Exclusive interview with Duan Yongping! Old Duan’s most complete investment ideas! How can ordinary people make a hundred times their money in ten years! Enlightenment!

This article took 125 hours to compile, and it sorted out Duan Yongping's most complete investment thinking framework. It uses an easy-to-understand interview format to subvert your investment cognition. The full text is 50,000 words, and not a single word is redundant. However, less than 1% of people can finish reading this article.

Part 1 Investment Framework“Business model is the most important, growth rate is meaningless”
1 I don’t understand SOL: What is investment?
Duan Yongping: To me, investing means owning part or all of a company. The simplest concept is “ownership”.
In other words, find the best company and invest your money in it, compare the risk-free interest and corporate profit returns, and look for the better one that you think is safe enough.
I want to remind you that growth rate has no meaning to me. Suppose a company made $1 per share last year and $2 per share this year, with a growth rate of 100%. Some people say that it may increase again next year. What about the year after next? I don’t know.
2 SOL that I don’t understand: In your opinion, what is the important thing in investment?
Duan Yongping: Probably these points:
1. Buying stocks means buying a company. At the same price, whether a company is listed or not makes no difference. Listing only makes it easier to exit.
2. The discount of a company's future cash flow is the company's intrinsic value. Stocks should be bought when the company's stock price is lower than its intrinsic value.
Whether it should be 40% or 50% (safety margin) or other numbers is entirely determined by the investor's own opportunity cost situation.
3. Discounting future cash flows is not an algorithm, but a way of thinking. Don’t try to calculate it with a calculator.
4. Don’t do it if you don’t understand it. The circle of competence is a necessary but not sufficient condition for a person to judge the intrinsic value of a company.
5. "Moat" is an important but not the only means to judge the intrinsic value of a company.
6. Corporate culture is an important part of the "moat". It is hard to imagine that a company without a strong corporate culture can have a wide "moat".
3 Incomprehensible SOL: What is a good company?
Duan Yongping: If you keep paying attention, you may be able to recognize good companies when they emerge.
SOL who can't understand: What kind of company can make you sleep well every night? Duan Yongping: right business, right people, right price. Business is the business model, and people is the corporate culture.
A strong business model, a strong corporate culture, and a reasonable price mean you can sleep well if you hold such a company.
4 Incomprehensible SOL: In terms of importance, how do you rank these three elements?
Duan Yongping: Price is not that important. Business and people are the most important. If I don’t like any of the business model and corporate culture, I won’t continue to look at it. The most important thing is to look at the business model. Otherwise, it is easy to see the trees but not the forest. You will focus on the fluctuations of the current month or quarter to decide on your buying and selling behavior. This makes it difficult to invest.
If I like the business model, assuming of course that at least I understand it and the corporate culture is also good, then I will just wait patiently for a better price.
I suddenly felt that my good investment performance over the years was indeed justified, and I would like to thank Buffett for his enlightenment.
I asked Buffett: What would you consider first? "Business model"! Yes, it's that simple.
However, it is very difficult to understand what a business model is. Even simple things are difficult. I can’t tell you. You have to figure it out yourself, just like if you don’t play golf, I can’t tell you how fun it is.
Brand premium is a misunderstanding. Long-term differentiation is the moat.
5 Incomprehensible SOL: What is a good business model?
Duan Yongping: The business model is the way a company makes money. For many companies, it is almost obvious that they will have a hard time in 10 years. This is called a business model.
A good business model has a moat, and understanding the moat is important for investment. However, the moat is not static, and corporate culture plays an indispensable role in establishing and maintaining the moat.
6 SOL that I don’t understand: For example, is Focus Media a good business model?
Duan Yongping: It has no appeal to me. I have observed that many people look down at their phones when waiting for or riding an elevator, so who would watch the ads? So this is something beyond my circle of competence and I don’t understand it.
7 Incomprehensible SOL: What is a moat?
Duan Yongping: Long-term differentiation is a moat. Differentiation means that the product can meet the needs of users that others cannot.
A business model without differentiated products is basically not a good business model. When investing, try to avoid companies whose products are difficult to differentiate in the long term, such as airlines and solar panel companies. The market is sometimes very crazy, and sometimes, investing in companies with not-so-good business models may have good returns in a certain period of time. However, in the long term (10, 20 years or more), if you insist on investing only in companies with good business models and good corporate culture, there is a high probability that you will get a relatively good return, and this investment method makes people very happy and don't need to worry about it all day long.
8 SOL I don’t understand: Is brand a moat? What do you think of brand premium?
Duan Yongping: I think brand premium is a misunderstanding. Brands are just value for money. When a brand is taken for granted that it has a premium, it is easy to make mistakes. Most people do not buy branded items for the "premium".
Consumer rationality is from a long-term perspective. Regardless of whether consumers are rational at the moment, we must believe that they are rational. Otherwise, you may engage in speculative or even unethical behavior when running a business.
9 SOL that I don’t understand: Some people say that value investing is also a very good business model.
Duan Yongping: I don’t quite agree with this statement. It’s the same as calling wine, mobile phones and search engines business models.
Value investing is a way of thinking, not a business model.
The correct statement is: Moutai liquor is a good business model, Apple mobile phone is a good business model, Buffett's value investment is a good business model, but many of those who pretend to be value investors may not be.
It seems that it takes a lot of luck to come across a good business model, but behind this luck there is a strong corporate culture background.
Which culture is better, Alibaba or BBK?
10 Incomprehensible SOL: What is corporate culture?
Duan Yongping: It’s the Mission, Vision and Core Values ​​of the people in the company.
Mission is why the company was established, Vision is where we are going; Core Values ​​are what is right and what is wrong.
11 I don’t understand SOL: Why do you attach so much importance to corporate culture?

Duan Yongping: A company’s products can be imitated, but its culture cannot be imitated.
If we compare an enterprise to a wooden barrel, the corporate culture is the bottom of the barrel. If the corporate culture is not well developed, the barrel cannot hold water. If there is a deep corporate culture, other shortcomings can be made up in time.
A good corporate culture can manage things that the system cannot manage. The system is mandatory, but culture is not. It is very difficult to establish a good corporate culture, but it is very easy to destroy it.
For example, any company where employees are trembling with fear when they see their boss will have problems over time. This is because most of the employees in such companies will gradually become irresponsible and want their superiors to decide everything, which will gradually reduce efficiency.
12 Incomprehensible SOL: What kind of corporate culture do you want to create?
Duan Yongping: The most fundamental thing for us to do business is our duty. Keeping our word is a duty. Keeping our word is not for show. Many entrepreneurs may refuse to pay for a promise, but I will fulfill my promise without hesitation. I once paid more than 18 million yuan for a promise.
It is the duty of an enterprise not to make money from everything. An enterprise cannot fail to make a profit, but the profit should be based on legal operations based on an accurate grasp of the market.
An enterprise is not about doing everything. It is a duty. Put 80% of your energy on 20% of the things, and then 20% of the things will bring 80% of the benefits. Do as much as you can, not as much as you dare.
Running a business is actually very simple. It all involves doing things honestly. The most powerful trick is to use no tricks. Just throw out with one punch. It is very simple.
Just like running a marathon, only those who keep moving forward at a steady pace and don't be lazy or take chances will avoid being eliminated.
13 Incomprehensible SOL: How to judge whether a company’s culture is good or bad?

Duan Yongping: I care very much about the character of the company's management.
I remember hearing about a survey when I was taking classes at CEIBS. The survey wanted to know what common traits very successful people have. It turned out that people have all kinds of traits, but the only trait they have in common is integrity.
Apple's corporate culture can be regarded as a classic of good corporate culture. You may gain some insights by watching more of Apple's press conferences.
The most typical sign of a bad corporate culture is that management often tells lies. If I think a company is dishonest, I won't touch it. Take Tesla for example. You can tell by how many lies it has told in the past.
For example, I visited the website of ** Company. A Chinese company actually didn’t have a Chinese website. It seemed that it was designed for investors. In addition, I didn’t find any description of the corporate culture. I don’t know much about this industry. After seeing these two points, I stopped reading.
Generally speaking, I am very cautious about companies that take "Wall Street" too seriously.
14 Incomprehensible SOL: Buffett said that we should look for companies that can be run well by a fool?
Duan Yongping: This was actually said by Peter Lynch and quoted by Buffett. What Buffett meant was that if the business model is good, mediocre talents are not a problem, but Buffett himself attaches great importance to management.
I have been against working overtime for no reason for many years. I have always believed that the head of a department who always forces overtime has a problem with his management level, and the boss of a company that always forces overtime has a problem with his management level, haha.
15 Incomprehensible SOL: Corporate culture can easily become a formality. How can we truly imprint it into the bones of corporate employees?
Duan Yongping: This is a difficult task. It is very important, but it is often not so urgent and is often overlooked. Companies with good corporate culture are often much more adaptable.
Corporate culture must be constantly promoted so that it can gradually penetrate into everyone's bones. It seems that Jack Ma has fewer opportunities to appear in public now.
16 Incomprehensible SOL: Will the forced brainwashing by management make employees unable to think independently or afraid to express different opinions?
Duan Yongping: I am a dissenter in the company. I will raise objections to almost everything. If no one is afraid of my objections, I will feel more at ease in doing anything.
What I fear most is that when the boss says something and everyone says “yes”, then the company will be in danger.
Of course, the premise is that I think many of my colleagues are better than me in many aspects. If you think you are the "boss" of the smartest people in the company, it is difficult to agree with my point of view.
17 Incomprehensible SOL: How can companies pass on good culture?

Duan Yongping: First, we need to find people who share the same ideals. Then we need to talk about it year after year, month after month, and day after day, and weed out the unsuitable ones over the years.
When companies recruit people, they divide them into qualified people and suitable people. Suitable refers to cultural match, while qualified refers to ability.
Don’t accept people whose values ​​don’t match yours, because you can’t convince people who don’t believe in you. People who create trouble for the company are often qualified but unsuitable people.
18 Incomprehensible SOL: Which culture is better, Alibaba or BBK?
Duan Yongping: The difference between Alibaba culture and BBK culture is that Alibaba wants to be the biggest, while BBK has to do its duty.
In fact, whether you are the first or not is not that important, because when consumers buy things, they generally don’t care who is the first, what they care about is what they buy (consumer-oriented).
Many companies like to say that they want to become century-old businesses, but a century-old business does not necessarily mean that it will live to 101 years, just like you cannot use PE to predict next year's profits.
Lehman Brothers seems to have a history of more than 150 years. But if you pay attention to what Lehman Brothers' corporate culture became in its later years, you will not be surprised by their ending.
19 SOL I don’t understand: People in the investment circle often say that values ​​lead to success. What do you think?
Duan Yongping: You can say that. But occasionally you will see that some companies with some problems in their values ​​will be popular for a period of time because of some right products. You will also see that companies with good values ​​will make strategic mistakes and suffer a catastrophe.
The difficulty of investing lies in the fact that there is no formula to follow and no sufficient conditions to determine which companies can be bought.
But choosing the right company is a question of ability, while not choosing the wrong company is a question of right and wrong.
I remember when we bought Vanke, someone asked me what to do if Vanke had fake accounts. I said that from what I know about Wang Shi, he is definitely not the kind of person who would lock himself in a room with the finance department to discuss fake accounts to deceive shareholders. In fact, I was not familiar with Wang Shi at that time, and I am not familiar with him now. It was just my intuition.
The most important and simplest thing in investing
20 SOL that I don’t understand: In your opinion, what is the most important thing in investing?

Duan Yongping: The most important thing is to understand the value of the stock you invest in. If you don’t know the value of the stock, you can’t touch it.
It is difficult to understand a business, and it is even more difficult to hold on to something you don’t understand. Most people can’t hold on to something because they don’t understand it. If you don’t know what you are buying, you can’t follow the “experts”.
There are very few companies that I can understand, and if I can't understand them, I can only give up. The difference between me and many people is that I admit that I know very little, so I keep it simple.
The secret of Buffett's success is that he knows what he is buying. Whether you understand the long-term or the changes, as long as you really understand, it is a good opportunity when it is cheap.
The most important thing is to invest in what you really understand and in companies that you really think will make money. My definition of making money is: the return is higher than that of long-term risk-free bonds.
21 Incomprehensible SOL: What does it mean to really understand?
Duan Yongping: It’s very simple. When you still have doubts, it means you don’t understand or don’t understand enough.
The thing about a company that you understand is that no matter how much its price rises, you won't want to sell it, and when it drops sharply, you will buy it back with all your strength.
The companies you don't understand are the ones that you want to sell as soon as the stock price drops, and you also want to sell when the stock price rises a little bit. If you buy an investment that you are afraid of the price falling, it is best to stay away from it. If you are afraid that the price will fall no matter what you buy, stay away from the stock market.
22 SOL that I don’t understand: Financial derivatives can make money if used properly. Buffett also uses them, but the money earned from derivatives is not the money for the growth of the company. What do you think?
Duan Yongping: What Buffett opposes is completely different from the derivatives he makes. I use a lot of financial derivatives myself, and I use them in the same way as Buffett, so I understand what he is talking about.
Many people use derivatives like gamblers in a casino, hoping to make money quickly. But Buffett uses derivatives like opening a casino in Macau, which is a sure win in the long run.
Not everyone can make money by opening a casino, but those who know how to open one can. Maybe the example of a casino is not necessarily appropriate, but the principle is indeed the same.
23 Incomprehensible SOL: What is the simplest thing in investing?
Duan Yongping: I think about it and I always feel that there is only one thing that is the simplest, that is, when you buy a stock, you must think that you are buying this company, and you may hold it for 10 or 20 years. With this idea, it is easy to make many judgments.
It is more difficult to look at the future over three to five years than over ten years. Basically, it can be said that the shorter the time frame, the more difficult it is.
24 I don’t understand SOL: Can you give an example?
Duan Yongping: For example, when I bought Apple in 2011, Apple's market value was about 300 billion (the stock price at the time was 310/7=44), and it had 100 billion in net cash. The profit at that time was less than 20 billion.
Based on my understanding of Apple, I think that Apple's profit will increase a lot in the next five years or so, so I guessed 50 billion (59.5 billion last year). At that time, my idea was very simple, using a market value of about 200 billion to buy a company that currently earns nearly 20 billion/year, and will earn 50 billion/year or more in the next five years or so, and it will continue to do well in the future.
If you have this conclusion, buying an apple is just a simple arithmetic problem, and you can make a decision based on your opportunity cost. But it is not easy to get this conclusion. It took me at least 20 years to get this conclusion, and I understand it.
If you don’t understand, don’t touch it. I have a friend who bought some at 320/7=46, and then sold it at 310/7 after a pullback (now Apple’s price including dividends may have exceeded 200). He also told me why he sold it, and since then I no longer talk to him about investment.
It’s easy to look at three or five years, but it’s difficult to look at ten years?
25 Incomprehensible SOL: Many investors believe that it is easy to look at three or five years, but difficult to look at ten years?
Duan Yongping: If you think it is harder to watch for ten years than for three years, then you must think it is harder to watch for three years than for three days. Is it easier to watch for three days? Many people watch for three days, two days, or one day, and the results are obviously not good, right?
When we bought Moutai in 2012 and 2013, we didn't know what Moutai would be like in two or three years, but I can be sure with a high probability that Moutai will be good in 10 years. Now it's actually less than 10 years, and the effect is already good. In fact, it's easier to understand with the words of Buffett: It's much easier to know what will happen than to know when it will happen.
Many things, whether good or bad, will most likely happen if given 10 years, but not necessarily in three years. However, the probability of something happening in three years is obviously higher than in three days. Therefore, it is better to wait for three years than to wait for three days.
26 Incomprehensible SOL: Does this have something to do with the circle of competence?
Duan Yongping: Knowing where the boundaries of your circle of competence are is far more important than how big your circle of competence is.
Failure to understand this is the reason why many “smart people” have poor investment performance over the long term. However, these “smart people” will attribute the success or failure of others to luck or “accidents”, and they can always find a way to “cleverly” make themselves believe that this is indeed the case.
There is a saying in Kung Fu Panda that “there are no accidents”, which makes a lot of sense.
27 Incomprehensible SOL: What are the boundaries of your circle of competence? How have you expanded it in recent years?

Duan Yongping: The circle of competence is not like drawing a circle on the ground with a golden cudgel and saying stay inside and don’t go out because there are monsters outside.
The circle of competence is: be honest with yourself, know what you know, and know what you don't know. With this attitude, if you can understand something, then it is within your circle of competence, otherwise it is not. Many people make the mistake of choosing something they don't understand but others say has a high return, and as a result, 85% of them lose money.
If we ask these 85% of "investors" whether they would choose 8% or 10% or 20% annual returns, it's a bit like a reporter asking people "Are you happy?"
In a business that you truly understand, there is no reason to choose one with a low return, but the premise is that you truly understand it! And the business that everyone can understand is to deposit money in the bank.
Therefore, only a few people can understand investment, and most people are better off not touching it.
If you don't understand, don't do it. I still don't fully understand where the risks of banking business lie. Some large banks in the United States experience major turmoil every 10 to 8 years, and I still don't understand what's going on.
Soros’s stuff is not easy to learn, at least it is difficult for ordinary people like me to learn. Buffett’s stuff is easy to learn, and those who understand it will understand it immediately.
28 I can’t understand SOL: What do you think of Soros?
Duan Yongping: I have no interest in Soros, so I can’t comment on him. I have no interest in things I’m not good at, just like many people have no interest in me.
It is not easy to have no interest in things you are not good at, because people always think they are smarter than they actually are.
29 Incomprehensible SOL: Many people would also say, if you don’t understand, just go and study?
Duan Yongping: Investing is simple but not easy! Understanding a company is no easier than studying for a bachelor's degree. It is not cost-effective to spend a lot of time looking at companies that you don't understand.
30 I can’t understand SOL: Is there a way to save time?
Duan Yongping: A very important thing I learned from Buffett is: look at the business model first. Unless you like the company's business model, don't read any further. This will save you a lot of time.
Buffett also said that a great business can usually be explained clearly in just one paragraph.
31 Incomprehensible SOL: Do you read financial statements?
Duan Yongping: I don’t really read financial reports when I invest, at least not in detail. I will find a professional to look at them, and then it’s ok if he tells me the answer.
It is not easy to understand a good company. In most cases, it is not enough to simply look at the financial statements. Looking at the financial statements will only show the history of a company, but investing cannot only look at the history of a company.
Buffett once recommended several books to shareholders, one of which was "The Autobiography of Jack Welch". Welch in the book was very concerned about corporate culture. You can imagine that Buffett also cares about this. He does not just look at financial reports as some people say.
For me, I should know whether a company is good or not before I read its annual report. I usually learn about the corporate culture first. If I don’t trust the company, I won’t even read the financial statements. But I will read them before I understand them, at least I should.
Generally speaking, for companies you know well, it is unlikely that you don't know whether they are intentionally falsifying their financial statements. Don't touch companies you don't know well. If you can't even see fraud in their business, it will be even harder to see fraud in their financial statements.
Of course, my lazy method may not be suitable for others.
32 SOL that I don’t understand: You can be lazy because you are also in business and can choose to invest in an industry that you are familiar with?
Duan Yongping: I don't pay attention to the industry. I only invest in companies that I can understand. Sometimes I don't invest in industries that I am familiar with, such as the electronics industry, because the competition is too fierce.
Many of my successful investments seem to be in completely unrelated industries, but they are relevant to me because I can understand them and know whether the management is talking nonsense, whether the company has a good mechanism, whether the competitors are much stronger than him, and where he will win over his competitors in three to five years...
It's just these things. If you understand them, you can invest.
33 SOL that I don’t understand: Pharmaceutical stocks are considered to be the most promising industry. Have you paid attention to innovative pharmaceutical companies such as Celgene, BeiGene, and Innovent Biologics?
Duan Yongping: I have never been involved in the pharmaceutical industry, and I don't plan to spend time trying to understand it. Although I don't know much, I should be able to make a living, and I want to do things I like when I have time.
“The concept of investment is that you can go big.”
34 Incomprehensible SOL: What advice do you have for ordinary investors?

Duan Yongping: The key is to follow the principle of not touching something if you don’t understand it. Most people make mistakes when they only have a vague understanding of it, because they are afraid of losing the opportunity and act hastily.
I remember a long time ago, I met a teacher in school who asked me what to do if he didn’t understand investment but needed to manage his small fortune. I told him to just give it to Buffett and buy all of Buffett’s stocks. He would be able to manage it better than if he managed it himself, and he wouldn’t have to worry about it.
Small shareholders do need to be cautious when making large investments, but once they find something good, they should not let it go easily.
I have seen many small investors swapping stocks back and forth, and after 10 years, they did not make any money, while others did. In the end, more than 90% of investors invested less money in the stock market than they would have earned in the bank.
Don't buy stocks based on hearsay and make sure to change stocks less often. If both companies are good, whether to switch depends on which one you know better, not what others think of it.

35 SOL that I don’t understand: What do you think is the difference between investment and speculation?
Duan Yongping: Speculation is a zero-sum game, while investment is about the profits brought by enterprises.
I have the simplest way to measure it. At the current price, if this company is not a listed company, would you still buy it?
If you decide to buy, it is called investment; if you say that you will buy my stock as long as someone else buys it, but you will not buy it if it is not a listed company, it is called speculation.
36 Incomprehensible SOL: But some people believe that going public can bring in funds, development space, and value.
Duan Yongping: Some companies are, some are not, and most companies in China are not. Going public may not necessarily bring better development.
37 Incomprehensible SOL: This is the difference in thinking mode. How to distinguish investment and speculation in behavior?
Duan Yongping: First, are you using a large amount of money or a small amount of money?
In my opinion, speculation is a bit like playing in a casino. You can't bet big and you can't win big. The concept of investment is that you can bet big, but if you don't have a high degree of certainty, such as about 90%, you shouldn't make a move.
Second, when stock prices fall, the attitudes towards speculation and investment are exactly the opposite.
Investors are often happy to see stock prices fall because they have the opportunity to buy something cheaper, while speculators think that something must have happened to the company and they should get out as soon as possible.
Investment and speculation are very different games, but they look very similar. Just like in Macau, the casino owners are investors, and the gamblers are speculators. Casinos always have a steady stream of customers because there are always gamblers who can win money, and gamblers always win louder.
As a form of entertainment, there is nothing wrong with gambling a little money, but gambling one's entire life is wrong. However, I have seen many people gambling their entire lives in the stock market.
Don’t touch it if you don’t understand it. At least 85% of people are not suitable for investment
38 Incomprehensible SOL: Have you ever speculated?
Duan Yongping: Yes, but just for fun.
I also often do short-term trading. Sometimes my fun comes from short-term trading. I have two accounts, one is a long-term account and the other is a short-term account. Short-term trading is fun. Does it make money? Yes, but do you have any experience in it? No. For the short-term account, I pay my family expenses and taxes from it every year, but the money has never been less. There is always so much money. For the long-term account, sometimes I don’t even know that it has made money. The longest one is that I have never touched it after buying it. After holding it for 5 years, I have probably made more than 50 times. In the past 5 years, I have also made 2 times in the short-term. Which one do you think is better? I don’t know. Buffett also does short-term trading. His purpose is the same as mine: fun. Of course, he does it himself, and his investment company does not do it. When people discuss stocks with me, I always make it clear to them, are we discussing speculation or investment? Is it for fun or for money? If it is for fun, there is nothing to discuss. Just buy what you like. Anyway, you won’t sell your house and carry the money to Las Vegas.
I once spent 200 yuan on a cruise for three nights and made 2,000 yuan. If you tell it as an investment story, it has increased tenfold in three days, what kind of story is this! But would you dare to gamble with millions of dollars? No. So, investment is another way of speaking.
39 SOL that I can’t understand: You are considered to be the Chinese version of Buffett.
Duan Yongping: I have been a value investor since the beginning. When I buy stocks, I always assume that if I have enough money, I will buy the entire company. Everyone is playing different games in the stock market, but there is actually only one way to play the game of investment, which is "value investment."
There are different ways to play speculation. There are many ways to play in a casino, such as playing "big or small" and so on. Of course, the money comes quickly, but it also goes away quickly.
A true value investor believes in value in his heart. Whether a person is a value investor depends on the extent to which he cares about the company itself.
40 Incomprehensible SOL: What kind of people are value investors?
Duan Yongping: When value investors buy stocks, they always assume that if they have enough money, they will buy the entire company.
What value investors pursue is value, which has nothing to do with whether the company is popular or not. All truly good companies will become popular one day.
The most important thing is to look at the value of a company with a normal mind and ignore the market's ups and downs.
Some people who don’t touch stocks can also be the best value investors, because they understand the essence of value investing - if you don’t understand, don’t touch it. In the long run, their investment returns are better than 85% of people in the stock market because they don’t lose money on stocks.
At least 85% of people are not suitable for investment. If you suddenly find that you are not suitable, there is nothing to be embarrassed about. As long as you "turn back now", your "not investing" performance can at least be better than 85% of people. The best way to learn from Buffett is to stay away from the stock market.
Everyone can learn from Buffett, but I found that only a few people will really study it seriously, so only a few people can actually learn it.
41 SOL that I don’t understand: What do you think of the value investment of domestic public funds?
Duan Yongping: It is difficult for most funds to truly achieve value investing, mainly because funds are often measured and evaluated over years, and investors often decide whether to invest based on their performance in the previous year.
(Note from SOL: In recent years, many public fund companies have used three-year and five-year performance as assessment weights)
What we often see is that when it is the best time to buy stocks, many funds will sell them like crazy in the market because the holders are panicking and want to redeem them. And when the stock price is high, many funds will buy like crazy because there are often many investors willing to invest money at this time.
In addition, funds charge management fees, and when you have money you always want to do something, otherwise investors may have opinions.
42 I can’t understand SOL: What do you think of trend investors?
Duan Yongping: I have seen people who are very good at following trends, and they have been doing it for decades, but they are still “small funds”.
If you think about it with Munger's "reverse thinking", you may not be so interested in "trends". Speculation is much more difficult to learn than investment, but speculation is exciting and fun, so most people still like speculation.
In fact, speculation is the belief that one can be one step ahead of the market. If a speculator believes that the market is smarter than himself, he will not intervene from the beginning.
But in the end, most people did prove that the market is indeed smarter. From a long-term perspective, the market is extremely smart!
Any time you're thinking about shorting someone, you're still a speculator who thinks you're smarter than the market.
Value investing does not necessarily make money, and value investing can also make mistakes, but in the long run, the probability of making money is higher.
Value investing is generally long-term investing, but long-term investing does not automatically equal value investing. Good returns on operations and stock prices over a period of time do not necessarily mean value investing.
Incorrect things must be stopped immediately, no matter how much it costs, it is the smallest cost.
43 Incomprehensible SOL: Does everyone have a speculative heart?
Duan Yongping: Yes, that’s why we need faith, faith means to “do the right thing”. And “doing the right thing” means not doing something when you know it’s wrong.
The most important reason why Buffett is so great is that he can persist in not doing things he thinks are wrong. Persistence is very difficult because often "wrong things" are short-term temptations.
I always try to tell people what not to do, but most people always come back to me and ask, "What should I do?". Probably only a few people understand that what we did is not very helpful to what you can do.
44 Incomprehensible SOL: What is the right thing to do?
Duan Yongping: The right things are often related to long-term sustainability, especially in investment.
Doing the right thing is actually achieved by not doing the wrong thing, so you need to have a stop doing list. Once you find that something is not right, stop immediately, no matter how great the cost is, it will often be the smallest cost.
For example, if you find that you have bought the wrong stocks or companies, you should leave quickly, otherwise, the losses will increase as time goes by. However, most people tend to want to wait until they get their money back.
About five or six years ago, my company asked me to be responsible for investing some spare RMB. When we bought it, we probably didn’t know enough about it and didn’t fully understand it. Later, we thought we made a mistake and sold it at a loss. We exchanged it all for Moutai. If we hadn’t corrected the mistake in time, we might still be losing money today.
It is not easy to sell stocks at a loss, but it will be much easier if you understand the concepts of sunk costs and opportunity costs.
However, it is not always easy to judge what is wrong. Some things are relatively easy to judge, such as not lying. Some are not so easy, such as whether to go to bed early and get up early.
In fact, everyone knows more or less what they can do, but often they don't know what they shouldn't do. If everyone stopped doing things they shouldn't do, the results would be much different than most people imagine.
You can look at the example of how Munger made $2 trillion. Legend has it that in the 1970s, Munger lost most of his net worth in two years because of margin, so there is a saying that you only need to get rich once. Munger can be considered a person who has been rich once and a half.
45 Incomprehensible SOL: How do you judge something that is wrong?

Duan Yongping: You need to have time to think. Many people are busy all day and have no time to think, and may never understand. Wrong things are learned through long-term thinking and the experience and lessons of oneself and others. Everyone or company should accumulate their own stop doing list.
Some of the things we don’t do are discovered during the process, such as processing for others; some are caused by our duty, such as not being dishonest. Things we don’t do reduce the chances of making mistakes, and the effect is very good over time.
If you can try not to do the wrong things and at the same time work hard to do things right, the difference in 10 or 20 years will be huge.
What I want to emphasize is that in the process of doing things right, you will definitely make a lot of mistakes. The mistakes made in the process of doing the right things and the consequences of doing the wrong things should be strictly distinguished.
When you are sure that you are doing the right thing, you must stick to the right thing, such as buying a good company.
As for how to do things right, you need to spend time developing skill sets (which means there is a learning curve and you have to allow yourself to make mistakes).
Stick to the "Stop Doing List" and you will be great after you accumulate it.
46 Incomprehensible SOL: How to judge whether something is a mistake made while doing the right thing, or whether the thing itself is wrong?
Duan Yongping: Doing something right depends on your ability, but ability can be improved through learning.
In addition, whether you are doing business or investing, the basic rule for success is not to rush things. Just think about Liu Xiang and you will know that speed alone is not reliable. The key is to find the right thing and stick to it. If you find something wrong, correct it immediately.
It's important to take your time. It is said that most people can become experts after spending 10,000 hours on anything.
In fact, if we can find a good stock in two years, it would be very, very good.
47 Incomprehensible SOL: How to understand the “Stop Doing List”?
Duan Yongping: It is not a skill or formula, but a way of thinking: if you find that you are wrong, stop immediately, because the cost is the lowest at this time.
If you make a mistake, you must stop and resist the short-term temptation. It has nothing to do with how important it is to you or how much effort you have put into it, or whether you can find something better. Anyone can learn skills, but what makes us who we are is not only what we have been working hard on, but also our decision not to do something is equally important.
Stick to the "Stop Doing List". Success is accumulated. There is no shortcut. You have to rely on your own accumulation and experience.
48 Incomprehensible SOL: How did you become so awesome?
Duan Yongping: I remember once I was having dinner and chatting with a big boss from Taiwan’s OEM business. He asked me why we were so successful.
I said, because we have a "stop doing list." He also asked, "Give me an example." I said: For example, we don't do OEM, because if we do OEM, it will be difficult to compete with you.
I don’t think about the present, I always think about the long term.
For example, I studied radio. When I graduated from graduate school, I found a job that said I could become a director in a few years, and I could get a house in two years. I could also get chicken, duck, fish and meat. But I was not interested, so I left. Many people say "I didn't find a better opportunity", but in fact they don't have the courage to stop doing the wrong thing. If you find that you are wrong, you should stop immediately, otherwise you may still be in that bad place two years later.
Many people are obsessed with immediate interests, and will still be obsessed with the same interests 30 years later.
49 Incomprehensible SOL: How many items are on your stop doing list?
Duan Yongping: I haven't really counted them, but it seems that there are not dozens of them. The things included in this list must be as few as possible, otherwise it may restrict everyone's hands and feet. It often takes a lot of reasons to buy a stock, but one or two reasons are often enough not to buy it.
What I want to emphasize is that we must stop doing wrong things immediately, but we don’t have to do all the right things. We also need to focus on doing the right things. In addition, we can make mistakes when doing the right things. That is a matter of skill, which requires learning and practice, and sometimes talent, such as playing the piano or playing golf.
Don’t short sell, don’t borrow money, and don’t do things you don’t understand!
50 Incomprehensible SOL: What are the things you absolutely cannot do on your investment stop doing list?
Duan Yongping: I generally don’t invest in any non-listed companies, unless they are companies started by someone I have known for more than 10 years and who I know very well or trust. I am also not interested in companies that have just gone public, mainly because I don’t have enough time and information to understand them. I will never invest in fixed income. Fixed income products will definitely lose to inflation in the long run, so it is a wrong thing to do in the long run.
In addition, don’t forget what Buffett taught you: don’t short sell, don’t borrow money, and don’t do things you don’t understand! Short selling has unlimited risks, and one mistake can be fatal.
Investing does not require courage, and when you need courage you are in danger. Borrowing money is dangerous, and no one knows how crazy the market is.
I remember Buffett said something similar: If you don't understand investing, you shouldn't borrow money. If you understand investing, you don't need to borrow money, because you will have money sooner or later anyway.
Moreover, in the long run, short selling is definitely wrong, because the market is bound to go up. Value investors will make mistakes. There may only be one chance to make a mistake when short selling. As long as you short sell, there will always be a time when you make a mistake. Why bother?
51 Incomprehensible SOL: Many times, people are full of courage to gamble, but in a crisis, they are often too afraid.
Duan Yongping: A crisis occurs about once every 5-8 years. I hope that when the next one comes, you will remember to take a look, wipe off your cold sweat, and invest all the money you can.
But don't borrow money, because no one knows how crazy the market will get.
The advantage of debt is that you can develop faster, and the advantage of no debt is that you can live longer. Whether you borrow money or not, you will lose countless opportunities in your life, but borrowing money may make you never have another chance.
Borrowing money by short selling is very dangerous, because the market can be very irrational occasionally, and over time, everyone will encounter extremely irrational moments in the market. People who use short selling sometimes go back to the days before liberation overnight after encountering such a situation. The premise of borrowing money is that if the worst happens, you can still pay it back, and don't take chances. For example, if you lend someone 10,000 yuan, but your annual salary income is 100,000 yuan, this kind of loan is fine.
52 Incomprehensible SOL: Small investors may think that they don’t have much money anyway, and if they don’t give it a try, there will be no chance of making big money.
Duan Yongping: There is no investor in this world who doesn't want to make a lot of money. Knowing what not to do is much more important than knowing what can be done.
The most important reason why "small investors" can easily remain "small investors" is that they may want to make quick money and big money because they are small, so they take risks instead of pursuing the truth. Who doesn't want to make a profit? But the result of doing so is basically that they work hard for a long time and still make less money, so they will no longer want to do this kind of thing in the future. It is also important to know that it is not possible.
53 Incomprehensible SOL: Some people say that they are just unlucky and were cheated and exploited by dishonest people.
Duan Yongping: I get cheated a lot because I am greedy or dishonest. Otherwise, there must be more people who want to cheat me than those who want to cheat ordinary people.
My understanding of investment is very simple, but this "simple" is actually very difficult.
Simple refers to the general principles, which are "right and wrong", and difficult refers to the skills, which means "doing the right thing and doing things right".
The most important thing is to have a sense of right and wrong and a long-term perspective. If you can think about everything 10 or 20 years in the future, you probably won't be so confused.
Sometimes, some of the choices you make do not bring you comfort, but only allow you to temporarily escape from problems or gain a little immediate benefit, but you may very likely lose your inner peace.
Be upright and don't be surprising
54 Incomprehensible SOL: How to maintain inner peace in a noisy market?
Duan Yongping: (The Book of Purity and Tranquility) says, "If a person can always be pure and tranquil, all heaven and earth will return to him." If a person can always be pure and tranquil, the power of heaven and earth will return to his life. An ordinary mind is the meaning of purity here.
Only a normal mind can fulfill one’s duty. “Duty” means returning to or finding a state of mind in which one can often do the right thing.
A blogger once had a name called "Sticking to the right path and being surprising". I said I don't like this name because people who stick to the right path and are surprising are actually thinking about being surprising all day long. I said, we should stick to the right path and not be surprising.
If you don't think about doing something surprising all the time, the chances of making mistakes will decrease, and it will become possible to do something surprising accidentally.
If you earn money in an honest way, you will sleep well. If you are healthy, you will live longer, and you will make a lot of money in the end. Most importantly, people who make money in an dishonest way are actually not happy.
Duty means to do the right things and do things right, and not to do things that are not your duty. A normal mind is a mentality that returns to the origin of things, and strives to recognize what is the right thing and the essence of things.
In time, the power of duty is powerful. On the other hand, if you don’t do your duty, you can check the reasons why companies went bankrupt in the past 30 years.
55 Incomprehensible SOL: In other words, duty is an important reason for the success of a successful company?
Duan Yongping: Someone once asked Munger, if he could only use one word to describe their success? His answer was: "rationality", which is a bit like what we call a normal mind.
A normal mind means being able to eliminate all external interference at any time, especially when there is temptation, return to the essence or origin of things, distinguish right from wrong, and know what is the right thing to do. Generally speaking, smart people know how to do things right, but wisdom means doing the right thing.
Looking back a few decades, you will see that many very "smart" and "intelligent" people have achieved very little. The reason may be that they did not use their intelligence to do the right things.
56 Incomprehensible SOL: Knowing is easy, doing is difficult. It is not easy to do it.
Duan Yongping: At least you have to have the attitude of using spare money, so that you can have a normal mind, otherwise you really won’t be able to sleep. I have always used spare money.
People who view investing as "farming" will have a much better mentality because they roughly know what they are doing, although there are times when the weather is not so good.
I think that when a person thinks he can beat the index, he may have lost his composure. Good value investors don’t compare in their hearts. But the result is often that good value investors will eventually beat the index. At every point in time, “holding” is equal to “buying”
57 SOL I don’t understand: What do you think are the differences in the perception of investment among domestic and foreign investors?
Duan Yongping: I have met many ordinary investors in the United States, and they all have a very deep understanding of value investing. After returning to China, when I talk to people, even those who have become very big and famous, I can't help laughing and crying. For example, he will find some "short-term Buffetts", which is very funny, because Buffett means that you can't short-term. Let me give you an example. The fastest return I made was 50 times in 2 hours, and I made it in the casino. This is not called investment, this is called gambling.
Many people who "buy and hold" are actually speculators, because they don't actually know what they are buying. After buying, they need to ask others what they think all day long. When they are trapped, they use "long-term investment" to comfort themselves.
Remember, there is nothing more harmful than buying the wrong stock and holding it for a long time.
58 Incomprehensible SOL: Some investors say that for any stock you hold, you should constantly clear your mind, assume that you have not bought it, and think about whether you are still willing to buy it. Do you think that holding and buying are the same?
Duan Yongping: This is a very common but very meaningful question. I believe that almost all investors have been troubled by this question for a long or short time, and most people probably cannot solve this problem in their investment career.
This question will ultimately not bother true "value investors". Those who cannot figure out this question are not considered "value investors", no matter how many investment books they have read or how many years they have been investing.
"Is holding equal to buying?" is actually correct at every point in time. The shorter the time, the greater the probability of being correct. This is also what bothers many people.
Buffett explained it quite clearly when talking about when to sell a business, but don’t expect to truly understand it after just reading it once. Buffett also said that it took him many years to roughly understand it, and I am also at the stage of roughly understanding it.
I think there is no standard answer to this question, but it is a very good way to distinguish between "buy to keep" and "buy to sell".
In fact, "holding" is indeed equal to "buying" at every point in time. This is what opportunity cost means! However, if investors really think that way, it is easy to fall into the trap of thinking "is it overvalued" every moment, paying too much attention to the market instead of focusing on the business itself.
The essence of investment lies in the business itself. The more attention one pays to the market, the higher the element of speculation. The so-called "value investors" should be able to decide whether a company is a listed company now or in the future and decide to buy or sell the company.
Among the companies that I understand, there is no company that can attract me to exchange Apple for it. From the perspective of holding equals buying, I am actually buying Apple every day.
In theory, holding = buying, this is not a point of view but a fact. If people do not have the mentality of holding a non-listed company, they will have the urge to sell at any time. If you still have the feeling of "holding on", you are not a "value investor".
6 factors to “hold” stocks
59 Incomprehensible SOL: People often underestimate the difficulty of holding a stock for a long time. Many people say that they chose the right company but did not hold on to it.
Duan Yongping: If you learn how to choose right and hold on to your stocks, plus a little bit of luck, it won’t be that difficult to make money in the stock market.
However, human nature does make the second one more difficult.
Therefore, I think you should spend at least half of your energy to understand the second course that Buffett taught (Note: Buffett said that investment requires mastering two courses, one is how to value a company, and the other is how to deal with market fluctuations). Once you understand it, hold on to it, and it won't be difficult.
In my personal experience, there are several factors that can help you "hold on": 1. Don't have too high expectations for returns.
2. It is very important to have a certain understanding of the laws governing the stock market. Otherwise, how come you can always think in reverse and most of the time you are right?
3. Focus on the game, not the scoreboard, but most people don't do this.
4. Try to stay away from the market and don’t watch the K-line every day.
5. Adjust the time for evaluating investment returns to more than 5 years.
6. Don’t think you are smarter than others.
60 Incomprehensible SOL: Someone joked that after choosing the right company and buying it, you can just close the position and not look at it for 10 years?
Duan Yongping: It is a good idea to hold a position for 10 years, and this is what you should think when selecting stocks. But I don’t know if I will hold Apple for 10 years or more.
In fact, when I buy stocks, I really don't think about how many years I will hold them. I usually set a rough price for the stocks I buy. For example, when I bought GE, I thought GE was worth at least $20, but I really didn't think about how many years it would take to get there.
You don't have to buy stocks with reasonable prices. My view is that only when the price is unreasonable is there an opportunity. Sometimes it may be very uncomfortable to wait, especially in a bull market. Buffett once said that the hardest thing is to do nothing. If he finds it difficult, it is normal for us to find it difficult.
61 Incomprehensible SOL: Do you set an expected return for every investment you make?
Duan Yongping: First, I actually never set a preset return expectation, because investment returns have nothing to do with expectations.
My understanding of investment is that the process is more important than the result. Man proposes, God disposes. As long as the process is right, the result will naturally be good.
Second, in the long run, going to the bank to deposit money should be the most basic requirement, otherwise it would be a waste of time.
Third, from the perspective of value preservation, the long-term investment return must at least be able to maintain the purchasing power unchanged to avoid loss. In any case, you should not choose one that cannot beat the government bond interest rate, but one that can beat gold (about 10% or so) is very ideal.
I often see people being disdainful of an average annual return of 15%+. I don’t really understand it. It seems that they should be aiming for 5 times or 10 times the return as soon as they make their move.
The market often talks about what a normal year should be like. This statement is very interesting. For me, every year is a normal year.
62 Incomprehensible SOL: Does the expected rate of return have anything to do with the size of the funds?
Duan Yongping: People like to measure it with one year’s rate of return, but the annual rate of return of large funds has no chance of being particularly high, such as Buffett’s Berkshire.
However, small funds often have the opportunity to have a high return rate. For example, among your friends, there is often someone who is said to have a return of 40%, 50% or even higher that year.
Just like when some friends go to the casino together, there are always some who are very excited when they come out on the first day. Don't think that these people are better than Buffett.
The sooner you start investing, the better, but remember to "get rich slowly"
63 Incomprehensible SOL: When did you find it difficult to invest?
Duan Yongping: I know what to do when my portfolio is full, but I don’t know what to do when my portfolio is empty. I later studied Buffett and found that Buffett also said that the most difficult time is when you have a lot of money but no projects to invest in.
In fact, Buffett has been in this state for a long time. If he doesn’t find any projects to invest in, he will just wait. This is the most difficult time for investment.
64 Incomprehensible SOL: What would you do if you have some spare cash but can’t find suitable stocks to buy, and you’re worried that the money will depreciate?
Duan Yongping: I will be anxious, but I will try not to make decisions when I am anxious. Decisions should be made on a rational basis.
For so-called value investors, if there is no suitable thing, they will not buy it. If there is a suitable thing, they will buy it, just like ordinary people shopping in a mall. I think everyone will not set the goal of spending all the money when shopping in a mall. My advice is to take it slow. Slow is fast.
65 Incomprehensible SOL: Buffett always keeps cash on hand. Should we always keep cash on hand to leave room for ourselves?
Duan Yongping: Buffett always has cash because of his business model. As far as investment is concerned, if there is a good company with a good price, why would you keep cash?
When I see a company I want to buy at the right price, I can't think of a reason to keep cash.
When it comes to investing, it is not enough to just watch all day, you need to practice. The sooner you start investing, the better. Don’t think about making a lot of money right away, but remember what Buffett said: “Get rich slowly.”
Occasionally, you will hear someone say that a certain stock will at least increase 10 times, so he plans to put 10% in it, etc. If he really believes that this stock will increase 10 times, why would he only put 10% in it? Or do you think it is speculation, so you only put 5-10% in it?
66 Incomprehensible SOL: Focus on a few companies that you can understand.
Duan Yongping: From the beginning to the end, I have actually invested in five or six companies at most. I have sold some of them, and I usually hold about three companies. I am not afraid of concentration. I am not just generally concentrated, I am absolutely concentrated.
Buffett's Berkshire Hathaway has a market value of more than $100 billion, but has only invested in a dozen companies.
Buffett once said that he was very focused many times in his life, even reaching 100%. Whatever comes his way, it's a win. Anyway, you don't need many goals to make money. Buffett said that one idea a year is enough.
I know very little. I just know that Buffett's road is very good and can definitely get to Rome. A lot of friends always ask me what Soros's road is like, and they don't allow me to say I don't know. I really don't know.
Generally speaking, if you see the opportunity, you must be ruthless. It is difficult to be ruthless if you don't quite understand. There will always be opportunities if you wait patiently.
“Margin of safety” refers to the degree of understanding of the company
67 Incomprehensible SOL: How do you value a company?
Duan Yongping: When most people talk about valuation, they are referring to what price the market should give to stocks.
The idea of ​​being acquired is no different from the idea of ​​"buy high, sell higher". Sooner or later, you will suffer. Perhaps many people have already suffered, but they just don't repent.
When I "value" now, I always try to figure out what "price" I should pay so that I don't have to worry about it for 5 or 10 years. In other words, if I own the shares for 5 or 10 years, will the actual return in the future be worth the price I paid?
I don't consider what the market is willing to pay at the moment. I usually imagine that if it is a private company, I use the current market value to own this company, and compare it with my other opportunities in the next 10 or 20 years, which one may get a higher return.
The return here does not refer to the stock price increase, but to the company's profit, looking at the cash flow it can bring in its future life cycle.
68 Incomprehensible SOL: The stock prices of good companies are very expensive, what would you do?
Duan Yongping: Finding a good company is more important than anything else. When everyone is in a "crisis", a good company can often simplify the "crisis" into an "opportunity".
When I buy stocks, I usually buy good companies with problems. The key is whether these "problems" can be accepted by these companies and whether they will be fatal.
Finding undervalued companies is a difficult task. How do you evaluate whether a company is undervalued? I think the team is important, but it also depends on whether the company has a good culture. The real core competitiveness of a company is its corporate culture. Whether it is expensive or not should be judged from a five- or ten-year perspective. Many companies seem to make a lot of money, but their cash flow is decreasing. That's dangerous. Buffett said this a long time ago, and people know it, but they are confused when investing.
Buffett is definitely a person who can find the essence of things. Investing in Apple is a very good example. Revolution has no order of priority.
69 I don’t understand SOL: Do you use the discounted cash flow formula to calculate?
Duan Yongping: I would rather have vague precision than precise vagueness. Discounting future cash flows refers to a way of thinking, and valuation is a rough estimate.
Rough estimate means that if you can figure out the price in 5 minutes, it must be cheap enough. If you need a calculator to figure out the price, it is not cheap enough.
Just like when Yao Ming walked in, you didn't need to measure him with a ruler, you knew he was very tall. If I wanted to buy something of Yao Ming's height at the price of someone of my height, I would buy it. I didn't need to know how much taller he was than me before I bought it.
As for whether I should sell when the price rises to the same height as Yao Ming, it is hard to say. There may be other reasons, such as I found a more suitable stock.
Generally speaking, stocks that can earn you dozens of times or more are not estimated by valuation. Otherwise, it makes no sense for investors not to bet everything on them at the beginning. If I had known that NetEase would increase by 160 times, wouldn’t I have bought all of it?
Of course, there are times when you feel that a stock is very cheap just by pressing a calculator, such as when Buffett bought PetroChina and I bought Vanke, but these are often exceptions. You cannot simply look at the numbers, unless the net cash on the books exceeds the stock price.
But be careful with companies whose market value is lower than their cash. At first glance, companies whose market value appears to be lower than their cash are often indeed worth taking the time to look at, but in most cases they may not be bargains.
I always believe that rough valuation is mainly used to judge the downside space, and qualitative analysis is the source of real profits. This may also be the most difficult thing in value investing.
70 Incomprehensible SOL: So, you do more qualitative rather than quantitative analysis?
Duan Yongping: I do use more qualitative analysis in my investment, and this is the difference between me and Wall Street analysts. Otherwise, how would I have any chance?
However, since qualitative analysis involves a lot of uncertainties, in most cases, people often do not dare to place big bets even if they are optimistic, or even if they place big bets, they do not dare to go all out.
71 Incomprehensible SOL: How do you do quantitative analysis?
Duan Yongping: For example, if a company has a net asset of 10 billion and earns 1 billion every year, how much is this company worth? It is roughly the amount of money you deposit to get the interest on 1 billion, calculated based on the interest on long-term government bonds, and then the amount of funds is discounted by 40%.
Long-term interest rates will change, so I usually use a fixed rate of 5%. If I buy 20 billion long-term government bonds and earn 1 billion a year, will I spend 20 billion to buy a company with an annual profit of 1 billion? Government bonds are risk-free, so buying a company requires a discount.
The more unreliable something seems, the bigger the discount will be. This is probably the origin of the margin of safety that Buffett talked about.
72 SOL that I don’t understand: At what discount do you think there is a safety margin?
Duan Yongping: I think that Buffett's "margin of safety" actually refers to the understanding of the company, not the price. From a 10-year perspective, buying at a price 30% higher than the lowest price is not much. Good companies have nothing to do with whether the stock price fluctuates. If you can't understand it for five or ten years, you shouldn't touch it. Don't make decisions based on past prices.
If the company you buy has a PE ratio of 10, even if it delists, you can still make a 10% profit every year. Not counting the company's growth, the profit can be used for dividends or investments, which is much higher than government bonds.
If you believe that it will have a 10% profit in the future, the convertible bonds of Goldman Sachs and GE that Buffett bought are 10% plus options, which is a very good deal.
The problem is that PE is historical data. You cannot rely solely on PE to speculate on a company's future earnings, otherwise you will be caught.
For example, GM (General Motors) has always had a low PE ratio, which used to be around 5 times, but its debt was very high and it ended up going bankrupt.
Real investors are arrogant
73 Incomprehensible SOL: What is your standard for expensive and cheap?
Duan Yongping: I only have one standard, which is to buy when I think it is cheap. I usually buy companies that I think are undervalued by 50% or more. The value I understand is the current net worth plus the discounted sum of future profits.
For example, if I think GE is worth $20, I might start buying a little bit when it reaches $15, but I will buy a lot more when it drops below $10. It takes a certain amount of luck to buy cheap stocks in large quantities. It seems to be more difficult to do it when watching the stock market every day.
74 Incomprehensible SOL: When you say cheap, it is not just about looking at the price, but understanding the company. Many people try to buy at the bottom because the price is cheap, but they find that they are catching a falling knife. In the process of Citibank's stock price falling from $60 to $1, a large number of "value investors" who tried to buy at the bottom were trapped.
Duan Yongping: I personally think that bottom fishing is a speculative concept, and value investors should not seek to bottom fish. Bottom fishing is looking at others, while value investors only take action when the price is low enough, regardless of what others think.
In fact, if I buy a stock at the bottom, the profit is often less, because I often cannot make a move when it rebounds and easily miss the opportunity.
The most typical example is that when we bought Vanke that year, we bought it at the bottom and the amount we bought was far less than our original plan.
The reason why it is easy to fall into the trap when catching a falling knife is that when people catch a falling knife, they tend to think about what price the stock has been in the past, rather than how much the company is worth.
I think that whenever you buy stocks, you should always assume that you have just arrived on Earth from outer space, and then think calmly about whether you should buy this stock at this price, including when catching a flying knife.
Why does being trapped become a value investment? Was Buffett trapped by Citi? Why not?
I asked Buffett what he would do if the stocks he bought kept going up. He said that if the stocks he bought went down, he could still find money to buy more, but if they went up later, he would not be able to buy more.
He even believes that buying at the bottom is a bad thing when investing, because after you buy at the bottom, the stock price will continue to rise, so you can't buy the maximum amount.
A real investor hopes to buy in as the stock price continues to fall within the allowed value fluctuation range. Only in this way can he get more and cheaper chips.
75 I don’t understand SOL: Would you avoid Wall Street on purpose for cheap prices?
Duan Yongping: When I buy a company, a big factor that determines my decision is how closely the company's behavior is related to the influence of Wall Street on it. The greater the correlation, the lower the chance that I will buy it.
Wall Street is always right, it represents the ideas of different people. But you have to know what you are doing. If you listen to Wall Street, you will be confused.
Just like when I bought NetEase, I was able to buy so much at that price because Nasdaq has a rule that stocks below one dollar will be delisted if they remain below a certain period of time. Many people were afraid of delisting and sold them when the price was below one dollar.
Why am I not afraid? I will buy it regardless of whether it is listed or not. If the price is lower than its value, I will buy it.
BBK has never been listed, but I sold the company because of this. This doesn’t make sense and is ridiculous. I founded the company and then sold it just because it was not listed. Then why did I start the company?
I studied NetEase carefully and found that when its stock price was $0.8, the company still had more than $2 in cash per share. It was facing a lawsuit and might be delisted, so there was some uncertainty.
I consulted some legal professionals and asked what the most likely outcome of a similar lawsuit would be, and the conclusion I reached was that the consequences would not be serious because their mistakes were not particularly outrageous.
It was important to know that the company had no major operational problems. After doing my homework, I basically used all the money I could to buy its stock.
The most important reason why I dare to buy a large amount of NetEase stock is that I have spent enough time on the enterprise and have a deep understanding of the company and its products.
Investment is not about missing an opportunity, but about not taking the wrong opportunity. When the value of the investment object is greater than the price, it is not called boldness, but rationality. Can you say that you are bold to spend 5 yuan to buy something worth 10 yuan? What many people lack at this time is rationality, not courage.
Whether an opinion is right or wrong depends on the facts, not how many people or who share your opinion. The most important thing in investing is to have the ability to think independently and rationally.
76 Incomprehensible SOL: Do you know how to choose the right time to enter the market?
Duan Yongping: I don’t pay attention to the overall market when investing. The overall market has an impact on the short term, but not the long term. I don’t understand the overall market. Even Buffett doesn’t understand it, so why should I?
Any attempt to think about the market and timing is probably wrong. Buying stocks has nothing to do with what price the stock has been at in the past. The saying that half the IPO price is cheap does not make sense.
I focus on the long term and don't touch anything I don't understand. I look at business and only focus on individual stocks. You say a certain stock is expensive, how do you know? Looking back at 10 years ago from today, I guess everything is expensive. Looking back at today from 10 years later, if you can understand the company and it's cheap, just buy it.
From a 5- to 10-year perspective, the impact of macro factors on a company is much smaller than imagined.
The problem with most people is that they calculate too much and think too little. It's okay to take a little money and try it, but what do you want to try? The trend of the market.
Many people call themselves investors, but I say they are just doing it for fun. They care a lot about whether others are satisfied with the company. A real investor is absolutely "arrogant". He only focuses on the company. He does not care whether anyone around buys it. He would rather hope that no one else buys it.
"The one who knows how to sell is the master" is a trading mindset
77 Incomprehensible SOL: When should I sell stocks?
Duan Yongping: I don’t know when is the best time to sell.
When I buy a stock, there must be a reason to buy it, and I must also see the negatives. When the reason to buy disappears, or the important negatives increase to a level that I cannot accept, I will leave the market.
It is very important to face market fluctuations rationally and carefully examine each of your investment reasons and their changes. When you buy, you think it is at least worth the price, and you should study it carefully again after the price is up.
Too expensive can sometimes be a reason to leave the market. Generally speaking, when the "market situation" is good, it is probably time to sell stocks.
However, if it is a really good company, you should not sell it even if it is a little more expensive, otherwise you may not be able to buy it back and the opportunity cost will be high.
I sold all the shares because I didn’t know the company well enough. We made good profits from Skyworth because it was not easy to sell and the price rose quite fast.
When we bought Skyworth, its market value seemed to be less than 2 billion, or maybe a little more, I don’t remember, but I thought it was cheap, so I bought it. We stopped when we were 10,000 shares away from 5%.
Because the next purchase would require an announcement, I wanted to communicate with Huang Hongsheng before the announcement, fearing that he would think I was going to steal his piece of land. As a result, we did not buy more because it was not convenient at the time. Later, I called Mr. Huang to thank him and say hello.
As for Skyworth, I don’t have a clear idea of ​​how much it is worth, and I don’t have a detailed understanding of their current business situation, so I have been selling off my holdings gradually after the stock price went up.
Once the basic target price is reached, it is still very important to judge its value.
For example, I spent a lot of time on the subsequent development of NetEase. Otherwise, it would not have been possible for me to get most of the shares at 120-140 times the price before selling them. I was not the only one who bought NetEase shares at US$0.8, but not many people insisted on holding on to them until they reached US$100.
78 Incomprehensible SOL: Should I hold or sell, should I consider the time cost?
Duan Yongping: Stocks or companies have time value, and this is the charm of "discount".
For example, I think Apple will be a stock worth 1,000 yuan sooner or later, but it may take three years. If someone is willing to buy it for 800 yuan today, I may be willing to sell it.
But if I thought that NetEase would be a stock worth more than 50 yuan or even 100 yuan within 10 years, if someone offered 10 yuan to buy it, I would not sell it even if the market value was 5 yuan at the time.
The "discount" of future cash flows, if you ignore the word "discount", the meaning is completely different. For example, if I tell you that Apple will reach 100,000 yuan per share one day, but it will take 10,000 years, will you buy it? My judgment standard is value. When I first bought NetEase, the average price was about 1 yuan, and most of the selling prices were about 30-35 yuan.
Every time NetEase reached its target, I would seriously re-evaluate it. During the 8 to 9 years I held it, I was probably tempted by the selling price every day, and I used this principle to resist the temptation.
Actually, I did buy and sell some of them, but they were very small. I sold them because I needed to switch to GE and Yahoo. I will always keep some NetEase stocks.
After Vanke reached the base price, it sold it without re-evaluation, resulting in a much lower profit.
When the stock price drops, it is also a motivation to re-evaluate the stocks you hold to see if the reasons for buying have changed. For example, if I bought UNG and looked at it carefully, I found that I bought the wrong one, so I cut my position. Otherwise, I would have lost tens of millions if I had kept it until today.
79 Incomprehensible SOL: Investors often say that selling is harder than buying, and those who know how to sell are masters.
Duan Yongping: The buying and selling of so-called value investors are all related to value, not cost. No matter when, selling should not be linked to the cost of buying.
There are many reasons to sell, but the only one you shouldn’t use is “I’ve made money.” Otherwise, it’s easy to sell a good company you’ve finally found at a cheap price, or not sell when you’re losing money. The same goes for buying. There are many reasons to buy, but it’s best not to use the price that the stock has reached as a reason to buy.
The one who knows how to sell is a master, and deep down he is actually considering the relationship between market price and cost. Those who want to do this are concerned about the market's attitude towards the stock, rather than focusing on the company's business.
For a company that you truly understand, the decisions to buy and sell are actually of similar difficulty.
For example, I once made money from Panasonic stocks. I bought them at 7 yuan and sold them when the price rose to more than 20 yuan. I kept them for about two or three years.
Because I am in this industry, many of my business ideas come from Panasonic. I have also visited their company and know their strengths and weaknesses. I feel that the stock price of this company cannot go below 7 yuan, and 20 yuan makes me feel that I can buy or not, sell or not.
Therefore, the investments you make have a lot to do with your past experiences and what you can understand.
Your judgment has nothing to do with the mainstream judgment of the market, and there may be a big time difference between the two. I judge its future, while the market will only reflect the price when the company's situation improves.
80 Incomprehensible SOL: Buffett said that you should never consider selling a truly great company.
Duan Yongping: He did say that, but up to now, there are very few companies that he has not sold.
I think the subtext of what Buffett said is that the market often does not give a crazy price to great companies. If you sell just because they are slightly overvalued, you may lose the opportunity to buy them back. Moreover, in the United States, selling stocks requires high taxes, which is not cost-effective.
The most important thing I learned from Buffett
81 I don’t understand SOL: What do you think of Buffett?
Duan Yongping: Buffett is a very good person. He is kind and sincere to people from the bottom of his heart.
He is very wise and can get to the essence of any complex issue in just a few words.
He is so wise, so successful, and so kind to people. I have hardly ever seen such a person among Chinese entrepreneurs, and there are very few such people among American entrepreneurs as well.
82 SOL I don’t understand: What impressed you most about your lunch with Buffett?
Duan Yongping: When Buffett left, his driver drove over in a car that looked like a truck, and he climbed in with great agility. This left a deep impression on me.
Although I knew he was not a luxury person, I didn't expect him to drive such a car. I have been to his house before, it is not a mansion, but just a very ordinary house. After meeting him, my wife also said to me: "You still have a lot to learn." I said, yes, it is true.
We have seen many rich people, but few ordinary people like him. After I returned to China, I saw some people with a little money were very arrogant, including when eating and their attitude towards waiters, the difference was huge.
Buffett is very nice to the waiter. He doesn't do this for me to see, and he doesn't need to do it for me to see.
Such an accomplished person is so modest, down-to-earth and kind. We may not be able to learn his humor, but we can always learn humility.
83 Incomprehensible SOL: Sometimes you find a good target but you don’t have money. In this case, what should you do?
Duan Yongping: When I asked Buffett some other questions, he answered this question indirectly.
I asked Buffett what are the things that you should not do in investing, and he told me: Don’t short, don’t borrow money, and most importantly, don’t do something you don’t understand.
He said that he only wanted to be rich once, and if he borrowed money, he might become rich twice or three times, and then become poor again. What he meant by this was to make fewer mistakes.
Over the years, I have lost hundreds of millions of dollars in investments, and every loss was made in violation of Buffett's teachings. The big money I made was all made in areas that I really understood.
84 Incomprehensible SOL: You advocate not taking out loans and not using margin. What if you miss the opportunity?
Duan Yongping: Loans and margins make money quickly, but lose money even faster. If you walk by the river often, your shoes will get wet. Once your shoes get wet, they will get wet for the rest of your life. Why take the risk?
Some opportunities are always missed, as long as we make sure we catch the right ones, that's enough. Most of our competitors in the past have disappeared, but we are still alive, maybe this is the reason.
85 Incomprehensible SOL: Have you ever asked Buffett what mistakes he made?
Duan Yongping: Yes. He said he made a lot of mistakes. For example, he invested in a company for more than 10 years, which was originally worth only 400 million yuan, but he spent 4 billion yuan. Now the value of this company is zero and it has gone bankrupt.
He said that making mistakes in investment is not terrible, the most important thing is to make fewer mistakes, and it is not enough to do a good job in a certain project. Investing is like playing golf. If you play well in every aspect, it will not be fun. Golf mainly depends on the overall performance, not a certain part. Most people are more concerned about why you play so well in this shot, but in fact, golf uses the whole field to calculate the score.
Sometimes we focus too much on the success or failure of a particular case and often ignore the overall situation.
86 Incomprehensible SOL: Sometimes you have money but cannot find a project, what should you do? Have you ever asked Buffett what to do when you are short?
Duan Yongping: I had thought about this question clearly before I met him. Investing has nothing to do with whether you are short or long.
When you are short, you cannot buy stocks you do not understand. Shorting means doing nothing. We found that the most difficult thing is to do nothing.
Buffett said he made the most mistakes when he was rich.
It is difficult to be short. When you have a lot of money, it is easy to make mistakes. In fact, no one is really short. I don't understand the concept of short. It is a speculative term.
Buffett has almost never had a short position, except for maybe one time, when his first fund ended.
87 Incomprehensible SOL: In 1969, Buffett believed that the market valuation was too high and announced the dissolution of the company and his "retirement", and this break lasted for 5 years.
Duan Yongping: If you think you should reduce some, why not all? If you think the company you own is too expensive, you should sell it all, unless you keep some as a souvenir, or keep some to bet that the market will rise a little more?
The reason why Buffett quit was because he couldn't find any company he dared to buy, and he felt uncomfortable holding everyone's money, so he simply disbanded the company.
Is buying airline stocks “copying homework”?
88 SOL I don’t understand: When you met with Buffett, what else did you talk about besides investment?
Duan Yongping: We also talked about golf, bridge, girlfriends, and the situation of our company.
Our company has done well over the years, but we don’t want to go public. I think going public would not be good for us.
Buffett mentioned that an entrepreneur he knew would rather his wealth be reduced by half than to delist his company. This was very shocking to me. He did not confirm or deny whether it was a mistake to go public, but he gave me a lot of affirmation from a very indirect perspective.
89 Incomprehensible SOL: What investment actions did you take after chatting with Buffett?
Duan Yongping: I once bought two airline stocks. I thought that with so many people flying, there should be a lot of room for growth. But Buffett said that this was a tough business.
Later, I realized that "there is no differentiation in the airline industry, and the only way to fight is price war." I sold one of them and avoided a loss of no less than $50 million.
Because airlines have difficulty differentiating their products, they can’t make money and have no investment value in the long run. This is what Buffett taught me, and it saved me a lot of money.
It is normal not to make money because of lack of understanding, and there is nothing to regret.
If you dare to invest without understanding, firstly, you won’t be able to hold on for that long. You may buy it for 80 yuan and sell it for 100 yuan or 120 yuan. In fact, you won’t make any money. Secondly, if you do this everywhere, you may have lost everything long ago.
90 SOL that I don’t understand: But you still bought Delta Air Lines in April this year. Why?
Duan Yongping: From the perspective of buy = hold or hold = buy, my purchase of airlines was actually equivalent to selling Apple to buy airlines, although I used the extra cash I had recently. From a 10-year or longer perspective, it does not seem to be a good decision.
But out of curiosity, I still looked carefully at the reasons why Buffett bought it, and it seemed to make sense, so I bought 1% of Dal (Delta Airlines), just for fun. Maybe under the epidemic, I have some time to take a look.
Compared with the last restructuring, the current major airlines are actually a bit of a quasi-monopoly, so the business model is still good in the foreseeable future. The investment in the airport is huge, and it is difficult for new competitors to enter.
In addition, buying also expresses my confidence in humanity's victory over the virus.
91 Incomprehensible SOL: Some people say that this is “copying homework” from Buffett, but is it wrong?
Duan Yongping: We must have our own independent thinking ability. It doesn’t mean we should simply follow whatever Buffett buys. Otherwise, we would have fallen into IBM’s trap.
In fact, in the years since Buffett bought IBM, I have always wanted to understand IBM, but after looking around, I feel that Buffett may make mistakes. However, no matter what Buffett does, it is worth my attention, at least to be curious about why Buffett does this.
The airlines did find this interesting at the time. This business is no longer the business that relied entirely on price competition and had no differentiation. If it weren’t for the epidemic, these large airlines would have been very profitable.
This epidemic seems to be a dimensionality reduction attack. If you believe that the epidemic will pass sooner or later and some airlines will definitely survive, then it is obviously a buying opportunity. As for who can survive, you have to figure it out by yourself. If you don’t understand, it’s best to stay away from them!
92 Incomprehensible SOL: Buffett bought 4 airline stocks, why did you choose Delta?
Duan Yongping: Buffett bought all four companies, but bought more in Luv and Dal. There are still some differences among these four companies. Southwest seems to be the healthiest, but has the least room for growth. Dal's corporate culture is not bad, and its security is about the same.
93 Incomprehensible SOL: After Buffett announced that he would sell airline stocks, you publicly said that it was a bit difficult to understand.
Duan Yongping: I was a little surprised that Buffett cleared out his airlines, because he had just said that he would not sell them! Selling them at this time would be like trapping his fans, which is a little hard to understand.
It seems that when he said he would not sell, he had actually decided to sell, and he first sold Delta and Southwest to less than 10% to prepare for further reduction of holdings later. It is rare to see this.
I have no interest in why Buffett sold the airline, I just feel uncomfortable with the way he sold it. He just told the media that he would not sell it and then sold it right away, and he used some tricks to sell it.
And he didn't explain why he said he would not sell it and then sold it. He just explained the reasons why he sold it, and some of the reasons existed before he bought it, which is also confusing.
Of course, there are many things in this world that are difficult to understand, and one more thing is not a big deal. We did buy some Delta shares ourselves, and the reason was that Lao Ba bought some and attracted my attention.
94 Incomprehensible SOL: Did you later understand why Buffett sold it?
Duan Yongping: I think Buffett may be very pessimistic about the virus. After all, no one has ever faced such a situation.
I have never seen Lao Ba do or say anything illogical before, but this time I felt that it was a little bit inconsistent. I also felt that Lao Ba was a little bit panicked. It was really not easy.
Logically, I couldn't understand why he sold it this way at first. The only logical thing I can think of is that when he said he wouldn't sell it, he thought the epidemic was nothing serious, because the entire US government seemed to think so. As a result, things changed so quickly that I was a little scared.
The circuit breakers for the U.S. stock market were on March 9, 12, 16, and 18. He was interviewed on March 10 (aired on the 13th). California was the first to start sheltering in place (the government required people to stay at home). On the 9th, he might not have realized how serious it was.
I think there is a high probability that he changed his mind that week and decided to sell the airline.
This can be seen from the fact that he did not increase his positions during several circuit breakers. Buffett has a lot of cash in his hands.
I can fully understand his aversion to risk, so he thought it was better to walk away, because airlines do involve risks. I also bought a little bit with the attitude of a small gamble for fun. Moreover, based on my own understanding of the epidemic, I believed that airlines should be able to restore a certain level of passenger flow quickly and avoid bankruptcy.
Buffett has proven many times that he is always right, but he has also made mistakes. The next few years will be very interesting. In any case, I still respect him very much!
95 Incomprehensible SOL: You said at first that you would not sell, but finally chose to sell. Did you not understand it at that time, or did you make a mistake?
Duan Yongping: My cost of holding Delta is around 22. I originally thought that it doesn’t matter whether I make a profit or a loss, I will just hold it until the end of the year.
I still think that if the epidemic is a problem that will not be over for a long time, the airlines that survive will have a great chance. About 1-2% of all the investments I manage are invested in Delta, and I still think that this money will not be wasted, and I should be able to see results within a year.
But I rarely have trouble sleeping because of my investment. I am not at ease holding airlines. There are always things I cannot figure out. I respect Barack Obama's ideas, so I also found an opportunity to withdraw.
It's not that I don't understand, it's that I see unnecessary risks. My opinion has not changed. I think Delta and Southwest are the airlines with the best chance of survival, but no one knows how the epidemic will eventually lead to changes in people's consumption habits.
I am optimistic that we will find a way to deal with the epidemic, but I don’t know when and how it will end or how we will coexist. The hard part of holding an airline is that you don’t know which side time is on.
The feeling of holding Apple is completely different. I don't mind how the stock price drops. Fortunately, my major position is Apple instead of airlines. Well, a small bet is fun, and I will accept the loss if I lose!
96 Incomprehensible SOL: Buffett said that he sold the airline because he made a mistake and his evaluation was wrong. When he bought it, according to his calculations, he bought it at a good value. Later, the development of things proved that he was wrong in his judgment, and the airline business has undergone a huge change.
Duan Yongping: Yes, I decided to sell after reading this. I agree with Buffett's point of view that this business has changed. However, Buffett is quick, and I am a little slow this time. I have only sold half of it now, and it will probably take more than a month to sell it all.
97 Incomprehensible SOL: Since you have found that you are wrong, why not sell it all at once? Buffett said that if you don’t want to hold 100%, you shouldn’t even hold 1%.
Duan Yongping: When I first decided to sell, it seemed that many people were selling, so I decided to wait. The volume was indeed a bit large, and I couldn't run away even if I wanted to. I let those who were fleeing run first, and it didn't matter if I was a little slower.
If I find that I am wrong, it means that this is not the company I want to hold for a long time. It does not meet the criteria of "good business model and corporate culture" and I need to find an opportunity to leave.
However, retreat is not a rout, and Delta is not expected to go bankrupt immediately, so it should be no problem to sell a little every day. I plan to basically clear out the position before the next financial report is released. So far, I have been lucky and have made a small profit.
98 SOL that I don’t understand: Later, airline stocks rose a lot again. Should I continue to hold them?
Duan Yongping: The new coronavirus is more contagious than SARS, and it seems that it will not disappear in the short term like SARS, and the frequency of this virus is likely to increase in the future. If it occurs less than once every 10 years, the business model of airlines will be very difficult.
99 I don’t understand SOL: What do you want to exchange your airline stocks for?
Duan Yongping: I decided to change some Brk (Berkshire Hathaway). In addition, I have always liked Disney, and I finally had the opportunity to buy some some time ago. This can be regarded as a little progress in collecting great companies.
Buffett said that he is a collector of great companies. I think Disney should be a great company that can be collected.
100 Incomprehensible SOL: Everyone says that you are the Chinese Buffett. Are your ideas different from Buffett’s?
Duan Yongping: We are the same in our bones, the only difference is the level.
Over the years, his understanding of investment, including his firm belief in times of change, is stronger than mine. He is also better than me in judging the macro situation and understanding of companies.
101 Incomprehensible SOL: What is the most important thing you learned from Buffett?
Duan Yongping: I said in the email that the most important thing I learned from him was that buying stocks is like buying a part of a company, and you have to hold stocks for a long time. Buffett replied, "What you said is what I learned from Benjamin Graham. It is this concept that changed my view and influenced my life."
I think the most important thing to learn from Buffett and what people can learn is actually what he doesn't do. Most people learn the opposite, that is, what he does, which is impossible to learn because everyone has a different circle of competence.
Buffett said that knowing how big your circle of competence is is much more important than how big your circle of competence is.
Of course, the size of your circle of competence can also be learned, but that is everyone’s own experience, including academic qualifications, etc. Buffett does not teach this.
102 Incomprehensible SOL: If Buffett wants to buy your company, will you sell it?
Duan Yongping: I won't sell, because if the price is too high, I will be sorry to Buffett, and if the price is too low, I will be sorry to our shareholders. Running a business is easier than investing.
103 Incomprehensible SOL: Which is harder, running a business or investing?
Duan Yongping: Buying stocks is buying companies, there is no essential difference between the two.
But I personally think that running a business is easier than investing. Running a business is in a field that you are familiar with, and the chances of making mistakes are small.
Investing always requires facing many new things and uncertainties, and it is very easy for investors to become speculators and take risks that they should not take. It may take much longer for speculators to be transformed into real investors.
104 Incomprehensible SOL: Do entrepreneurs have more advantages in investing?
Duan Yongping: People who have been entrepreneurs have an advantage. It is easier for them to understand the company and know where their own circle of competence lies.
But many entrepreneurs I know have no knowledge of the stock market. Most people do not touch the stock market because they think they do not understand it. If you do not understand it, you are a good investor. Even if you do not touch it at all, it is also right.
105 Incomprehensible SOL: What kind of people do you think are suitable for investment?
Duan Yongping: In fact, anyone can invest, as long as you understand what you are buying and where the value lies.
What I mean by this is that I don’t think that “only ‘certain kinds of people’ can invest.” But the proportion of people who are suitable for investing should be very small.
Whether a person understands whether a company can make money has nothing to do with education. Regardless of education level, a person always knows something, and what you know may one day allow you to discover opportunities.
The opportunities I have seized seem to have nothing to do with my education. For example, we were able to make more than 100 times the money on NetEase because I had a lot of understanding of games when I was working on Subor. This kind of understanding is not taught in school, is not in books, and cannot be seen in financial reports.
I have also tried to tell others my understanding, but found it difficult. For example, I dared to buy GE heavily at that time because as a business operator, we have been following GE's corporate culture for many years, and I believe from the bottom of my heart that GE is a great company.
Maybe it’s because the principle of investment is too simple, and simple things are often the most difficult. What is the “simple” principle of “investment”? When you buy a stock, you are buying the company! Is it simple? Is it difficult?
Statistically, about 80-90% of people who enter the stock market lose money. If interest is included, the loss ratio is even higher.
The reason why many people want to invest is probably because they think the money from investment is easier to make or comes faster.
106 Incomprehensible SOL: Is it best for fresh graduates not to enter the investment field directly?
Duan Yongping: It’s OK, but your understanding of the business will naturally be weaker. But as long as you love what you do and know your weaknesses, you will understand it slowly.
I claim to have a lot of business experience, but it was only after experiencing many setbacks that I felt I had a better understanding of investing.
If you start investing right away, the most important thing is to be conservative and not let a single mistake keep you from getting back on your feet. The only thing I can guarantee is that you will make mistakes.
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Part II Enterprise ManagementThere is no enterprise that overtakes others by a curve
107 Incomprehensible SOL: What is the most important thing in running a business?
Duan Yongping: Do the right things and do things right. The former is the "Tao", and the latter is the "technique". The "Tao" comes before the "technique".
As long as the direction is right, even if the method is a little bit stupid, it will only be done slowly, but you will not go the wrong way. Companies that do not perform well are often because they have made some relatively big mistakes and did not do the right things.
However, it is difficult to judge whether something is right or wrong. Once you have made the judgment, it is also difficult to decide whether to do it or not.
When I was in the United States, I went to the airport to pick up a colleague from BBK. I estimated that I would have to wait for an hour at the airport, so I put in an hour's parking coin in the airport parking lot. As a result, the colleague arrived half an hour early.
This raises a question: if you have invested an extra half an hour, should you continue to wait in the car for this half an hour, or waste the extra half an hour of money? The conclusion is self-evident, you must drive away.
But in actual decision-making, many people make the stupid mistake of continuing to wait. I have already invested tens of millions in this matter, and I have to invest tens of millions more to save these sunk costs. I insist on doing it even though I know it is wrong, and the result is naturally a greater failure.
We must persist in doing the right thing, and stop doing the wrong thing no matter what the cost.
108 Incomprehensible SOL: How do you judge what is right and what is wrong?
Duan Yongping: Our company's standard for judging whether something is right or wrong is the company's corporate culture, such as duty, integrity, quality, consumer orientation, etc. If we cannot determine whether something is right, we can list what is wrong. In this way, it is easier to understand and implement. The reason why our company has survived to this day and is still doing well is that we have made fewer mistakes. The fewer mistakes, the greater the chance of success. This is also the case with my investment.
For example, in table tennis, it is normal to hit a few good balls occasionally, but it is also normal to make a few mistakes. The side with fewer mistakes will definitely be the final winner.
109 Incomprehensible SOL: Sometimes, people know what is right and what is wrong, but they choose benefits.
Duan Yongping: Chinese culture is a "interest" culture. People tend to put interests first. In order to gain interests, they may know that what they are doing is wrong, but they use their intelligence and talents to do the wrong things very well.
What will be the result? They may succeed in the short term, but in the long term, they will fail.
110 Incomprehensible SOL: What do you think of Chinese enterprises’ love of overtaking on the curve?
Duan Yongping: There is a saying in Alaska, shortcut is the fastest way to get lost.
There is no such thing as overtaking on a curve. The most important thing is to focus on the essence! Otherwise, even if you overtake, you will be overtaken again.
Do everything slowly and quickly. For example, when driving on a highway, your goal is to reach your destination safely, not quickly. It is not worthwhile to kill your business for the sake of speed.
Many experts who play golf with Tiger Woods cannot make the last putt within a few yards. It is not because of their skills, but because they fail to keep a calm mind. They keep thinking that if they can make the putt, they will win the championship and beat Woods.
The great thing about Woods is that he just plays the shot the way he wants, so he wins more and loses less.
The same is true for running a business. It is normal for a business to encounter some setbacks or make some progress. You must be able to win as well as lose.
The fatal flaw of entrepreneurs
111 Incomprehensible SOL: What are the outstanding qualities of successful CEOs?
Duan Yongping: Many so-called powerful people are only successful because they have been doing what they are supposed to do honestly. If you look at each thing alone, it is difficult to see what makes them so powerful.
In addition, sometimes when a decision must be made, not making a decision can also be a major decision-making mistake.
112 Incomprehensible SOL: What are the fatal flaws of CEOs?
Duan Yongping: I haven’t studied it. But I read when I was studying at CEIBS that the most important quality for an entrepreneur is integrity. Violating integrity can be fatal if it lasts long enough.
113 I don’t understand SOL: What do you think of Jack Ma?
Duan Yongping: Jack Ma has a jianghu in his heart. He is a martial arts master. When I mention him, I always think of Jack Ma who dared to yell at a bunch of big men who stole manhole covers. Whenever I think of this moment, I always feel a little touched.
I'm not sure I'd dare yell at them if I were facing a few big guys.
The most courageous time I personally faced was in the early days of Subor. Someone in Guangzhou counterfeited our trademark. The company's legal advisor didn't dare to intervene. I had to carry a bag myself, pretend to be a buyer, and go to the place selling counterfeit goods to order a batch of goods. I had them deliver to the railway station so that I could catch the person red-handed. The law enforcement department was very powerful at that time, otherwise I would not be able to escape.
I have no choice, but Jack Ma can choose to leave.
114 Incomprehensible SOL: How do entrepreneurs know whether persistence is right or wrong?
Duan Yongping: It's very simple. If you can't hold on, then you can't hold on. If you hold on to something, you can't let it go. You will know it yourself when the time comes.
115 Incomprehensible SOL: How to choose the right partners and employees?
Duan Yongping: Finding the right one at once is luck. The main thing is to have standards, eliminate those who should be eliminated, and disband those who should be disbanded. If you know you are wrong, you must have the courage to stop. The sooner you stop, the lower the cost.
Enterprises should "dare to be the last in the world and strive to be the first among the last"
116 Incomprehensible SOL: As an entrepreneur well-known for marketing, can you talk about your marketing methods?
Duan Yongping: Marketing is not important at all, the most important thing is the product.
No company fails because of marketing failure. The essence of company failure is the failure of products.
If the marketing is not good, at most the product will sell more slowly, but as long as the product is good, the result will be the same in 20 years regardless of whether the marketing is good or bad.
Of course, I am not saying that we should not do marketing. In fact, we do a good job in marketing.
117 Incomprehensible SOL: What is a good product?
Duan Yongping: It is a user-oriented product. We always say that quantity is not important, profit is not important, the most important thing is to do the right thing, to find the real needs of consumers and find ways to meet them.
118 Incomprehensible SOL: How to make a good product?
Duan Yongping: I talk about the chicken rib principle within the company, which is the principle Mao Zedong talked about of "concentrating superior forces to annihilate the enemy."
The products we make are things that big international companies find boring and don't want to make. They are like chicken ribs to them, like using a fist to hit a flea. It's not worth it for them to do that.
If you insist on making products that are considered "chicken drumsticks" by big international companies, they will definitely fight you hard. Try not to become direct competitors with those who are much stronger than us.
But chicken ribs are relative. We need to evaluate any advantages we may have, even if they are partial.
For example, SONY also makes DVD products, but in China, we concentrate our superior forces, invest more than SONY, and understand this market better than SONY. In the domestic market, we can make DVDs and do them well.
119 SOL who doesn’t understand: Is this what you often say, “dare to be the last in the world, and strive to be the first among the last”?
Duan Yongping: All masters dare to be the last in the world, they just do it better than others.
You dare to be the last in the world because it is often difficult to guess market demand. The process of cultivating the market and educating consumers is extremely slow and costly. Once others have made their demands clear, you will be more certain when you meet them.
Many successful companies are followers. For example, from Windows to Word, Microsoft has never been the first to launch any of its products. However, once it finds a product with a market potential, it will deploy heavy resources into it and then make it the best in the industry.
In so-called small and medium-sized enterprises like ours, the strategy of "daring to be the last in the world" may be a relatively important phased strategy.
The biggest advantage of "daring to be the last in the world" is that it can avoid market risks. Although many people want to be the first to try something new, there are actually many people who are the first to eat puffer fish.
120 Incomprehensible SOL: After producing a good product, how to advertise more effectively?
Duan Yongping: Advertising is efficiency-oriented. The most accurate advertising is probably search advertising. The worst advertising is exaggerated advertising, because in the long run, consumers are a very smart group. Advertising can only influence about 20% of consumers, and the rest depends entirely on the product itself.
121 SOL that I don’t understand: What do you think about differentiated pricing of products for different customers?
Duan Yongping: If the price is inconsistent, it will be discovered sooner or later. Secondly, if customers find that they can bargain, they will try every means to bargain with you, wasting a lot of time. If the price is consistent, it will save a lot of trouble. When making products, the main thing is to grasp the needs of customers, not the price.
122 SOL: There are two models for mobile phone companies now. One is to attract users first and then monetize through other means, like Xiaomi; the other is to make money from the product itself, like Apple. Which model is better?
Duan Yongping: First of all, from the perspective of attracting customers, Apple is better than Xiaomi.
Secondly, in the long run, no company can make money by being cheap. The price-performance ratio is just an excuse for ourselves. We often mentioned the price-performance ratio in the early years. Until one time, when I talked about cooperation with a Japanese who was familiar with China, when I mentioned that our products were cost-effective, the other party asked in confusion, what is the price-performance ratio? It seems that there is no such thing as price-performance ratio in the Japanese dictionary.
It took me a long time to realize that "price/performance" is actually an excuse for poor performance. I hope our company will never use this term again.
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Part 3 Corporate Case StudiesI have held Apple for more than 9 years. The day when Apple will make $200 billion in three years is not far away.
123 Incomprehensible SOL: You have bought and held Apple for more than 9 years?
Duan Yongping: I started buying Apple on January 19, 2011. I remember it was around 310-320. I decided to invest 10% at the beginning, but then I understood more and more, and gradually almost all of my investment went to Apple.
The most important point that made me decide to buy Apple at that time was that I realized that Apple would still be strong without Jobs.
I find that Cook is a better CEO. Hiring him is definitely Jobs' greatest "invention", not just one of them. With Cook, Apple's culture can be extended forward at least 50 years.
Looking back, I am very satisfied with the decision I made. I bought another Apple iPhone on January 19, 2019 to commemorate my decision eight years ago.
124 Incomprehensible SOL: The market generally believes that Jobs’s ability is far superior to Cook’s?
Duan Yongping: If you pay attention to Apple's corporate culture, you may come to a different conclusion. In fact, I made the same mistake with Apple.
This book (Built to Last) specifically mentions that Jobs was a "time teller." When I first looked at Apple in 2002 or 2003, its market value seemed to be only about 5 billion U.S. dollars. Influenced by this book, I didn't read it too seriously and simply skipped it.
At the beginning of 2011, I suddenly realized that Jobs was not only a time teller, but also a clock maker. Cook was actually one of Jobs' greatest inventions (discoveries). Cook was a better CEO than Jobs, more rational, and at the same time, he understood Jobs' pursuits very well. After figuring out these two points, I started to buy.
I once told an old veteran in the investment industry that I thought Cook was actually a better CEO, and the old man said he thought so too.
125 SOL that I don’t understand: You also make mobile phones. In your opinion, among so many mobile phone companies, why is Apple the most successful?
Duan Yongping: Apple is rare in that it focuses on what it does. Apple pursues something beyond profit, which is to make the best products.
Apple’s culture is very strong, with a strict “Stop Doing List” that is determined to satisfy users and make the best products.
We don't compete with Apple, because among the 1,000 features, some of them are better than Apple's, which doesn't mean anything. It's like saying that we know Kung Fu when CBA basketball can't beat NBA. That's nonsense.
126 I don’t understand SOL: In addition to its product focus, what else attracts you to Apple?
Duan Yongping: The reasons why I like Apple are:
Apple's products have indeed taken user experience to the extreme, and it will be difficult for competitors to surpass or even get close to it for quite some time.
Apple's platform has been established, or its business model or moat has been formed (Note: App Store revenue exceeded US$38.75 billion in 2019, and the market estimates that App profits were approximately US$15 billion).
Apple's single product model is actually the highest level in our industry. I've probably only seen Nintendo do this before, and Sony's game products are similar.
Ever since I started working at Xiaobawang, I have been pursuing a single product variety. I am particularly aware of the benefits and difficulties of single product variety. There are not many people in this industry who understand this and are consciously willing to do so. We simply cannot do this now.
Compare it with Nokia, and you will immediately understand the benefits and difficulties of a single product. Nokia needed to use many products to be consumer-oriented, while Apple only needed one product. The difference is huge.
When it comes to products and markets, people often like to have many varieties. The advantage is that they can be used in different market segments and to attack their competitors. The disadvantage is that they have a lot of inventory and it is difficult to control the quality.
A single product requires great skill - it is difficult to make the product perfect. Because it is difficult, most people like multiple products. This is just like investing. Value investing is simple, but not easy. Volatility is often very attractive.
127 Incomprehensible SOL: Buffett sold IBM and bought Apple. What do you think he saw?
Duan Yongping: Cash flow, current cash flow and future cash flow.
128 Unintelligible SOL: What is the reason for the rapid growth of Apple services in the past few years? Can this rapid growth continue for a long time?
Duan Yongping: The growth of the service is the increase in the total number of users, plus the direct increase in user unit consumption and the indirect increase (data traffic fees). I think it will continue to increase in the future.
129 SOL I don’t understand: You pay attention to corporate culture. What impressed you most about Apple’s corporate culture?
Duan Yongping: The so-called corporate culture is about what is right, what is wrong, and how to do the right thing right.
Apple's corporate culture is a classic example of a good corporate culture. You may gain some insights by watching more of Apple's press conferences.
Apple doesn’t do promotional advertising very often, and basically does functional or scenario-based advertising. Apple’s advertising takes a while to show results, but it has a deep impact, and its long-term subtle influence is very powerful.
130 SOL: What do you think of Apple’s future growth potential? Can it bring better returns?
Duan Yongping: I think that Apple's products are in a huge market with huge growth potential, so there should be a lot of room for improvement.
Of course, Apple’s room for growth is far less than that of NetEase back then, but NetEase back then was hard to come by, and even if I came across it now, it wouldn’t be of much help to me.
I have recommended Apple to many friends, and they all said they believed in me, but I am afraid that less than one in ten have persisted until now. Perhaps it can only mean that most people’s trust in me cannot overcome their fear of the market, even though they know that I still hold Apple.
It's really not easy to understand Apple, and I never seem to be able to make anyone who doesn't understand it understand.
I suggest you take a look at everything Cook has said, including every press conference. Even if you are not planning on investing in Apple, at least you can see what a good company should look like.
131 SOL I don’t understand: Apple’s market value has exceeded one trillion, is it still worth investing in?
Duan Yongping: I think in the long run, Apple will only make more money than it does now.
Apple’s current market value, after deducting its net cash, is approximately $800 billion, with an annual profit of approximately $50 billion.
If you believe that Apple's annual profit will be no less than 6% in the next 20 years or more, and you have no other way to make an annual profit of more than 6%, then you can buy Apple.
But if you have a lot of opportunities to earn more than 10% annual profit in the long term, you should invest your money there. Investing in Apple is not a right decision. This is why investment is based on opportunity cost.
(Note: This is Duan Yongping's reply on April 7, 2019. On March 28, 2020, Apple's market value was 1.08 trillion, and on December 28, 2019, Apple's cash reserves were 207.06 billion US dollars. After deducting net cash from the market value, it is about 870 billion; in fiscal year 2019, Apple's profit was 55.256 billion US dollars.)
132 I don’t understand SOL: What do you think about the decline in Apple’s stock price?
Duan Yongping: Probably not many people would be happier than me to see Apple’s stock price fall, because Apple’s repurchase price will be lower, the repurchase quantity will be greater, and the proportion we hold will naturally increase in the future.
The most important thing is, will Apple's net cash flow in the future be as strong as it is now? I personally think that Apple's good days are far from over. Now the net profit is close to $60 billion a year. In the future, $80 billion or $100 billion/year are both possible. As long as it can reach $100 billion within 10 years, the current price is a very cheap price! When I say 10 years, I generally mean that I think it will not exceed 10 years. Personally, I think the day when Apple can make 200 billion in three years should not be far away.
(Note: In fiscal year 2019, Apple's profit was US$55.256 billion; in the first fiscal quarter of 2020, Apple's net profit hit a new record high of US$22.236 billion.)
133 SOL that I don’t understand: If you encounter a systemic risk like the one in 2008, would you sell some of your Apple shares?
Duan Yongping: When good companies are cheap, you should buy as much as possible. Why sell them?
Good companies don't need to be sold! It's not easy to find a good stock. Selling stocks has nothing to do with the cost of holding them. Think rationally.
134 I don’t understand SOL: What do you think about the impact of the popularization of 5G networks on Apple phones?
Duan Yongping: Apple products have a longer lifespan, so the frequency of phone replacement will be lower. 5G will definitely increase the replacement rate of existing users and is a step forward in the development of the smartphone industry.
135 I don’t understand SOL: What do you think about the future technological trends?
Duan Yongping: I don’t care much about cutting-edge things. I usually lag behind and invest in good companies after I understand them. Cutting-edge things are what companies like Apple are concerned about. What I do is to find companies like Apple.
136 Incomprehensible SOL: Buffett said he likes companies that don’t change, but he can make a lot of money by understanding the changes. Which kind of company do you like, the changing or the unchanging, and why?
Duan Yongping: Buffett is really amazing. He saw through Apple and invested heavily! He was probably attracted by Apple's cash flow.
In fact, Buffett has always spent a lot of time thinking about the emerging companies in recent years. His understanding of companies such as Apple, Google, and Amazon far exceeds everyone's imagination.
The changes he mentioned should refer to products. Obviously, Apple is a company that needs to change, while Moutai is a company that does not change. I like Apple and Moutai because their business models are both good.
But the industry that Apple is in is indeed a very fast-changing industry. Although I think Apple is already in a very advantageous position in the competition, I am still very concerned about what changes may change Apple's position.
It is very difficult to be optimistic about an industry, just as we cannot say that we are optimistic about the Internet industry. We have to know how many companies do not survive to the end.
137 Incomprehensible SOL: Under what circumstances would you consider selling Apple?
Duan Yongping: If Apple starts to focus on business rather than user experience, it’s time to consider leaving.
Moutai is still Moutai. In 10 years, people will say...
138 SOL that I can’t understand: You invested heavily in Moutai very early, what’s the reason?
Duan Yongping: We mainly hold Moutai in A shares. I have never met anyone from Moutai so far, but I was very determined to buy Moutai.
Moutai's business model is very good. The wine industry is indeed good, with high gross profit but few new brands. In fact, I haven't seen a new brand for a long time. Even if there are some companies that are very capable and want to build new brands, it seems that there is nothing they can do.
I know a lot of friends who drink liquor, and they don’t drink any other liquor except Moutai. Just imagine, when everyone is at a party, if you say “Let’s not drink Moutai today, let’s drink xxx liquor”, I guess many people will immediately say “I don’t want to drink liquor today…”
The result of social development is that there are more and more people with good economic conditions, and the growth of Moutai should also be high in probability.
In addition, Moutai's culture is also good. If Moutai's corporate culture is not good enough, Moutai would not be where it is today. This does not mean that Moutai has no problems. A company with a bad corporate culture will sooner or later fail to maintain a good business model.
Not every liquor sold is Moutai, and not every "Internet" company can make a lot of money.
139 SOL that I don’t understand: There are many companies in the liquor industry. Do you prefer big companies?
Duan Yongping: Generally speaking, large companies have more public information and longer histories. I once paid attention to Lao Bai Gan, but I always felt that it was not appropriate to exchange Moutai for Lao Bai Gan at the price at that time.
This is a typical example of "big companies" being easy to understand, while "small companies" are relatively difficult. Do "big companies" necessarily have complex businesses? Jobs laughed! Apple is very simple, and so is Moutai. Are small companies' businesses simple? Jobs also laughed.
140 Incomprehensible SOL: Many people are optimistic about Moutai, but not many people really hold a long-term position in it.
Duan Yongping: Among A-shares, I have basically only held Moutai for several years. I always think about what Moutai will be like in 10 years, so it is easy for me to hold on to it, and the returns are also good.
I don't care how much money others make during this period, I only consider my own opportunity cost.
141 SOL that I don’t understand: Is it a good choice to buy Moutai now?
Duan Yongping: Better means comparing with your own opportunity cost. Only you can know whether it is better now or not.
In my personal opinion, if you buy now, it will most likely be better than putting it in the bank in 10 years.

142 SOL that I don’t understand: What do you think of Moutai’s valuation?
Duan Yongping: I don’t quite understand valuation. When I bought Moutai, I considered all the negative aspects and still thought it was very cheap.
I usually keep a full portfolio. If I finally come across a good company, I won’t sell it easily just because the price may be a little bit high.
For example, many people asked me, "Why don't you sell Moutai when it's over 700 yuan?" Most of these people may have sold it at over 300 yuan, and they are actually regretting it.
I just try to think about what will happen to my company in 10 years if I invest my money in it. Looking at it from a 10-year perspective, Moutai is still not expensive. It is not a big deal if the stock price drops slightly in the green last week or last quarter.
143 Incomprehensible SOL: Will the price of Moutai fall precipitously again like in 2012? Is there any good way to deal with it?
Duan Yongping: The underlying reason why prices are driven up is real demand. As a shareholder, there is nothing to worry about. Even if prices fall, they will go back up.
If the day ever comes when this happens again, please turn to this page, think about the underlying reasons, and then buy more stocks and 53 Degree Feitian, just like you did last time.
Moutai is still Moutai, and its business model is just right. Ten years later, people will still say that the price ten years ago was really not expensive.
144 Incomprehensible SOL: What will Moutai be like in 10 years?
Duan Yongping: In fact, there is no way to know what the situation will be like 10 years later, but it is often more difficult to know in a shorter period of time. For example, when the plasticizer problem emerged, it was difficult to know what would happen in the short term, but we know that it should not affect Moutai 10 years later.
There are many companies that are easy to know will have problems within 10 years, such as LeEco... Moutai, you should still be selling Moutai in 10 years, what do you need to think about?
There is a high probability that Moutai's future profits will be higher than they are now, and there is a high probability that they will continue to increase...
145 I don’t understand SOL: How about comparing Moutai and Apple?
Duan Yongping: Moutai's business model is good, but the way it handles the money it earns is not satisfactory. Apple is perfect in this regard. This can be seen from the completely different performances of the two companies when they had repurchase opportunities in the past two years. The funny thing about Moutai is that its dividends actually fell because of the drop in stock prices.
Apple’s explanation of its dividend and repurchase strategy is very clear and basically predictable for shareholders, while Moutai will be affected by non-shareholder factors.
146 SOL that I don’t understand: Moutai has a production capacity limit, while Apple is a business without a production capacity limit. How do you view the difference between these two businesses?
Duan Yongping: Both are good investment targets, one can be bought with RMB and the other with USD. Their greatness has little to do with whether there is an upper limit to their production capacity.
147 SOL who doesn’t understand: What do you think about the sale of Feitian for 1,499 yuan on online channels?
Duan Yongping: Reduced risks and increased income.
Reduced risk means that each person buying two bottles is better than one person buying a lot. Increased income means that the price of selling directly to retailers is better than that of selling to agents, and it is legitimate, while also reducing the opportunity for corruption.
148 Incomprehensible SOL: Moutai has changed its chairman, will the corporate culture change?
Duan Yongping: I personally feel that Moutai’s product culture has been established, and with so many people watching, no one would dare to change it.
Moutai is the 53-degree Feitian. Whoever changes it will be out of office.
The advantages of state-owned enterprises are fully demonstrated in Moutai, while private enterprises may change due to personal factors.
149 Incomprehensible SOL: How to evaluate Moutai’s financial layout?
Duan Yongping: The effective way to increase shareholder risk is, hopefully, only a limited and very small risk.
150 Incomprehensible SOL: Under what circumstances would the Moutai brand be ruined?
Duan Yongping: Promote more cheap non-53% alcohol liquor, including Moutai beer and red wine, even Moutai rice wine, as well as Moutai mineral water, Moutai hotels, Moutai mobile phones, and Moutai air conditioners. Speed ​​up the launch of these products, and do not allow the five-year factory rule. Do not care about fake liquor either...
Ten years later, Moutai's status should be completely different.
151 Incomprehensible SOL: If you were to give advice to Moutai’s management, what would you say?
Duan Yongping: Moutai should learn from the French wine practice and make every bottle of wine a vintage wine - the year of production should be written on each bottle. The year on the bottle is really inconspicuous now.
Red wine is a very personalized product. It is affected by the raw materials and cannot maintain a high degree of consistency. When good red wine is served, people who like to drink red wine tend to drink red wine first. However, good red wine is too expensive (unit price per unit of alcohol), far less affordable than Moutai.
Moutai has a good quality culture, which is why Moutai has come this far, and Ji Keliang has made an indelible contribution to this.
Tencent can earn 200-300 billion yuan a year in 10-15 years
152 SOL I don’t understand: In October 2018, you replied to netizens saying that you had bought Tencent. Could you tell us more about it?
Duan Yongping: I did invest some at that time, but the proportion was still very small. It seems a bit hard to exchange it for Apple. I seem to understand Apple better. I need to think about it carefully.
I invested in Tencent and FB, but I never talked to any internal executives, although I actually know some Tencent executives (my fellow investors).
My investment criteria are very simple: business model, corporate culture, and reasonable price. So when a company with a good business model and corporate culture has a good price, I will be interested.
Tencent is really good, with long slopes and thick snow! The reason I didn't buy it before was mainly because I was too lazy to transfer money to Hong Kong, and I had the money anyway, and I always wanted to wait for a better price.
153 SOL I don't understand: In Tencent's 2018 financial report, 40% of its profits came from investment. Is this considered diversified operation? Will it damage the main business?
Duan Yongping: Although many of Tencent's investments are indeed financial, most of them are still quite relevant, and they probably don't invest for diversification. Moreover, their investment behavior does not affect their main business, but their main business is often helpful to their investment.
I feel that Tencent is not very diversified in terms of products. Most of their products are more or less related or intrinsically related. Their investments seem a bit scattered, but if you think about it carefully, most of them seem to be related. At least they are not pursuing diversification, right?
154 I don’t understand SOL: In your opinion, what is considered diversity?
Duan Yongping: I don't know what the definition of diversification is. It looks like the businesses under the same boss have little correlation. Apple's businesses are highly correlated, which is obviously not what is generally called diversification.
155 Incomprehensible SOL: Some diversification cannot be done well here, can it be better if we change to another thing?
Duan Yongping: The actual situation is that most people may have succeeded in one area and then think they are very capable and want to do more things, and accidentally run outside of their circle of competence.
Sometimes it’s okay to give it a try, but it’s actually hard to draw a clear line. Many people’s so-called diversification is probably for business reasons, they just do whatever makes money, and it has nothing to do with their original user base.
For example: If Tencent starts to do real estate, it is called diversification, but if they buy a piece of land to build dormitories for their employees or build their own office building, it does not count.
For example, someone opened a website because of his hobby. Although it is not exactly the same as what he did before and he doesn’t know whether it is within his circle of competence, this is still not considered diversification, but it can be called entrepreneurship.
156 SOL I don't understand: Tencent's PE is as high as 37 times, is it too expensive? Can the growth rate in the next 10 years be sustained?
Duan Yongping: 37 times the PE is indeed not cheap, compared with other good companies, such as Moutai or Apple.
This shows that everyone has high expectations for WeChat. There is no so-called reasonable growth rate for everyone, because everyone has their own opportunity cost. I think it would be great if it can maintain 15% in 10 years.
(Xiaoya Note: This question was answered on March 27, 2019. According to the 2019 financial report, Tencent's earnings per share were 9.856. On March 28, 2020, Tencent closed at 382.4/share, with a static PE of 38.8 times)
157 SOL I don’t understand: Looking at the next ten years, does Tencent still have a lot of potential value that has not been reflected in profits?
Duan Yongping: Ma Huateng is a good person and young. The influence of WeChat and WeChat Pay is very large and far-reaching, especially WeChat Pay.
However, it is still quite complicated to know what will happen to WeChat Pay. Facebook plans to develop cryptocurrency for decades. Apple Credit Card is very easy to use. I feel that after using Apple Credit Card, I will probably not use other credit cards anymore. In China, cash is probably no longer used in 99% of scenarios... The future payment market will be very interesting.
158 SOL that I don’t understand: What is the appropriate market value of Tencent for you?
Duan Yongping: The right price means a reasonable price relative to your own opportunity cost. For example, I thought Apple should be able to earn more than 50 billion in a few years, and a market value of 300 billion was a suitable price at that time, so I stopped waiting for a cheaper price.
Market value refers to how much money others are willing to pay to buy the company. I don’t know how much others are willing to pay to buy the company, so I don’t know how much market value Tencent can reach.
However, I believe that Tencent will most likely earn RMB 200-300 billion a year in the next 10-15 years. How much you are willing to pay for this company depends entirely on your own opportunity cost.
I think that looking back 10 years later, the money Tencent has earned (the proportion of the shares I bought) should be more than the interest on bank deposits. (2019.3)
159 Incomprehensible SOL: If you had to choose the order of investment among Moutai, Tencent, and Alibaba, what would you choose?
Duan Yongping: It depends on which one you really understand. Assuming they are all private companies, if you could come back to the present from 10 or 20 years in the future, which one would you choose?
If you have no idea, then don't choose any. If you think they are all good, but you can't tell them apart, then buy some of them?
160 I don’t understand SOL: What do you think of digital currency?
Duan Yongping: This thing is still in the stage of being unknown, but it will most likely become a powerful thing in a few decades. Traditional banks will be part of this change, and it is very likely that some banks will survive better as a result.
161 Incomprehensible SOL: Will this impact physical banks?
Duan Yongping: Mobile Internet will have an impact on traditional banks. Maybe we will see changes in another 10 years.
I don’t think physical banks will disappear anytime soon, but banks in the future will probably be very different from what they are now. The Internet, especially mobile Internet, is changing so many things, including banks.
162 Incomprehensible SOL: Buffett has invested in many bank stocks, but you have almost none. Why?
Duan Yongping: Because I don’t understand yet, I always feel uneasy.
I invested in some Internet-related companies, but Buffett never invested in them because he didn't understand them. He believed that Coca-Cola was something people had to drink, and I believed that games were something people had to play.
Why buy Facebook instead of Amazon
163 I don’t understand SOL: Did you also buy Facebook?
Duan Yongping: Over the years, I have seriously bought a lot of Apple and Moutai, and later added some Tencent and Facebook and not too much Google, if Pinduoduo is not counted. 164 Unintelligible SOL: You invested in FB and believe that it is likely to reach a net profit of about 50 billion US dollars in the next 5-10 years. What is the logic?
Duan Yongping: I just think the business model is very good, the corporate culture is also very good, Zuckerberg is still so young, and this company will have good room for growth.
FB's original mission was to "connect the world", but it didn't pay attention to privacy. Now the mission remains the same, but attention to privacy has become a prerequisite. When good companies make mistakes, it is often an opportunity to buy.
165 SOL that I don’t understand: Buy against the trend when a good company makes a mistake. Was it the same when I bought NetEase?
Duan Yongping: I never thought that my investment in NetEase was a contrarian investment, and my investment in Apple or Moutai was not for the sake of stability.
My investment criteria is very simple, which is to find companies with higher long-term returns and hold them within the scope of my own understanding.
When I bought (NetEase) back then, I thought it was cheap. I didn’t know how to value it, but I knew they would have good profits in the future. I made more than 100 times when I sold it. If I hadn’t sold it, I would have made 500 times now. So don’t sell a good company easily.
166 Incomprehensible SOL: Amazon is not on your list of holdings?
Duan Yongping: I know Amazon is a great company, but I don't know how much it is worth. However, it seems that it will not be too difficult for them to make 50 billion or more a year in the future. It is difficult to switch back and forth, so it is better to do less.
I saw online that 74% of Americans choose Amazon as their first choice for shopping. New retail is indeed terrifying. However, this industry is very likely to become a winner-takes-all or a monopoly by a few big players. The phenomenon of many companies may not last long. (2019.3.21)
167 Unintelligible SOL: When you talked about Amazon before, you said that it was a long slope, but the snow on it was not too thick. Now it seems that you are more optimistic about Amazon than before?
Duan Yongping: Yes, my understanding of Amazon has changed a bit. I really think that the company's corporate culture and business model are very impressive. I didn't have much idea about Amazon's business model before.
It seems that it takes a lot of luck to come across a good business model, but behind this luck there is a strong corporate culture background.
Search eventually became a good business model for Google, so we certainly cannot simply say that search is a good business model.
Mobile phones are an excellent business model in the hands of Apple and in our hands, but many mobile phone companies have collapsed or simply cannot make it. Wine is also a typical example. The success of Moutai does not mean that all wines are successful.
Most “electronics companies” are probably not worth investing in
168 Incomprehensible SOL: Some people say that companies in the real estate industry generally have a high debt ratio, which is not a good business model.
Duan Yongping: The real estate industry is too general. A high debt ratio does not necessarily mean a bad business model. The debt ratio of banks is very high, but some banks are good. It is just like saying whether the business model of the consumer electronics industry is good or not. There is no way to draw a conclusion.
Competition in the consumer electronics industry is extremely fierce, but Apple has created a very good business model, while it is very difficult for other companies.
169 Incomprehensible SOL: The electronics industry is highly competitive. What is the most important gene for companies that can win?
Duan Yongping: Generally speaking, most "electronic companies" may not be worth investing in because their business models are generally not very good.
It is difficult to make a lot of money in the long run without differentiated products. The reason why Apple makes a lot of money is because it sells iPhones, and the same is true for other companies.
Differentiation means something that users need but other competitors cannot meet.
170 Incomprehensible SOL: Will machines replace humans in many industries in the future?
Duan Yongping: I don’t know. But machines are definitely getting stronger. Humans have already lost in Go, and you can’t beat machines in speculation. But in investment, machines will never beat humans because machines can’t understand companies.
Pinduoduo may share the market with Taobao in ten years
171 SOL that I don’t understand: What is your logic for investing in Pinduoduo?
Duan Yongping: I don't invest in early-stage companies, I only invest in listed companies. I invested in Huang Zheng for personal reasons.
Huang Zheng and I have been friends for more than 10 years. I know him and I trust him! Huang Zheng is a rare and insightful person I know. He focuses on the essence of things.
Buying into Pinduoduo is equivalent to betting on Huang's evolution. Give Huang Zheng 10 years, and everyone will see how powerful they are.
Perhaps in 10 years people will find that the era when one could not find an opponent even with a telescope is over.
172 SOL that I don’t understand: Will you continue to buy Pinduoduo?
Duan Yongping: At that time, investing in Pinduoduo was only suitable for venture capital. So I have always advised not to invest a large proportion.
After the listing, I bought a little more symbolically. Now I have quite a bit, but I still want to buy more. I haven't had the desire to buy a company for many years, but I think if there is a chance, I will buy more Pinduoduo.
I believe in the power of corporate culture! I will not consider selling Pinduoduo stock in 10 years, but I will continue to buy it if there is a chance.
173 Incomprehensible SOL: How should Pinduoduo be valued?
Duan Yongping: When I invested, it was still too early to count. The only reason I felt I could do venture capital was that, under this growth situation, I believed their good culture would eventually have a good probability of bringing good results.
What venture capital means here is: if this group of people, this culture, and this business model continue to develop in this way, is it possible for them to share the market with Taobao in 10 years? If they do, the return on shareholders will naturally be high.
Judging from the financial report, it seems not difficult for Pinduoduo to make money, but there is no need to rush to make money.
With this amount of traffic, it shouldn't be a problem for Pinduoduo to make 20-30 billion RMB in profit in the future. As for what price to buy this company, that's not something I can answer.
I don't know much, but I know that traffic is often valuable. They have a lot of traffic, and it all comes from visible business, so monetization is not a problem. I believe that their culture of integrity will allow them to find a way that is not short-sighted.
174 Incomprehensible SOL: Have you ever used Pinduoduo?
Duan Yongping: I didn’t use it when I was investing, but I bought some things on Pinduoduo when I returned to China some time ago, and I didn’t have any bad experiences.
For example, this time I forgot to bring my nasal rinse bottle and salt (for allergies), and I couldn't find them in the store. I found them on Pinduoduo and another e-commerce platform. The products from Pinduoduo arrived in just two days and were a little cheaper, so I bought them. They are the same as what I used before.
I haven't had the time to experience Disney myself, but I have experienced Costco.
175 SOL that I don’t understand: Many domestic companies are engaging in new retail, what do you think?
Duan Yongping: I haven't paid much attention to this term. Are you talking about e-commerce like Pinduoduo? Currently, 74% of American people's first choice for shopping is Amazon (I saw it online today), so the new retail is indeed terrifying.
However, this industry is very likely to become a winner-takes-all situation, or a monopoly by a few big players, and the situation that many companies are doing may not last long.
176 Incomprehensible SOL: Compared with the Apple you bought, which one is more attractive?
Duan Yongping: From a 10-year perspective, Pinduoduo clearly has greater opportunities, but also greater risks.
177 I can’t understand SOL: How does it compare with NetEase?
Duan Yongping: It is different from buying NetEase. I know games very well and was very sure that they would make a lot of money in the future. What I didn’t know was how much.
As for Pinduoduo, at my current level I still don’t know whether they can make profits in the future that match their current market value.
When I invested in Pinduoduo, I didn’t know whether they could make money in the end. Now after looking at the data, I still don’t know, but it is clear that their influence has grown a lot. I think their chances of success are much greater now than they were three years ago. 178 SOL that I don’t understand: What are the risks of investing in Pinduoduo?
Duan Yongping: If I knew that, it wouldn’t be venture capital.
Mistake: Tesla is a profit-oriented company
179 Unintelligible SOL: What mistakes have you made in investing? What lessons have you learned?
Duan Yongping: I have made mistakes in investment, but I have not made big mistakes, except in speculation.
When speculating in Baidu, I was short squeezed and lost 100 million to 200 million US dollars.
The lesson is to learn from Buffett: I won’t touch anything I don’t understand, and I will definitely miss a lot of good opportunities, but I will make sure that the ones I seize are the right ones. We must follow Buffett’s logic: first look at the business model and understand how the company makes money. 95% of people focus on the market when investing, which means they don’t understand investment. You must focus on the business, and the company must make money.
I made mistakes in the past because I did the wrong thing, or I made mistakes while doing the right thing. In the future, most of the mistakes I make will probably be due to my inability to do things right.
180 SOL that I don’t understand: You invested in Vanke and sold it very quickly. Was this a mistake?
Duan Yongping: No. When I bought Vanke, it was only over 2 yuan. At that time, I thought that this stock was worth more than 10 yuan no matter what, and it didn’t make sense to buy it for more than 2 yuan. Later, when it rose to more than 10 yuan, I sold it because there was other demand at that time. From the current results, it proves that I sold it wrong, because it is now more than 20 yuan, and I lost half of my profit, but do I regret it? No regrets. It doesn’t matter to me whether it rises or not, because I just need this money. Because I am not in China. When I bought it, I had a basic understanding that this stock was worth so much money. When it reached this price, I felt satisfied. In fact, I don’t know whether this stock should rise or not. It has to do with fundamentals. I haven’t done a good job of research. My selling of Vanke does not mean that it is overvalued. Many people who bought Vanke with me are still holding on.
181 Incomprehensible SOL: Have you ever made money, only to find out later that you got the facts or logic wrong?

Duan Yongping: Tesla is a typical example. We used to buy a lot of Tesla stocks, but after buying Tesla cars, we no longer like this company.
If I think about it carefully, I made a mistake buying GE (General Electric) back then. I would probably make a different decision today.
We also made good money on GE. I think I bought it at $9-6 and sold it at around $20. The reason for the sale was that I suddenly realized that GE was different from what I had imagined.
182 Incomprehensible SOL: What is Tesla’s problem?
Duan Yongping: After I bought a Tesla car, I found that it had quite a few minor problems as well as some not-so-minor problems. I also learned that they had actually stated clearly that they did not want to make improvements at the moment because there were not enough cars to sell anyway.
I no longer trust this company and don't see how they can make money, although every time they need financing, the financial reports suddenly improve, this may be selective memory.
I was not optimistic about Tesla because of the problems I saw later. Its corporate culture was very bad.
If I think a company is dishonest, I won't touch it, such as Tesla. There are probably two main taboos: a bad business model and a bad corporate culture. The most typical feature of a bad corporate culture is that it often tells lies. You can tell this by looking at how many lies it has told in the past.
In my eyes, Tesla is a company with zero value, and it will be finished sooner or later. Luck will not last forever, and doing the right thing is the most important thing. The return that Apple brings us is good enough.
183 I don’t understand SOL: What do you think of Musk?
Duan Yongping: Munger said that Musk is a proven genius, his IQ may be 190, but he thinks it is 250. But to run a company, you must be rational.
Now it seems that what he did was sometimes really 250. Musk's talent can sometimes make him a good time teller, but he enjoys telling time too much.
184 Incomprehensible SOL: What kind of entrepreneur there is, what kind of corporate culture there is.
Duan Yongping: The risks of a company being managed by inappropriate people are often difficult to control, and as a result, the company may very likely collapse.
Companies with better corporate culture tend to discover problems more quickly, have a much greater chance of correcting them, and have a much greater chance of survival.
Time will tell. However, in any case, Tesla is the coolest mistake I have ever made, and buying the wrong stock has helped us make tens of millions.
I have been a bad-mouthed person these years. Whoever I say is not good, almost always turns out to be a bad one. The underlying reason is that when I invest, I always try to avoid companies that I think will have problems in the future, that is, those profit-oriented companies.
Tesla's profit orientation is reflected in Musk's personal ambition. He feels like a person who will do whatever it takes to achieve his goals, or he may just be a big kid who will do whatever it takes to get attention. As long as the time is long enough, there will be enough trouble.
185 SOL that I don’t understand: There is a leading company in the A-share market called CATL that supplies batteries to Tesla. What do you think?
Duan Yongping: This type of product has little differentiation and changes quickly, so it is a bit difficult to build a moat.
Selling case: GE’s corporate culture is different from what you imagine
186 Incomprehensible SOL: What happened to GE that made you realize it was different?
Duan Yongping: I liked GE's previous culture. GE's integrity was above all else. I also bought a lot of GE stock.
I bought GE after reading the book "Built to Last" and the book "Built to Last". I have worked in business, and the things in the book are not something that can be made up.
Jack Welch said that the most important thing in their corporate culture is integrity.
One of the important reasons for selling GE later was that one day I went to GE’s company homepage and found that I could not find the description of GE culture that I had read in Jack Welch’s book. The CEO at the time actually had a tendency to “de-Welchize”.
In addition, the company's business is too complicated. Moreover, I am a little suspicious about the company's cooking book (modifying financial statements) because their earning (profit) is always just right.
I felt that buying GE was a mistake, so I sold all of it.
I have always said that I have never seen a successful example of corporate diversification, with GE being an exception. Now it seems that it won’t work in the long run.
Later, the price of GE was significantly lower than the price I sold it at, but I no longer had any interest in it.
187 SOL I don’t understand: What do you think about GE’s withdrawal from the Dow Jones Index?
Duan Yongping: GE has indeed had problems in recent years. The CEO actually traveled on another plane when he was on business trips. What's even more terrifying is that the CEO actually said he didn't know. I have never seen anyone so unreliable.
188 Incomprehensible SOL: What will you do after making a mistake?
Duan Yongping: Correct mistakes immediately when they are discovered. No matter how great the cost is, it is the smallest cost. If you do not correct mistakes, you will pay a greater price.
I always say that doing the right thing is to do things right. Doing the right thing means not doing the wrong thing, and correcting the wrong thing immediately.
For example, dishonesty is wrong, so don't do it; borrowing margin to trade stocks is wrong, so don't do it. Business promises may not be fulfilled occasionally, and at this time you need to pay a price. Dishonesty is often reflected in avoiding the cost.
Lao Ba also said something similar, which is that if you find yourself in a pit, at least don't dig any further.
Some people may ask, is there anyone who would do something knowing it is wrong? This world is very interesting. Often, wrong things have many short-term temptations, even food. Delicious food is often bad for the body.
I want to emphasize that in the process of doing things right, many mistakes will be made, because doing things right is a learning process. Many people will get confused.
(Note: In early March 2009, a reporter from China Business News and Duan Yongping had a transatlantic phone call. At that time, the U.S. stock market was plummeting, and Duan Yongping told the reporter that he was buying GE shares.)
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Chapter 4: Dealing with PeopleThe downside of having too much money: losing the joy of making money
189 Incomprehensible SOL: To sum up, what is your secret to success?
Duan Yongping: If you persist in doing the right thing for decades, or insist on not doing the wrong thing, and at the same time keep working hard to do things right, it is highly likely that you will get a good result.
After suffering many losses, people who keep on realizing will eventually realize the "Tao". But realizing the Tao does not mean reaching the destination. It may take a long time to know the right things and do them right.
The good news is that once you get on the road, it doesn’t really matter how fast you go; sooner or later you’ll get to Rome.
190 Incomprehensible SOL: The reason is very simple.
Duan Yongping: In fact, there are very few people who are willing to simplify things. People often think that doing so makes them seem unsophisticated, just like buying Maotai, which is meaningless.
191 I don’t understand SOL: How much time do you spend on investing?
Duan Yongping: I now spend less than 70 minutes a week on investing, because it is completely unimportant to me.
192 Incomprehensible SOL: What proportion of your family wealth does your stock investment account for?
Duan Yongping: I don't know what proportion of my family's wealth is in stocks. It doesn't matter to me. No proportion will affect my life. If the proportion affects your life, you have to plan carefully.
I have always believed that not everyone who has a lot of wealth has financial freedom.
193 Incomprehensible SOL: What is financial freedom?
Duan Yongping: Not doing things you don’t want to do for money and spending your time on what you want to spend is called financial freedom.
Under this definition, many people will eventually get close. If the definition of financial freedom is having endless money, then most people really can't do it. Many people are rich but not free.
Having a lot of money is not always a good thing. Of course, most people will try to understand what is wrong with it.
194 Incomprehensible SOL: You have experienced it, what’s wrong with having too much money?
Duan Yongping: Because making money is a great pleasure, if you have too much money you lose a very important pleasure. It is enough to have enough money, it is more important to do what you like.
195 Unintelligible SOL: What advice would you give to your friends on how to get rich? Duan Yongping: Accept getting rich slowly.
Do not borrow money by mortgaging stocks under any circumstances. If you know how to invest, you don't need margin, because you will have money sooner or later. If you don't know how to invest, you should not use margin, because it will most likely get you into big trouble. In fact, I don't want to get rich slowly, I just don't know how to get rich quickly. If you just want to make quick money, it can be dangerous sometimes.
Eliminate distractions, every shot is different from the previous ones
196 Incomprehensible SOL: What is the most important thing to you?
Duan Yongping: The answer is different at different ages. Now it is family, kinship, and friendship.
Finding something you like to do is the most important thing, regardless of whether you are rich or poor. Going to a good university may help you find a job, but the help period is actually very short, and soon no one will care which university you graduated from. There are probably even fewer people who can easily find something they like to do. Most people may never look for a job seriously, but there are still many people who try hard to find a job that pays more. Generally speaking, people who do a job they like may have a relatively higher income.
197 I don’t understand SOL: How to find something you like to do?
Duan Yongping: If you always stay in a place you don't like, you may never know what you really like. So if you find something wrong, you should stop. Try more and search.
198 I Can’t Understand SOL: What are your hobbies?
Duan Yongping: Investing is my hobby, and I believe I will do it for life.
I have many hobbies, including playing golf. Playing golf is like investing. You need to eliminate distractions, concentrate, and each shot has nothing to do with any previous shot. If you can hit below 80, you may understand a lot.
I also like playing games. If I am not writing blogs, I usually spend time playing games.
I believe that there is no difference between a game company providing good games to consumers and other companies providing good products, and there is no conscience issue involved.
We don’t think that it’s Mahjong’s fault if someone is addicted to it, right? We also don’t think that it’s the alcohol’s fault if someone is drunk, right? Why do we think that it’s the game’s fault if someone is addicted to it? Jack Ma used to be very opposed to games, but later he suddenly became supportive because he found that the elders who played games were much happier than those who didn’t.
The proportion of children addicted to games should not be high. They are mainly children whose parents do not spend enough time with their children. The proportion of adults (18 years old or above) addicted to games should be much higher.
How people view games will not affect their development, and the government will not ban them for a long time, but there must be restrictions on minors, which is not easy to solve technically.
199 Incomprehensible SOL: Is investment also your career?
Duan Yongping: Investing is just a hobby. On average, I can beat the S&P.
Keep calm, there is nothing to get angry about.
200 Incomprehensible SOL: Some people say, "Your conservatism has made your career", what do you think?

Duan Yongping: What is the definition of "conservative"? I think I have never been conservative. Investing requires taking a lot of risks, no matter how much money you spend, you have to take risks, but I don't take risks. We pursue healthier and longer-term, which is not "conservative", but the concept of a normal mind.

Just like what I said about playing golf, you pursue the overall performance and the fun, not the hole-in-one. After the hole-in, although the shot is beautiful, there is not much improvement overall. Just like what Buffett said, you can do 99 things right, but 1 small mistake can cause all your achievements to fail. The most important thing is not to let small mistakes happen. I have been running a business for almost 20 years, and my competitors have changed a lot. Every time we do something, others say that this is not good and what should be done. I said that taking risks will definitely cause problems after a few years.

A few years later, this person came to me and said, "You are really amazing." The same is true for enterprises. You have to look at long-term development. Of course, there are things that need to be improved. I can accept this. The key is whether you have the ability to improve. The idea of ​​investing in a business is similar: Are you really willing to hold this stock 20 years later?
201 Incomprehensible SOL: How to keep a normal mind?

Duan Yongping: It is not difficult to maintain it, because it is already there (something that is already in your heart). However, Jack Ma also said, "It is difficult for ordinary people to have a normal mind, so a normal mind is also an abnormal mind!"
202 Incomprehensible SOL: Have you ever been angry?
Duan Yongping: I was very angry back then. Get angry for a while, then calm down and return to the basics. Do what you need to do and don’t make any decisions because of anger.
When I met Buffett, I asked him, "Are you angry?" Buffett thought for a moment and said, "No." I asked why? He said, "Because it's not worth it."
203 I Can’t Understand SOL: How has your personality changed after all these years of life experiences?

Duan Yongping: It is difficult to change one's personality. It is not easy to change, but any time may be a good time.
It is actually very difficult for people to work harder. I was always setting goals when I was a kid, but no matter how hard I tried, I could never work harder.
Don't always try to "get rid of the dross" and learn to take the essence of others
204 Incomprehensible SOL: What do you consider when recruiting employees?
Duan Yongping: If you look at suitability (value matching) first when selecting people, it will be much better than just looking at qualification (ability to do things), and the probability of selecting the right person will be much greater.
Many companies first look at qualifications when recruiting people, which tends to cause problems. Many companies have problems with their own values, so selecting people is naturally difficult.
205 Incomprehensible SOL: What kind of people would you like to make friends with?
Duan Yongping: We are all like-minded people with common values. It is almost impossible to change people's values.
Values ​​are a principle, not a technique. They are hard to learn. People who pretend won’t last long.
206 Incomprehensible SOL: What is your way of making friends?

Duan Yongping: I am anti-social (introverted and not gregarious). Socializing is tiring and time-consuming. I have too few friends in casual socializing. It seems that I know a lot of people, but it is actually difficult to get to know them deeply.
To build long-term friendships, you must deal with people sincerely.
There is a statistic in CEIBS that shows that there are all kinds of personalities among the CEOs of the Fortune 500 companies, but they only have one thing in common, which is integrity.
I learned from Lao Ba that friendship is the most important thing in life. So, we should be tolerant, friendly and honest to our friends.
But he didn't say that you have to have a lot of friends. Having a dozen good friends is enough.
207 Incomprehensible SOL: How do you educate your children?
Duan Yongping: The most important thing is to give children a sense of security. How to give it? Give them quality time, that is, high-quality companionship, make friends with them. High-quality companionship means staying together and hiding your phone. Love them unconditionally. Chinese people tend to have conditional love. "You won first place, Dad loves you very much", these two sentences should never be said together.
Chinese people also like to brag about their children getting first place, which can easily put pressure on children. Children will think: If I get second place, do you love me less?
When I take care of my children, I try my best not to say "NO" to them. Except for major issues and things that involve boundaries, I let the children explore boldly.
What the rebels are rebelling against are not the parents, but the parental authority. If parents can let go of their authority from the bottom of their hearts and truly respect their children in all aspects, perhaps you will find a different child?
208 SOL I can’t understand: What do you want to say to your son the most?

Duan Yongping: It is useless to say anything. What matters is what you do. The most important thing is what you do.
209 Incomprehensible SOL: What are your good study methods?
Duan Yongping: I often see people coming to "learn" with the mentality of "Teacher, I am here to remove your dross."
Many people come to you for advice in the name of seeking your advice, but deep down they actually hope that you can support their ideas and are simply unable to let go of their previous ideas to listen and understand.
With an open mind, you will focus on "extracting the essence".
However, it is not easy to know what is the essence. Most people want others to prove that they are right, rather than really thinking about what others are saying. This includes myself.
People who don't have an open mind will be the same no matter who they deal with, and vice versa.
210 I can’t understand SOL: Don’t be self-biased?
Duan Yongping: People having their own opinions does not necessarily mean they are prejudiced, but learning to look at things from another perspective may be helpful to you.
211 I Can’t Understand SOL: What books would you recommend about investment?
Duan Yongping: The most important thing is Buffett's letter to shareholders, followed by his usual remarks. If you really understand them, you can start.
Exclusive interview with Duan Yongping! Old Duan’s most complete investment ideas! How can ordinary people make a hundred times their money in ten years! Enlightenment!

Part II Enterprise Management

Part 3 Corporate Case Studies

Chapter 4: Dealing with People

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Exclusive interview with Duan Yongping! Old Duan’s most complete investment ideas! How can ordinary people make a hundred times their money in ten years! Enlightenment!

Part II Enterprise Management

Part 3 Corporate Case Studies

Chapter 4: Dealing with People

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