Recently, some friends joked that our performance fluctuates a little bit. The first quarter was among the best, and the second quarter was the bottom.
Indeed, we who don’t often look at the scoreboard were startled at first glance. After taking a closer look, my heart is set again. It turns out that it is not that the net worth fluctuates greatly, but that the ranking fluctuates greatly. To use a mantra: You can only try to make yourself smarter, but you can never stop someone from being smarter than you. So, it’s better than ranking.
There are also friends who implicitly question why we still don’t buy growth stocks, especially since they fell so much before and rose so much in the second quarter. Could it be that we didn’t buy them for three years, just to buy the dips?
Not really. Falling much and growing fast are not reasons for us to buy a stock. The stocks we can buy must meet at least one of the following two conditions, preferably both: First, the long-term competitiveness is sufficiently prominent, the profitability is stable enough, and the confidence level of the judgment is high enough, and it can be viewed as not so Buy at a cheap price; the second is that although the long-term prospects cannot be optimistically judged with high confidence, the price is cheap enough that there is no need to be particularly good to have excess returns in the future. The former is similar to buying a high-quality horse at the price of a medium-sized horse, and the latter is equivalent to buying a medium-sized horse at the price of a low-quality horse. Apart from the valuation, we are not good at investment based on prosperity alone, so we cannot force it. Munger said that in the eyes of those with a hammer, the world is full of nails. The hammer people in the stock market include the followers of prosperity. In their eyes, the reason for buying a stock can only be that it will rise, and the reason for selling a stock can only be the expectation that it will fall. In fact, there are many ways to make money, in addition to hammers, saws, planes, and even hoes. We don’t use a hammer, we have to give up our ups and downs predictions and focus on the long term. Look at demand in the short term and supply in the long run. Therefore, we did not buy a stock, and the reason can only be one of the following two points: one is that the long-term pattern is not understood, and the other is that the price is unacceptable.
Some friends frankly criticized us for not studying hard, failing to expand our ability circle, and using investment ideas as a shield for incomprehension.
This criticism is right and wrong. The reason why it is right is because there are indeed too many things that we have not understood and need to learn; the reason why it is wrong is because we have not relaxed our studies. The market generally assumes that you buy a stock because you know it well. This is right and wrong. The right thing is, those who dare to buy heavy hands must have a relatively thorough understanding. Understanding is a necessary condition for heavy positions; what is not right is that things that dare not buy may also be understood a little bit. Understanding is not a sufficient condition for heavy positions. . In the allocation of research energy, we have always said that most of the energy is invested in things that have not been “dare to buy”, but not much energy has been invested in the things that have been bought. This approach sounds paradoxical, but it is very reasonable, because “understanding” does not necessarily lead to liking it, or it can be disliked. Mr. Lee Kuan Yew said it very well: “A theory does not necessarily sound practical or feasible just because it sounds pleasing to the ear or seems logical.” The more you know about stocks, the more you love them.
The progression from ridicule to questioning to criticism is the progression of anxiety caused by the duration of performance lag. It is easy to be anxious, anxious when you lose money, and anxious when you earn less than others. It’s the scoreboard that hurts, and everyone would be a lot happier if the fund disclosed its NAV not on a daily basis but on an annual basis. It is the instinct of animals to respond to external stimuli, and “the ability to not respond” is the element of wisdom – this is a famous saying of Mr. Zhou Guoping, and I wrote it down in my notebook.
If you want to have a better chance of winning, set your goals smaller. My small goal is to make money for the holder, not to earn more than others, although the difficulty of achieving the small goal is not low.
Why is it so difficult to achieve small goals? Because investing is a profession that requires competition, you can not compete with others, but you must compete with yourself. Humans are best at interpreting all new information so that their original views remain solid. But what the truth is, it has nothing to do with our wishes. The so-called rivalry with oneself refers to being the opposite of oneself and constantly questioning oneself. We’ve said that we expect a state of “laying flat”, but lying flat only refers to work rhythm, not work intensity. We don’t want to stay up all night in earnings season, and we prefer to keep thinking about it in the usual way. We can discuss a stock from work to get off work, or we can take the time to copy financial statements by hand. We are more willing to solidify “seeking more and more understanding” into a habit, rather than chasing the wind.
Recently, some well-meaning friends comforted us, blaming our unfavorable fleeting years on the irrational and extreme polarization of the market. Well-intentioned, but I am not a victim, but a survivor. For a fund manager who doesn’t aim for short-term gains, short-term performance depends on the market. I am glad that we have not fallen behind in the past few years. I am also glad that I can chat with you calmly. I am even more glad that I can still sit in the position of the fund manager. I am most glad that the current combination is quite comfortable. Look how lucky we are!
A famous American writer once said: History does not repeat itself, but it is strikingly similar. More than a hundred years later, Mr. Dai Renzhu, a famous American sinologist, echoed it with another sentence: “History will really repeat itself, because the actors in it always repeat the mistakes of their predecessors.”
In my opinion, as long as we do not repeat the mistakes of our predecessors, small goals can be expected.
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