Original link: https://ljf.com/2023/07/12/1275/
2020 Daily Journal Shareholders’ Meeting Speech
As we all know, the major shareholders of major companies in the United States have all become index funds, with few exceptions. Who would have thought that the voting rights of major American companies would fall into the hands of a group of index fund managers? It wasn’t planned by anyone, it just happened. God knows what the consequences will be.
I can’t stand the “EBITDA” (EBITDA) that investment banks make up. If you ask me, it’s profit bullshit
Sequoia’s performance is particularly beautiful, and one important reason is that it consciously controls its own scale. Other venture capital firms only think about earning more fees, and blindly pursue scale and growth. This is an abnormal phenomenon and will not lead to good results.
It is the most basic principle to sell good things to others and not to cheat. We choose to sell good things to others, even if we make less money, we will not change. In fact, we will not earn less, but more. Warren said it well: “Always take the avenue, and the avenue is less crowded.”
I was able to succeed because when I was young, I mastered several thinking methods, which I used repeatedly throughout my life.
After a long time of pretending, people do change. One thing, you have repeated it many times, and finally you will really believe it.
In my opinion, the most powerful companies are not in the United States. In my opinion, Chinese companies are stronger than American companies, and they are growing faster.
Shareholders: If there is a new company that you have never heard of before, how do you research this company? How long did it take to research? If after estimating the intrinsic value, you find that the company is expensive, will you continue to follow up? Or do you make a rough estimate and find out that it is not cheap, so just look at other things? How do you allocate your time when researching companies?
I don’t watch anything that involves very complicated high technology. There may be some exceptions, but I basically don’t touch high-tech things.
The company I research must have advantages that I have, and others cannot compare with me. A company where others have advantages over me, so I will not participate. For example, for a pharmaceutical company, you have to analyze what new drugs it can develop. Others know more than me, so I have no advantage.
Others are better than me, I don’t compare with others. I have a chance when others are stupider than me. Look for companies with your own advantages, so that you can make a good investment. Thanks to our “pig opponents”, our wealth is given by them.
Another point is that you have to know your circle of competence and know where its boundaries are. You have to know that what is beyond your circle of competence is something that you will never understand for the rest of your life.
Shareholders: At present, due to the slowdown of China’s economic growth, the global economic growth is weak. In addition, geopolitical risks are on the rise. How do you see the outlook for the global market and economy? Thanks.
I am more optimistic about China for many reasons. It is unique in history that a country as big as China can rise so quickly. China has done many things right. I have great admiration for what China has achieved.
I am optimistic about China today. I think the US should be friendly with China, and China should be friendly with the US.
The 99% are always the bottom 99%, that’s the reality.
Of the people I’ve met, the ones who ultimately succeeded were the ones who remained patient and kept their sense. They lived within their means and dutifully. They take it easy and do things right. When the opportunity presented itself, they swooped in and grabbed it. Your new generation of young people, living like I said, can also be successful.
In my opinion, most people who want to take the financial path cannot make it through. There are many crazy behaviors in the financial industry. If money is too easy to make, people tend to go to extremes. Human nature is like this, like a group of animals on the African land pecking at carrion.
I can only give you one piece of advice: lower your expectations and work hard for your little wishes, and you will live a happier life. You may not think so, but it’s an obvious truth. Most people, no matter how hard they try, are still ordinary people. This is the reality. Look at the people around us, how many people can see this reality clearly, and be content and happy?
Shareholder: I would like to ask a question about the Stoics. After hearing you talk about Stoicism, I went back and read some books about it. Those who know your story know that you lived out your belief in being a survivor, not a victim. Although I am still very young, your attitude towards life has inspired me a lot. Can you talk a little bit more about that belief and how it helped you? Why should one hold on to this belief no matter what adversity one faces?
No matter what happens, we should keep a positive attitude. No matter how difficult we encounter, we should try our best to get out.
You can’t get out of the feeling of being victimized, and you always feel that others have harmed you. This way of thinking can only make yourself deeper and deeper. You always think this way, after a long time, who wants to be close to you?
Shareholders: You dare to deny yourself, no matter how deeply you believe, you will try to find evidence to the contrary. Can you give us some concrete examples?
Self-correction is an invaluable ability.
I consciously cultivated this habit, and even specifically thought about how to deny myself.
We must take out our own ideas and ponder over and over again, especially when our ideas contradict reality, we must think about it and ponder it carefully.
Shareholders: You often say that we should take the pursuit of rationality as a moral criterion. Influenced by the evolutionary process, our brains have many wrong cognitive tendencies, which bring a lot of resistance to our rational thinking. May I ask, do you have any good methods or good habits that can help you think rationally?
One of the methods I use most often is reverse thinking.
If someone asks me to help India, I will not think about how to make India better, but how to make India worse. Think of all the things that can harm India and don’t do them. When encountering a problem, think backwards, develop the habit of reverse thinking, and solve problems more rationally.
In algebra, reverse thinking is a common way of thinking. Great algebraists are good at reverse thinking, and they use reverse thinking to solve many difficult problems. In daily life, people should also make good use of reverse thinking. Always think backwards, don’t think about what you want, think about what you don’t want. Consider both what you want and what you don’t want. Thinking right and wrong.
If you want to help others, think about how to hurt others. Thinking in reverse like this, we can see more clearly.
Shareholder: Many years ago, you gave a speech titled “The Psychology of Human Misjudgment”. After so long, what can you add to this speech? Also, you told us that you have always pursued reason throughout your life. Excuse me, in addition to the methods and suggestions you have already mentioned, can you tell us more about how to make yourself more rational step by step?
This is a long process, and it is impossible for anyone to get enlightened all at once.
Reason needs to be cultivated slowly. The degree of rationality that everyone can achieve is different, but it is always good to strive for rationality.
Shareholders: I have been working in the financial services industry for five years. One of the things that surprised me was that over the past five years, many of my colleagues in the financial industry have been sitting on the sidelines, hoping to wait for the stock market to fall before investing. My idea is that those of us in our 20s and almost 30s already have some savings in our hands, and we have decades to invest in the future, so we should start now. My question is, do you agree with me? If you agree, how can I persuade my friends to start investing now? Thanks.
In the long run, people who can delay gratification will live better. Some people can’t control themselves since they were young, and when they grow up, they spend money recklessly, buying Rolex, Patek Philippe and other flashy things.
The quality of delayed gratification is basically innate, and this conclusion has been confirmed in psychological research. If you’re impulsive and can’t do without immediate gratification, I can only wish you luck. It is estimated that you will have a bad life in this life, and I can’t bring you back.
If you have some talent for delaying gratification, and you can develop it, you’re already well on your way to success and happiness.
What you want, you want to get it immediately. Such a person will not only achieve nothing, but may also fall into the abyss.
Shareholders: Now our budget deficit, unemployment rate, and balance sheet expansion have all reached historical highs. Why is there no inflation? Also, please recommend some good books you read last year.
In response to the economic crisis in 2008, countries around the world frantically started printing money and bought a large amount of various assets. The scale of water released by countries around the world is beyond the imagination of all economists.
In the face of macroeconomics, it is better for us to remain humble.
Lyndon Johnson said, “Talking about economics is like pissing in your own lap. It’s hot to you, but not to anyone else.” His analogy is vivid, so I won’t dwell on it.
Shareholder: I would like to ask you a question about Tesla. Tesla’s market cap is as high as $140 billion. Last week, Tesla shares traded as much as $200 billion, and options traded as much as $500 billion. It once soared 20% in a single day a few days ago. Mr. Musk fanned the flames as hard as he could, trying to make the flames even hotter. What do you think? How would you rate Mr. Musk’s behavior?
I just want to say two points: first, I will never buy Tesla; second, I will never short Tesla.
Shareholders: How should we educate our children so that they can succeed in their future lives?
Parents set a good example for their children and set a good example, which is better than anything else. It’s just that preaching is useless, and children can’t listen.
Everyone wants to be the best, but unfortunately, no matter how hard people work, no matter how successful people are, the bottom 90% of society is always made up of 90% of all people.
Shareholders: I am an 18-year-old student at the University of Southern California. Sometimes, I find myself doing nothing interesting. You are 96 years old and still have a strong interest in your career. Where does your motivation come from? Why can it last so long? Thanks.
Maybe it’s my luck. I love what I do. I have good colleagues, good friends, and good family. I do what I love.
I’m a lucky man and I don’t know how to make other people as lucky as me.
Shareholders: There is a problem with Boeing’s aircraft. What do you think of the recent Boeing incident?
I don’t want to insult Boeing. Boeing is a great company, and its safety record is second to none in the world.
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