#Buffett

Space Notes | "Let's Talk About Buffett"

Recently, I'm reading: Buffett's letter to shareholders. At that time, Dongzhen specifically mentioned that some of Buffett's thoughts on investment may still be very inspiring and useful today.

During this period, space talked about Buffett, this legendary figure in the investment industry, and saw whether some of his investment standards and ideas are still applicable today.

🎙️Zhen Dong Twitter @zhendong2020

Looking back at Buffett's public letter to partners or shareholders in 1956, you will find that some of the principles and views he has upheld in the past sixty or seventy years have been upheld to this day. Similar principles and views can also be felt that the principles and views he formed at that time and now uphold are very valuable.

There are many interesting points in his early process of becoming a stock expert:

The first point is that he can find a large number of arbitrage strategies in the market. For example, many things he did in the early days were similar to holding banks and insurance companies. There were not so many competitors in the market, and these arbitrage strategies could achieve very high returns every year;

The second point is that no matter whether it is a low-valuation or holding-type enterprise, in the beginning, I faced the situation that my understanding of the opponent and the competitor were relatively weak;

The third point is that some investors around him have no logic, no opinion, greed, and do not follow rationality; the fourth point is that if you compare the agricultural product companies, traditional newspapers and map companies he acquired at that time with the current Crypto, you will find that many things he did at that time were very innovative, and he was looking for some suitable opportunities among some irrational investors in the market.

Buffett was born in an era of traditional business. From this perspective, we can understand why he is more interested in old-fashioned businesses and why he can't understand the current Internet companies including Crypto. Each generation of investors will be related to some of the most important innovations or changes of the time, and look for the best opportunities in this process.

🎙️ Peicai Li Twitter @pcfli

How can you keep your assets with a stable rate of return in the next ten, twenty, or even thirty years? At this time, you need to think clearly about why you can beat the market, just like Buffett?What are the advantages? Focus on long-term value instead of chasing short-term stock prices. He has always emphasized the real value, saying that some values ​​are reflected in the financial statements but are not necessarily true. Some financial statements that do not reflect the real value are worth noting.

In the field of Crypto, we have become accustomed to the high valuation model of the project. In fact, everyone does not know whether there is long-term value. Sometimes we think that the price of the currency can rise, and even chase the so-called ability to lock and sell. Buffett has insisted on writing down his investment strategy and investment return rate every year since he was 26 years old. This is really a very good habit worth learning.

🎙️Odyssey Twitter @OdysseysEth

Buffett is not thinking about never touching textile companies again, but thinking about a concept called restricted surplus and free surplus. He believes that companies like textile companies seem to make money, so they must buy the latest equipment. If they don’t buy it, the productivity of other companies will soar after buying it. If they sell it at the same price, they will lose money and can only be forced to upgrade, so the money earned must be continuously invested.

This is actually infinitely close to a standardized competition, so he thinks it is useless. He also made a metaphor later that "if this horse can count from 1 to 10, it must be a very powerful horse, but definitely not a good mathematician."

I think there are at least two angles to Buffett's theory:

The first is the barbell strategy, at least a part of the funds should be placed on positions that may subvert the original investment portfolio;

The second point is that for such companies whose certainty seems to be declining, there will be some risks that are compensated by the growth of its potential market. In fact, it presents two perspectives at the same time, one is how big the overall potential market is, and the other is who has the ability to capture the greatest value in this overall potential market.