Reproduced below Orient Securities fine translation refinement of new articles, I do not review, because I learn a lot!
Preamble: the beginning of the
recent news about Li Lu will become a Buffett successor up the impression of him two more concentrated, first, his first fancy BYD, and then recommend to the Munger and Buffett, it contributed to the second, he is studying in the United States and engaged in investment. gossip owned by gossip, we are more concerned as a successful Chinese investment house,Coach Purses, his investment style and philosophy Why will be shares of God and share God think than their own more clever of Mans grid value. following sorting of the material sources, including his return to his alma mater two lectures on value investing at Columbia University (2006 and 2010), as well as him this year, the Chinese version of the sequence written by Charlie Munger look at how the future of the investment and BYD? he has experienced the biggest investment mistakes (both long and short) What are the implications for us? by Munger coaching out of the woods, he learned from the master of the body which the value of investment in the true meaning of?
three characteristics of the 2006 Columbia Business School lecture points
value investors:
1,Coach Kristin, does not depend on the stock trading hands, but to think of myself as a stock in which the industrial operators.
2 However, not control of the entire company and industry, so they need a certain margin of safety.
3, the imaginary identity of the business industrial, will make value investors in the only 5% of the funds is the value of investments, different with the other 95%, both an opportunity and a challenge. the biggest challenge is to determine that he really is 5% or 95%. emotional makes it easy for you to do 95 doing things, after all, 95 percent of the funds will be everywhere, but only 5% have very high income investment on the road, you will encounter a variety of tests, so you clearly know what is 5%, or 95 %
If you are that 5% of the value investor, you will not make public, the minority will feel at ease, This is at odds with human nature (unnatural), your decision should be based on your logic and evidence, rather than other people think so. value investors, most of the time is not :
Timberland, (engaged in outdoor sporting goods) to get the company was found: the Asian financial crisis, the turnover of the region came to a standstill when should companies interact with others, not to listen to suggestions, but to understand the basic understanding of the market it when the company no one covered, mainly because the company is a long-term steady growth, 40% family holding (98% of the voting rights), as if company then get involved in a lawsuit, if you are 95% of the investors, you may arbitrarily concluded that the company's management engaged in, but to download all the case files, read carefully and found that many lawsuits are due to company performance did not meet the guidance, angered investors, the management is also unhappy, and angrily refused to communicate with Wall Street. how to make the right judgments by management, then you should become a reporter with the spirit of a detective, many professional investment managers feel that this is not their own scope of work, but 5% of the value investor to do. you can go to the family of operators live in the community, their friends and neighbors to understand their man. through various means, to learn the Timberland father and son, father graduated from high school. is very simple. son went to business school, the young, the company's chief operating officer. through a common acquaintance with his son, father and son should be a professional ethics. not miss important in determining the information (including the Asian business to cut only 5 percent of the company's overall performance, the shoes of their home began in young people, especially children in the popular, and so on) the face of still-low share price, the conclusion is the market is not carefully studied this company or a lot of institutional investors due to various constraints choose not to configure the stock 2 years of growth performance,Coach Poppy, stock prices rose 700%, turn to five times the PE of 15 times.
example:
Bloomberg News Agency. the overall situation of this company is the characteristics of the product itself, so the user a high switching costs, but the history of the research firm found that the company is also started from a very young and a little bit to get market share, by the way customers use every day, until can not do without this product, also officially reached monopoly status. Bloomberg users with the products has been established between the behavior of contact, so even if the product price increases, it will not choose another. Bloomberg as an ISP, I learned the transaction member of the habits, will continue to ask the user to use feelings, and to provide more updated service that allows users to completely CapitalIQ, such as is to copy the Bloomberg model.
value of investment is not just theory, but can actually bring huge returns. the premise that learning by doing, but must pay a huge effort to research and analysis. more suitable for young analyst is concerned, because they have nothing to lose. become a good investor must first become a good analyst. good analyst has two points: first, to obtain comprehensive and accurate information, because very often you draw their own insights.
know more, more favorable to investment. any factors that affect the industries in which the company will you, including the political, technological, and even literary works of art will always be in a point in time, you see what other investors did not notice. encyclopedic knowledge can always play a role in cross-sector investors.
As Charlie Munger has said, that person's life does not have a lot of insight, only continuous learning before they can select an industry in the United States, may have studied 15 years of industry, and then find the same industry in the Asian region, equivalent to that you can intervene in the initial stage of these industries, of course, only a thorough understanding of this industry in order to grasp every turn, resulting in ultra-high income.
investors as a business owner with 95 percent of investors is very different, but we must understand the idea of ??95% of investors, but if you really as a business owner, and finally you will be able to leave the asset management industry, but go really really run a company or changed to a private equity investment, Buffett and Munger go road. < br> to find the source of the disease, found that many patients killed reluctant to talk about the serious and really research than any training I often make my interns to do an exercise, assume that your distant relative left you an industry, you have 100% ownership. carefully want, what would you do? If you can do, then you took possession of a great advantage in the investment competition because many people do not realize this, they just think the stock is an easily traded paper If this is your own industry, you would not have to stop trading, you will know what this business the to how valuation.
when he joined, to catch up with the Asian financial crisis a few years after the Internet bubble, a financial crisis could have been once in a century crisis, the outbreak of now with increasing frequency. every time disaster strikes, the market value of all the possible loss of more than 50%, then you need to have enough self-confidence, not the influence of others may not be easy, but life is so Ba Jun in the company history, at least three times the stock is sliced, Carnegie also encountered such a situation, Rockefeller met, everyone is the case , at least to prove that you do not make mistakes, because in this market, if you make a mistake, your loss is not 50%, but all destroyed.
Q: You mentioned that the research industry to study both the most cases of failure to the industry, specifically?
A: If you have a thorough understanding of a business model can be extended to the entire industry. Every industry has its own characteristics, these characteristics may allow the industry outperformed other industries identify the industry's best and worst companies to track their performance of the whole process and pay attention to, if the stock of the worst companies in the industry even better than the industry's best price performance, allowing you to have a new understanding of this industry such a situation does exist. if you really get the insights of an industry, also found that the management involved in good company at a reasonable price, it will bring you long-term high returns.
ask: example?
A: such as the automotive industry, initially only a few enterprises, profits are high, and subsequent decline of General Motors, in the 1960s, the return on capital of up to 46%, the 1970s, dropped to 28%, only 9% in the 1980s, 1990s, 6 percent, and now should be negative. With these data, the understanding of the industry can be more in-depth, rather than vaguely that the automotive industry is very profitable or very bad and this understanding, for research and investment in China and India and other countries in the same industry will be very helpful.
Q: BYD, I heard that you used to think that BYD should sell a car to the U.S., why would you want as?
A: This question is best asked Wang I I still want to talk about the core battery of electric vehicles. battery is the largest value-added part, and determines the value of electric vehicles before the Rockefeller oil refining success, one third of the cars electric, and later Henry Ford by the combustion engine technology, waste 85% of the energy situation, so that the manufacture of engine and vehicle costs are greatly reduced, making the car into the lives of ordinary people, but many years later,Coach Op Art, we know that burning oil cause global warming in the future even if the Earth there, humans may have gone so very many reasons to the development of electric vehicles. car battery technology has been rapid development, the cost has been the traditional car title and on the BYD are doing thing is to allow the further development of the car battery, allows users to take the initiative to buy electric vehicles but we also recognize that many centuries enterprises, traditional car manufacturing process developed to an extreme degree, as long as a very short time you can acquire in the future also Who's leading in this area have long-term development of space is the car battery technology, will have the biggest advantage of the end can only have a Ford-style company became the biggest winner of the battery manufacturing and automotive manufacturing unites these two put together is not an easy thing.
Q: BYD's lithium batteries, they do ordinary lithium battery is definitely no problem, but the car's lithium batteries are much more complex, I do not think the ordinary lithium battery + car manufacturers provider is a very good concept Buffett factors push up share prices, and is no longer suitable to do value investing, why do you continue to hold?
A: first have to say investors the greatest pleasures is the possibility of surprise , BYD is the case. Wang and his team did have such a culture, their thoughts are always ahead of a lot of people for several years. production of battery when he is compelled, before listing him only $ 300,000 in venture capital through the listing financing, together with $ 200,000,000 of Buffett's investment, they have now developed to the 160 000 employees, 60 to 70 billion revenue and 500 million net profit. BYD automation, low cost, high product quality and reliability. Wang creativity makes him different .8 years ago, when I invest in BYD, is not clear that he is to develop automotive battery or notebook battery or cell phone batteries. this investment the most difficult place in this industry at an unprecedented rate changes, a large scale. BYD to recruit 10,000 university graduates, the production capacity will soon double. This is why I think a great company, so I suggest that the universal history of careful study (every 5 years divided stage).
Q: your investment in China has encountered difficulties it?
A: I really see BYD factory until the end of 2008, the fishes have a better understanding a lot of time for investment, unable to grasp the most complete (perfect) information, because the investment itself is to buy the future, I decided to invest in the case of Asia there are a variety of issues, so everything is back to the basic concept of the margin of safety. we should tolerate a certain degree of uncertainty. will prevent us from investing in? do not you think dealing with the management of listed companies is the class of time-consuming? you will of a business pay a premium?
A: Introduction to the case may be. not seen management, can also learn management; see management may also have not only said that if other conditions are the same, you are more understanding of the management, they are more honest, more intense they do business motives, your margin of safety will be even greater. Again, the key is to clearly know what do not know if it is not clear that, probably just in the gambling deal with the listed companies there is no fixed pattern. if a curious, to find ways to collect data, but in the hedge fund and raised funds usually only about one weeks time to understand a business, it is difficult to completely understand. I am only 10 years, the now
still learning BYD's the new thing.
Q: Do you investment style and set up a fund at that time any different
A: Many things have changed but the biggest benefits of the investment industry to grow older, your ability to also accumulated to improve some industries, such as competitive sports, grow older, you are no longer engaged in this industry to invest in this way, your knowledge even more than your money faster to achieve the growth of the compound, if you really love this industry, I am building your Do not try to take shortcuts, you may spend a long time, but you will get more investment in BYD, is to help China to move toward modern prosperity. BYD is to help countries such as China and the United States out of the past relied carbon emissions era of development. global warming related to each person, so BYD for everyone has made an important contribution to the history of the United States contributed many inventions, and now one from Chinese companies through cheap electric cars and solar energy for the human civilization Ultimately, we from the sun to get all the energy to make a greater contribution, so if we can find an inexpensive way to store the sun's energy to the battery, and then drive the car, etc., that will truly promote renewable energy and we the initial investment in BYD, there is no thought of these, but for a great company, these are logical, natural, just like Bill Gates should also did not expect to win the whole industry, because all the time does not exist yet. The biggest investment errors / out of the woods
(taken from Lee Road time to compromise. two or three years time, I also had to do long and short positions (LONG-SHORT) hedge, to manage its fund volatility. and do (LONG) compared to short-selling (SHORT) very be difficult for long-term investment for three reasons: first, 100% of the maximum profit of shorting, but the loss of space is virtually infinite, which is exactly the same to do more than the opposite, short (SHORT) by borrowing. so even if the short decision is entirely correct, but if the timing was not right, the operator will be faced with losses or even bankruptcy. Third, the best short investment opportunities are generally a variety of fraud, but fraud fraud tend to be concealed take a long time will be brought to light such as the Madoff fraud discovered only last for decades. these three reasons, short at any time concerned about the ups and downs of the market to continue trading.
to do so for a few years, investment touches portfolio volatility in 2001 to 02 by the Internet bubble caused by the financial crisis, we do not have paper losses, and gains funds under management increased the number of hedge fund industry's most legendary two a bit predecessors my investors, another invited me to jointly set up an investment fund in Asia. seemingly quite the scenery, but in fact my heart is very painful. do empty and do more to control the short the risk, it is necessary to keep trading but kept the transaction, it is no time really to study the long-term investment opportunities during the period of return volatility than in the past, the result is not good But in fact, during that time there have been many excellent investment opportunities. frankly, in my career, the biggest failure is not determined by my error caused by the loss (of course my type of error is not a minority), while during this time can not be buying a few pieces I like the best stock, and I am less earn up to now still increasing.
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until the seventh year that we know in 2003 Thanksgiving Day gathering, (Li Lu and Munger) a long heart to heart conversation. all the companies I invest in companies I have studied and aroused my interest in the company introduced one by one to Charlie he is the review. I have to ask him the trouble I encountered. it comes to the end, he told me the problems I have encountered in almost all the problems of Wall Street.
whole way of thinking on Wall Street, there are problems. Although the Ba Jun has made such a big success, but on Wall Street but can not find a true copy of its company. if I continue to go all the way, my troubles will never eliminate, but I willing to give up the road now, out of the road with the Wall Street investment willing to give me. This makes me flattered. Charlie's help, my company conducted a thorough reorganization of the structure is completely changed into the early bus Buffett's partner and a partner of Munger Company (Note: Buffett and Munger early each have a partner to manage their own portfolio) as the structure, but also to remove all of the typical hedge fund drawbacks. investors are willing to leave to make a long-term investment to ensure we are no longer absorb new investors. new fund also retained the original part of the Fund's portfolio, including our investment in BYD. < br> I went into a golden age of investing career. no longer be a Wall Street investors a wide range of restrictions, after the completion of the Reform of Investment results also confirmed the correctness of this decision. Although the numbers still up and down fluctuations, but the end result is a substantial increase from the fourth quarter of 2004 to the end of 2009, the new fund, excluding operating costs, the annual compound rate of return over 36% since January 1998, the original Fund to create a start, the annual compound rate of return is more than 29% .12 During the return of growth in more than 20 times. aside figures aside, all these years of work a lot smoother. I do not need to dwell on the ups and downs of the stock market, continuous trading, constantly short. Instead, I can spend all your time is spent on the company's research and understanding on my investment experience has clearly demonstrated: the investment will certainly benefit all parties in accordance with the Buffett / Munger system but because investment institutions restrictions, the vast majority of institutional investors in this way, so it gives a great competitive advantage for those investors in this way and this advantage will not be in the future for a long period of time disappear.
Li Lu spoke Munger own affect
Charlie is such a unique person, his uniqueness is manifested not only in his ideologically, but also in his personality, for example, think Charlie always start from the reverse. If you want to understand life to be happy, Charlie first is how the study of life can become painful; to study how to become bigger and stronger, Charlie the first study of corporate decline; most people are more concerned about how successful in the stock market, Charlie was most concerned about is why the stock market, most people have failed him this way of thinking comes from the following sentence the philosophy behind the farmer proverb: I just want to know the future, I will die in where, so I will not go there.
Charlie in his long life, continuing to study the collection on a variety of characters, from all walks of life companies, as well as governance, academic research in various fields well-known case of human failure, and a checklist of reasons for the failure arranged in the right decisions, make him almost from the life, career decision-making do not make major mistakes. Buffett and the Ba Jun fifty years results to the importance can not be overstated.
Charlie sitting next to a beautiful woman insisted that Charlie use one word to sum up his success, Charlie said to be , he can one see the essence of things. Buffett put Charlie, this feature called essence is clear. the Ba Jun investment in BYD is an example. I remember 2003, my first time with Charlie about BYD, although he has never seen Wang I have never visited the BYD factory relatively unknown, even for the Chinese market and culture, but he was BYD raised questions and comments today still look to invest in BYD's most substantial
to hh
Charlie on me is not only a partner, elders, teachers, friends, is a model of success, but also a model of life from his body not only learned the truth of value investing, but also learned a lot of truth in life, he let me understand a person's success is not accidental, and the time is certainly important, but the intrinsic quality of the people is more important.
Charlie like an appointment with the breakfast fare, the time is half past seven. remember the first time to eat breakfast with Charlie, I get there on time, Charlie has been sitting there reading the newspapers of the day even worse a few minutes from half past seven, so that a highly respected old people and I was very upset. second date, I have about ahead of a quarter of an hour to reach Charlie is still sitting there reading the newspaper. to the third date, half an hour earlier to reach results Charlie or read the newspaper there, as if he never left the seat, year-round waiting until the first four times, my bitter heart is an hour ahead of arrival, half past six sitting there waiting to 6.4 15 when Charlie lay it came in, holding a stack of newspapers to sit down without looking. completely oblivious to my presence after I came to know Charlie and the date early. to not waste time, took out a good newspaper read. since Charlie's habit is to know, after we re-appointment , I will advance to the scene, take a newspaper to see, do not disturb each other, after half past seven with breakfast chat. accidental Charlie will be late. I once took a young entrepreneurs from China, went to see Charlie Charlie came from a luncheon was late for half an hour after one, Charlie first of our two young men, apologized, and explained in detail the reason for his late, and even lunch will be valet parking ( VALETPARK) should be how to improve it will not delay the 45-minute waiting time of the guests that Chinese young people are both surprised and moved, because in the world probably could not find a position such as Charlie's elderly will be a result of being late to the junior repeatedly to apologize.
fine Annotation: Our concern is that if Buffett really put a large portion of its assets to the Li Lu to take care of, said he thought the next decades of investment opportunities and priorities will be transferred to the United States markets outside Asia and China. If so, of