Original link: https://ljf.com/2023/08/30/1308/
2003 Speech at the Shareholders’ Meeting of Sike Finance
Why are Berkshire and Siko so attractive? Why do we have so many steadfast followers? First of all, everyone must have seen our long-term investment yield. However, you follow us not only because of our yield, but also because you appreciate the things behind the beautiful yield, that is, our values and our way of thinking. Birds of a feather flock together, people are divided into groups, we are like-minded people.
It seems discordant that Warren and I have delivered good investment performance year after year while the academic world advocates the perfect efficiency of the market. We don’t look down on the set of academia at all. However, we do have a sense of loneliness. Only in the investment industry, the most mainstream theorists and the best doers sing against each other, neither in the medical industry nor in the engineering industry.
Warren says he often tells business school students that he has a way to help them increase their return on investment. Take a card, on this card, only 20 holes can be punched, each hole represents an investment, make an investment, punch a hole. When all 20 holes are drilled, the investment opportunities of a lifetime are exhausted. By doing what he says, investors can realize higher yields over a lifetime, Warren said.
For a thoughtful and disciplined investor, if he only makes 20 investments in his life, he will definitely achieve a better rate of return in the end. Because the number of investments in a lifetime is limited, you must be cautious when making every investment, and you must keep your eyes on big opportunities.
To achieve this difficult goal, as far as we know, there is only one way: to reduce the number of investment decisions, not to sell lightly; to grasp the big opportunities, to make a big bet.
We should think of it this way: what does it have to do with me if others earn more? No matter what you do, there are always stronger players, there are always people who make more money, and there are always people who run faster. Don’t be greedy for too much, and be content with enough money you earn, this is how to live clearly. If you insist on comparing yourself with others, you will be jealous when you see others making more money than you.
I think the people who commit the crime of envy are the stupidest. Committed the sin of jealousy, not getting a little bit of happiness, the whole person is surrounded by pain, why should I suffer this crime?
When we invest, we always take the best investment opportunity in our hands as a reference standard, and use it as a ruler to measure all other opportunities.
Among the investment opportunities we browse, 90% to 95% are judged by us as not within our circle of competence. We don’t understand them, so we just ignore them.
If you really have the ability to achieve a high compound rate of return, you can invest even if you live in an attic.
Some people are impatient and cannot observe and wait like us. Too impetuous to get things done. If your life is already rich and smooth, and six months have passed, and your life is still prosperous and smooth, do you feel that life is too sad and unbearable?
Graham developed the principle of a margin of safety, a concept that never goes out of style. Graham taught us that the market is our servant, not our teacher, and this concept will never go out of style. These two concepts proposed by Graham are the foundation of investing and will never become obsolete. In Graham’s thinking, we can also learn to remain calm and objective, not affected by emotions, which will never go out of style.
We no longer engage in event arbitrage. One of the important reasons is that general event arbitrage opportunities cannot accommodate our large amount of funds.
When investing, one must keep your eyes open and wait for opportunities to appear, and the other is that when opportunities arise, you must act decisively.
We both buy stocks and do acquisitions. Compared with buying stocks, we can save a lot of tax costs by buying entire companies.
If a person’s career covers a very wide range, it is impossible to be successful without reading a lot. Some people have achieved specialization in a very narrow field, and they may not need to read a lot to be successful. Investing is an all-encompassing business. I don’t think it’s possible to make good investments without reading a lot.
Many people always avoid it blindly, unwilling to bear short-term pain. Asking for hardships and taking the initiative to suffer in front of you is the correct attitude towards life.
Taking fishing as an example, there are two ways to make money in fishing: the first way is to participate in fishing competitions to win bonuses, catch the most fish and win huge bonuses; the second way is to make a living by selling fishing gear and making money by providing fishing advice to others . There are two kinds of people who participate in fishing contests and those who sell fishing gear. People who sell fishing gear for a living basically have no real fishing skills. In Warren’s and my mind’s eye, most investment advisors sell fishing tackle. We are participating in the fishing competition, and they are selling fishing gear with lip service. Investment advisers talk about beta coefficients, so they can sell more fishing gear.
Berkshire dares to act when others are afraid, which is Berkshire’s consistent style.
When is the right time to buy a house? I think that when starting a family, you can buy a house when you need it. There is no need to go to great lengths to guess the price trend. Only by buying a house can you have a stable home.
I always firmly believe that as long as the government meddles in things, basically nothing will get better. Although the government has the responsibility to ensure the normal operation of the social security fund, I do not support the government’s large-scale entry into the stock market through the social security fund.
There are two main methods of stock valuation: the first is to estimate based on the cash flow obtained in the future; the second is to guess people’s psychology and buy before the stock price rises. In the first valuation method, stocks are similar to bonds. In the second valuation method, stocks are like Rembrandts. Once the government aggressively enters the market and buys a large number of stocks every year, the stocks may become the famous Rembrandt paintings that people are chasing after each other, and the whole society may fall into chaos.
Welcome to join us: the pursuit of growing a little more wise every day than the moment you wake up; the pursuit of being able to take on greater responsibilities every day; Day after day, year after year, you will come out on top.
In this life, until the end, people will basically have what they deserve. To be successful, you have to be worthy of it. The reason is very simple.
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