you have been investing with maximum probability, the long-term accumulation results will be good.

3 1

Fishing where there are fish and investing where there are opportunities. Opportunities in China are all-round, and the key is to seize the opportunities you know. It's not how much you know, nor how many opportunities you have. The key is to seize your own opportunities within the scope of understanding. This is the most important thing for investors.

Article 32

People are all similar in essence, and what other places need, China people also need, but we may not have reached the same level because of our economic level. The lack of domestic demand in developed countries is definitely a relatively certain direction for our long-term growth.

Article 33

The influence of management is different at different stages. In the initial stage of an enterprise, management is very important, and in the process of enterprise transformation, management is also very important, but under normal circumstances, the logic of the business itself is far more important than management. So it depends on the state of the enterprise you invest in.

On the whole, many enterprises in China are still in their infancy, and China's economy itself is undergoing great changes, so these enterprises and industries will also undergo great changes. Therefore, in China or other developing countries, the role of management is usually much more important than in developed countries and relatively stable economies.

Article 34

Have enough confidence in your own culture. China's culture is very suitable for the modern market economy. In China's classical culture, morality is the foundation of self-cultivation, which will only make your career better and faster. So it depends on whether you pursue short-term success or continuous success.

Article 35

The definition of sustainable success is very simple. If you tell everyone every detail of your success story, everyone will think you deserve it. If everyone thinks that you are opportunistic in the middle and you feel uneasy, this is not a sustainable success. The criterion for judging is whether you have won the victory.