16 years ago, I entered the A-share market with Buffett’s philosophy, thinking, logic and perspective. In the past 16 years, whenever I encountered the articles of Buffett, Munger, and Peter Lynch, I regarded them as the Bible, read them word by word, and loved them. It can be said that many of their wise sayings, I am thoroughly familiar with them, and understand them in my chest.
In 2020, I excavated stocks such as Tibet Pharmaceutical, Xiaoxiong Electric, and Jingsheng Electromechanical, and in 2021, I excavated Xingfa Group, Kestar, Furui, etc., and this year I excavated Yuanxing Energy, Suyanjingshen, China Nuclear Power, etc. , all rely on the master’s biography, divine biography and heart biography. Along the way, although there have been many mistakes, I still feel good about myself.
On April 30 this year, 92-year-old Buffett and 98-year-old Munger held their shareholder meeting in Omaha, the United States as always. During the six or seven hours of conversation with investors, the two old people proved to everyone their health and wisdom. Although many of the questions were the same as in previous years, their answers were by no means clichés. They had the taste of new wine in an old pot, which was inspiring and mind-blowing.
Today, May 8th, Mother’s Day, the weather is slightly warm. With great awe and humility, I report to you the topics discussed at Buffett’s 2022 shareholder meeting. The content of the “author” section is my perception. If you If you can benefit from it, please be as grateful as I am to these two supreme teachers of value investing.
1. On timing
Buffett said on investment timing, we never speculate on investment timing, we just buy when we think the price is cheap.
When asked by the audience “how to be as good at timing investments as Berkshire is,” Buffett replied that we don’t buy or sell because of market conditions or economic conditions, because we don’t know what’s actually going on. During the financial crisis of 2008, everyone panicked, and we didn’t seize the opportunity to invest; we also missed the opportunity of the stock market crash in March 2020. So we’re not very good at timing our investments, we just buy them when we think they’re cheap.
Author: There is no doubt that almost everyone wants to get in at the most opportune time, but it is almost impossible to do so. And to put it uglier, this is actually a little clever thinking at work. Small wins depend on wisdom, big wins depend on wisdom. Investing must not refer to making money by small cleverness, but should rely on great wisdom to win. The so-called great wisdom should be vision, strategy, belief, courage and persistence, rather than being quick-witted, throwing high and sucking low, positive T against T, tempting high and digging holes, etc. Peter Lynch has also said more directly that, in his view, there is absolutely no need for timing. At the same time, he also expressed the same view as Buffett, which is to buy when the stock enters the value area and has a sufficient margin of safety.
2. On the holding varieties and the new purchase varieties in the first quarter
Currently, about 66% of Berkshire Hathaway’s stock holdings are concentrated in four companies: Apple, Bank of America, American Express, and Chevron, with end-of-period market capitalizations of $159.1 billion, $42.6 billion, $28.4 billion and $25.9 billion. Among them, Apple, as the company’s largest holding stock, is as high as 40%, with a market value of nearly 160 billion US dollars, and the cost is less than 60 billion US dollars, which means that the heavy holding of Apple has contributed 1,000 yuan to Buffett in just five or six years. It is a company with the highest profit for it. Berkshire Hathaway significantly increased its holdings of Chevron in the first quarter, which is equivalent to about 159 million shares held by Berkshire in the first quarter based on the closing price of Chevron on March 31, which is much higher than that. About 38 million shares held by the group at the end of the fourth quarter of 2021.
In the first quarter just past, the global situation was unpredictable, but they were in charge of Berkshire, but they firmly started the “buy, buy, buy” model. In total, $51.8 billion of shares were bought and $10.3 billion of shares were sold. Among them, between the end of February and the middle of March, he bought $41 billion in stocks in one go. Although cash reserves have dropped significantly to $106.3 billion, Buffett still said the company will keep enough cash safe.
Author: Buffett has always been a concentrated position, Duan Yongping is also the same. But Buffett has always kept enough cash reserves, which many people may not have achieved. I myself often fill up the warehouse, which violates the taboo.
3. On speculation
Buffett said that the stock market has been volatile and elusive in the past two years, like a casino, where everyone gambles. This phenomenon is especially obvious, and it may also be that the stock market has been too bullish in the past two years.
Author: 20 years and 21 years, the same is true for A shares. Some stocks that have been touted as China’s high-quality assets, core assets, and track stars have all been fired. Yet time is a function of everything, and value is the touchstone of permanence. Now look again, Hengrui Medicine dropped from 97 to 27, Changchun Hi-Tech dropped from 522 to 131, Aier Ophthalmology dropped from 72 to 25, Arowana dropped from 145 to 42, Ningde Times dropped from 692 to 353, and Ping An from 97 dropped to 42, Gree Electric dropped from 66 to 29, Sunshine Power dropped from 180 to 56, Haitian Flavor dropped from 152 to 74, Tongce Medical dropped from 421 to 112, Sany Heavy Industry dropped from 49 to 14, Haikang Prestige fell from 70 to 34… So, some people exclaimed that value investment had failed, and Hengrui Medicine was the grave of value investment… In fact, on the contrary, they were cut in half or even cut again. It was value investment at work, it In an extremely cruel way, I will teach those who only look at the track, not the price, and imagine that they will buy it once and earn it for life. Value investing has always been a process of dynamic management. Hengrui Medicine was fired to a price-earnings ratio of 150 times, which is a very serious bubble. In addition, centralized procurement has made its former high gross profit no longer exist. The faucet of innovative medicines fell off the chain at a critical time, and could not afford to be the mainstay of profits. The current price of 29 yuan still corresponds to 40 times this year’s price-earnings ratio, the valuation is still not cheap, and there may be room for decline. The more than 800,000 retail investors who have been brainwashed are pitiful. I hate those chickens and dogs who lure high-quality goods while telling stories. Another example is Hikvision. From 2018 to 2020, Hikvision’s revenue growth rate was 18.93%, 15.69% and 10.14% respectively. By the first quarter of 2022, the company’s revenue was 16.522 billion yuan, a year-on-year increase of 18.11%; net The profit was 2.284 billion yuan, a year-on-year increase of 5.29%. This should be largely related to the four aspects of the US sanctions on Hikvision in 2019. Once the sanctions were imposed, the performance declined, indicating that he is still not strong enough, especially the chips. The key technology is not yet available, so I don’t think it has fallen into place yet.
However, from another perspective, value investors should be deeply grateful to those who speculate all the year round. Without their great speculation, there would be no more profitable selling and buying opportunities for price investment.
4. On quantitative high-frequency trading
Munger said that what we are seeing now is almost a speculative frenzy. Some computers with algorithms trade with other computers that also use algorithms. Subsequently, inexperienced market participants are also receiving broker advice (entry). It’s odd that these “casino activities” are legally mixed with long-term investments.
Munger said people were taking advice from “lesser knowledgeable stockbrokers” and said “it’s vile”. Buffett also chimed in, saying that those brokers actually know about commissions.
Then before lunch, Munger couldn’t help but criticize Robinhood, the “retail base camp”, saying that the company is now “disintegrating.”
Look what happened to Robinhood from peak to trough, Munger said. Isn’t it obvious that something like that happens? Munger denounced the brokerage’s business model for being riddled with “short-term gambling, large commissions, hidden rebates, etc.” and said the company’s collapse was “justice from heaven.”
Author: A-shares are also more fashionable in high-frequency quantitative trading. Don’t they know the difference between computers and human brains, chips and human hearts? If the computer can completely surpass the human brain and the chip can refer to the human heart, then there is no doubt that human beings will be completely destroyed and will never be saved. Objectively speaking, A-shares are T+1, with a limit-down limit, which is not suitable for high-frequency quantitative trading. It is said that this kind of high-frequency quantitative trading is very good in US stocks and Hong Kong stocks to achieve 20% a year, so it is not scary at all.
5. On Bitcoin
Buffett once again attacked cryptocurrencies at the shareholders meeting, saying that unlike farms and apartments, Bitcoin does not generate value, and its price will only depend on how much the next person who buys it is willing to pay. Cryptocurrencies may now have magical appeal because of the hype, but they are not productive by themselves.
When Munger talked about bitcoin, he said that I need to avoid some very stupid, evil, and hurtful things in my life, and I think bitcoin accounts for all three. It reduces the ability of the dollar and the Federal Reserve, which we absolutely need, and which is a key to maintaining the credibility of our government. China is smart enough to ban Bitcoin, we are really stupid in comparison.
Author: I have never seen what Bitcoin looks like, I have no understanding, and I will not comment.
6. About oil
Munger said, I hope to have a lot of oil reserves, I prefer to buy oil from the Middle East, to retain the resources in the United States. In the next two hundred years, oil will be a very precious resource. He admits that’s not what most people think, adding, “I don’t care, I just think they’re all wrong.”
Buffett: The question is elastic. Different ethnic groups have different ideas, which is not a bad thing. The US federal government now has billions in storage. Now everyone thinks that it is a good thing that this country has so many oil reserves, but when you think about it, it is actually not enough. These reserves will be gone in three to five years, and you don’t know what will happen in three or five years.
Author: Don’t we all talk about new energy now? Aren’t solar energy and lithium mines hot? I wonder why the two masters love oil so much? Doubtful.
7. About repurchase
Buffett said that after Berkshire invested in American Express many years ago, Berkshire’s stake in American Express has increased from 11.2% to 20% with the buyback of American Express over the years, while the investment in Apple has increased. As well, Apple’s buybacks over the past few years have generated substantial gains for Berkshire.
Author: I highly appreciate the buybacks of U.S. listed companies. Because after the repurchase, it will be cancelled, and after the cancellation, the interests of the original shareholders will be enhanced. And Chinese listed companies rarely repurchase and cancel the action. Not long ago, Vanke announced a 2.5 billion repurchase plan. The repurchase price is not higher than 18.75 yuan. The repurchase is for resale.
8. On Inflation
“The best protection against inflation is to invest in your own skills.” An investor asked at the meeting, if you only choose one stock to fight high inflation, what should you choose? In this regard, Buffett did not directly answer. He said: “Regardless of economic benefits, the best investment is to invest in yourself, do what you are good at, and become a useful person to society, so you don’t have to worry about your money being devalued due to high inflation.”
Buffett has always emphasized that investing in yourself is the best investment. Munger also once said that learning is talking with giants, and learning is the fastest way to progress.
Author: In the face of the current global inflation situation, Buffett’s discussion is very exciting. He said: “The tool to fight inflation is to improve your profitability.” That is, invest in your skills and fight inflation by improving your investment capacity. Although the Fed is now raising interest rates and shrinking its balance sheet, it has reduced money supply. But in the long run, it will still lead to market inflation. The RMB is even more so, so please bear in mind the advice of your mentor, invest in yourself, and improve your earning ability.
Finally, let’s talk about some live tidbits. Throughout the shareholders meeting, Buffett has been drinking Coca-Cola, and Munger has been eating See’s Candy. They also brought 11 tons of See’s candy to the scene to “live delivery”. The two old men are so cool!
#hengruipharmaceutical# #vankeA # #hikvision#
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