Yang Delong: The logic behind Buffetts successful investment

Source: Sina Finance

Author: Yang Delong

The existence of value investment has been almost 100 years old. From Buffett's teacher Graham, the founder of value investment and the godfather of value investment has experienced the inheritance of many generations of investors and carried forward.Here has become a master of success, creating the performance of no ancients and no come.In the past 58 years, Berkshire Hathaway's net assets have risen by nearly 40,000 times. For this proud performance, it is impossible to achieve.It is impossible to achieve a return of more than 10,000 times.Only when growing with a great company, it is possible to achieve such returns.Of course, value investment is often questioned, especially when the market style is relatively separated. Everyone likes to fry some technology hotspots.

Everyone thinks that the last time the technology of firing was the Internet bubble in the United States in 2000. At that time, all the company's stock price of ".com" was soaring, and many funds had several times the year's performance.But Buffett was unmoved. He said that my investment was within the scope of the ability circle, and I couldn't understand these technology stocks.Including his good friend, his iron buddy, Bill Gates, he hasn't invested Microsoft to now.He said that I knew Bill Gates, but I couldn't understand Microsoft's business, and he stubbornly adhered to the value investment concept.Of course, he also missed the rising market in the Internet industry, and escaped the disaster of the Internet bubble rupture in 2001.The hedge fund, which had a good performance that year, basically failed to survive the rupture of the US Internet bubble in 2001, because that wave of Nasdaq fell from 6,000 points to 1,000 points, and many stocks directly died.

Buffett is the foundation of stubbornly adhering to value investment. It can also be said that if you do n’t see the rabbits and do not scatter the eagle, you must have sufficient performance support, and he will only invest in the business model he can understand.So he talked about Musk at this meeting, because some investors asked that Buffett nor Munger did not look at Musk very much before, and felt that he was an empty person.Munger last said that Tesla would definitely fail, but in recent years, Musk has indeed been successful, Tesla has also risen many times, and he has to launch the rocket to Mars to explore.Of course, the last launch failed, but it did not affect Musk's exploration spirit.So this time Mu Ge said that Musk is indeed a smart person, and IQ is estimated to exceed 170, but he said that I would rather use those IQ 130, but I thought I have only 120 IQ instead of those IQ 150. As a result, I think I am 170People, because such people may be more adventurous.From the side, he is relatively conservative. He is willing to invest in some stable business and is unwilling to invest in adventure.

Buffett also said a very humorous sentence. He said that if you hear that someone wants to explore Mars, then we must stand up and applaud, but do not participate in investment.That is to say, science and technology adventure is indeed very exciting, but the probability of failure is very high. He said that we can't afford to fail to withstand the money of investors.In fact, it also reflects the fundamental investment of value investment to find certainty in uncertainty. It is necessary to find a good company that can truly cross the economic cycle and cross the bull and bear cycle, rather than a technological progress.It may fail.I think value investment is always out of date. Its basic logic is very simple. It is to buy a good company, choose a good industry, and wait for a good price to buy.So Buffett said that the companies we bought are all companies with very simple business models. If I can cross the column of one meter and two, I will go to a column of one meter, which is simpler.At this conference, Munger also emphasized that we only do simple things. In fact, he refers to that we will not do things like Musk's adventureism and difficult things.

From the perspective of the first quarter report, Berkshire Hathaway has received relatively high net profit, about $ 30 billion (S $ 39.7 billion), and the year -on -year growth rate is relatively proud.From the top five heavy warehouses disclosed in the first quarter report, there has been no change. Apple is still the first, accounting for about 35%of the positions. It can be said that it is the largest heavy stock stock.Cumulatively contributed $ 100 billion in profits.Then there are American Express, Bank of America, Coca -Cola, Chevrovan, and these five companies are his top five heavy stocks.However, he continued to increase western oil in the first quarter. Last year, he made a lot of money on Western oil, reaching four times the income, and many stocks fell sharply last year.Therefore, although Buffett's investment performance was lost last year, it fell only within 5%. This was very small in all funds. Last year, Nasdaq fell by 30%.Of course, it benefits from allocating Apple and Petroleum stocks and brought him a profit.

It can be said that Buffett's investment has both the component that keeps pace with the times and the bottom line he sticks to.For example, he was very successful for Apple's investment, but when he invested in Apple, Apple's market value was already the world's number one, reaching $ 1 trillion, that is to say, Apple is a very mature company.The person's hand is an iPhone, so he goes to buy it without buying it in the early days of Apple.If you buy it early, you will make more money, but it will take a lot of risks.We know that Apple once drove his founder Jobs, and it was difficult to operate. He wanted to sell it to Bill Gates for $ 100 million, but Microsoft did not want it because he had a bunch of debt.In the end, Buffett invested Apple after it became a consumer stock, that is to say, buying iPhone is actually a consumption behavior.

For the technology company, Buffett does not definitely not invest, but he will invest only after financial indicators and industry status can meet Buffett's stock selection standards.Buy 100 billion US dollars, so that it has survived 100 billion US dollars, which is equivalent to a company that gives him the most.I remember that Buffett had said something very deeply before, and he said that the stock was not how much he rose, but how much he bought.That is to say, if you want to fry a junk stock, do you dare to be full?You may only be equipped with 3%or 5%, up to a maximum of 10%, even if it doubles, it actually does not contribute to your net worth.But if you dare to buy a 50%position in a good company, it has doubled. Do you think about your income?The premise of daring to heavy positions is your confidence in the company.

Buffett's investment energy in the past two years is also very commendable. He has invested in new energy, such as BYD in 2008.In 2008, many people did not know what the new energy was, and he lay out and earned 30 times. In the past two years, he started a profit and reduced the position of nearly half.But it does not mean that he is not optimistic about new energy. He also clarified again at the meeting. He believes that new energy is the future development direction, and BYD is a great company and Wang Chuanfu is a talented entrepreneur.But his large investment is traditional energy, with Western oil and so on.He said that he would still increase the positions of Western oil, but he would not buy it, and he was very satisfied with the current position.In fact, he knows very clearly that the new energy sources will not be wrong in general, and it is the direction of the next decades, but in the future for a long time, it may be the standard of five or ten years.of.

We are still inseparable from oil, no coal, and natural gas, so Buffett's investment in petroleum stocks is also because oil stocks are in line with his stock selection concept.It can be seen that in the past two years, oil prices have risen very high, and the profits of oil companies have skyrocketed.Therefore, his investment does not actually say that he prefers oil stocks, but because of the performance of oil stocks, oil stocks are in line with his stock logic.From here we see that Buffett is a person who keeps pace with the times, but sticks to his stock selection standard and will not lower his stock selection standard.

Buffett has been very strict in risk control. He advocates holding a lot of cash. For example, the cash on Berkshire Hathaway's account has reached about $ 130 billion, compared to more than $ 400 billion in total accountsFor example,Equivalent to 30%of cash positions.So many cash is still a waste on the account. If the investors in A shares will definitely want to buy stocks at the last dollar, but Buffett still leaves cash.There are two reasons for his cash. One is the compensation that the insurance company may bring. For example, Florida suddenly came to a hurricane, and the insurance company would lose a lot of money. If the cash on his account was not enough, it might go bankrupt.This is a risk of business, so he is ready to deal with this risk at any time. Last year, he paid a lot of money on natural disasters.The second is the opportunity to hold cash. Of course, these cash will not exist in the form of cash, but buy government bonds.

Because of the good liquidity of government bonds, there is no risk of breach of contract, and now the U.S. benchmark interest rates are mentioned 5%. Therefore, the US government bonds have reached 5.9%of the income, which is simply collecting money.These national debt can be realized into cash at any time when they need money, so these called cash and cash equivalents are about $ 130 billion.He was waiting for the opportunity to take this money. Like a hunter, he must wait for the tiger to come out before he put the gun. When he saw the rabbit, he didn't care.Therefore, he kept a large amount of cash to wait for the appearance of the tiger and wait for the appearance of the stock disaster, and he could buy a better target at a cheap price.He also said this time that there is nothing particularly exciting large -scale acquisition, so the cash on the account may choose to buy Berkshire Hathaway's stock, that is, to repurchase its own stock,This is also a way to give back to shareholders.

Buffett was sold for more in the first quarter. The stock position was reduced, and it may also reflect his concerns about the US economy after the Federal Reserve ’s violence rate hikes.And he properly scattered in investment, increased its five stores in Japan, and recently went to Japan to inspect these companies in person.But he said that his main purpose was to introduce the understanding of Abel and these companies, because Abel may have to deal with them for 20, 30 or even 40 years.EssenceOf course, he invested in these companies because these companies are financially in line with his stock selection standards, and do not mean that he is optimistic about the Japanese economy or the overall stock market in Japan.Buffett is a natural optimism. He has always been optimistic about the long -term development of the economy, because only optimistic talents dare to buy it during the stock disaster. This is a major premise.However, he did not increase its positions this year, and it was also reduced in the first quarter, which also shows that he is still cautious about the trend of the US and Europe in the future.

Europe and the United States are now facing slow economic growth and high inflation, which can be called stagnation.According to Merrill Lynch, when the stagnation rose, stocks often fell a big decline, so from last year's high inflation to this year, the European and American stock markets have fallen greatly.Relatively speaking, China is now in a period of economic recovery and inflation is relatively low.During the economic recovery stage, according to Meilin Clock, stock assets are actually the most attractive assets, but everyone's confidence recovery takes time, so everyone has not seen a better rise in the A -share market.However, this year's structural bull market is still worth looking forward to. Everyone must lay off some of the wrong high -quality stocks or high -quality funds, and patiently wait for the market to recover.