Essence Edition Are you suitable for buying stocks?

Chapter 6: Buffett's Miraculous Skills (1)
family born
Warren Buffett was born on August 1930, 8 in Obaha, Nebraska, USA.If you come here expecting to see a poor inspirational story, you will be disappointed.Buffett was born into a wealthy family. For six generations, family members have occupied a place in the local political and business circles in Obaha.

In 1867, Buffett's great-grandfather came to Obach, and later opened the first sizable grocery store in the area.From the American Civil War to the early 20th century, under the operation of the Buffett family, it gradually became the largest department store in Obach.It can be said that Buffett's great-grandfather made great contributions to the Buffett family. He brought the family from the lower class to the upper middle class.Buffett's father, Howard Buffett, was a local securities broker and a Republican congressman, while Buffett's mother was also born in a wealthy Jewish family.

Therefore, in addition to his own nature, Buffett's sensitivity to wealth and talent for business that he has shown since he was a child, the influence of his family must not be ignored.

Buffett was so cute when he was a child!

In previous magazines, Xiaotou kept reminding everyone of the importance of financial quotient.If IQ determines a person's ability to fight alone, and EQ determines a person's ability to integrate resources and use external forces to achieve goals, then the third dimension of financial quotient determines how capable a person is. Leverage the power of money.

Rich people know how to make money work for them, while most of the poor and middle class work for money.The typical manifestation is that the poor only have expenses; the middle class buys liabilities that they think are assets; while the rich are actively allocating their asset items.

So, where does the money quotient come from?For our generation, we can only continuously enhance our ability to control money through continuous learning and practice.But for your next generation, the sooner you get financial and business education, the sooner you can realize their dream of wealth.If you can't be a Buffett, why not raise a little Buffett?

Investing is not a difficult task. As long as you find the right direction of learning, you can easily obtain the key to the door of wealth.Want more advice on how to start learning to invest?You can go to the homepage of Changtou.com to take a small test to truly understand how far wealth and freedom are from you.

Buffett's investment philosophy
1. Investment company
As we all know, Buffett is by far the most successful investor in the world. He has earned tens of billions of dollars of wealth completely relying on investing in the stock market, but he seems to be outside the stock market. Price action charts are not used.He refuses financing and never engages in leveraged transactions. He reads a large number of financial statements and relevant materials of companies and industries every day, and only decides to buy or sell stocks after forming a complete "concept" of the company.It can be said that investing in companies rather than investing in other financial products or instruments is an important part of Buffett's investment philosophy.

2. Long-term investment
If you are not prepared to hold a stock for ten years, then you should not hold it for even 10 minutes.One of Warren Buffett's most important investment philosophy is long-term investment. He believes that "short-term trading" is an irrational behavior, so he strongly opposes chasing short-term interests in the market and prefers long-term investment.His theory is that since an enterprise has intrinsic value, it will definitely be reflected, and the only problem is time.So he believes that the only thing we can grasp is the understanding of the enterprise.There are ups and downs in the enterprise, if it is not like most people who are eager to give up when there is a problem in the enterprise, and get carried away when there is a slight improvement in the enterprise, but work hard for a long time, then everyone will achieve business success.Choosing a promising field, concentrating resources, and persistently paying attention to it for a long time are the keys to investors' success.Enterprises with long-term sustainable competitive advantages are worthy of investment.

The common stocks held by Buffett generally have a holding period of more than 3 years, and those major investments generally have a holding period of no less than 8 years. The following table "List of stocks that Buffett has held for more than 10 years" can well Evidence of his long-held beliefs.

3. Concentrated investment
Be desperate, put all your eggs in one basket, and watch it.Warren Buffett's concentrated investment is to choose a few stocks that you know very well that can generate higher than average returns in long-term fluctuations, and concentrate most of your capital on these stocks. Regardless of short-term ups and downs in the stock market, stick to holdings Steady win.In layman's terms, it is to place a big bet on a high probability event.Buffett pointed out: "If you know a thing or two about investment and can understand the operating conditions of the business, then choose 5 to 10 companies with reasonable prices and long-term competitive advantages. Diversified investment in the traditional sense is meaningless to you. .” Of course, even if it is a stock that you know very well, you need to choose the best from the best, rather than buying a little of each stock.

4. Value investing

We are greedy when others are fearful, and we are fearful when others are greedy.Warren Buffett Warren Buffett is the greatest practitioner of the concept of value investing, and value investing is the core of his investment philosophy.In many years of investment activities, he put forward his unique views on value investment, and achieved great success through his consistent adherence to his value investment ideas.Buffett's investment thinking is therefore also considered a model of value investing thinking.

Buffett's great achievements today are due to his investment philosophy and methods different from ordinary people.The concept of value investing is such a non-traditional investment concept.He learned from Mr. Graham, the creator of value investment theory and a generation of investment masters, and was deeply influenced by his mentor's value investment philosophy.He does not focus on the market like ordinary investors, but on the companies behind the proof of equity.

Buffett's value investing thought synthesizes two different investment philosophies of Graham and Fisher.Buffett himself describes his investment strategy as "85 percent Graham and 15 percent Fisher."What Buffett got from Graham was "an appropriate model about the essence," that is, the principle of buying value, the conservatism embedded in Graham's margin of safety principle, and a mentality detached from the daily fluctuations of the market.Later, Buffett absorbed Fisher's idea of ​​investing in excellent companies, and gradually realized that a well-run company is completely different from a company with cheap stocks from a value perspective.It makes Buffett have a deeper understanding of how to evaluate the intrinsic value of a company.

Buffett is a thorough practitioner of "value investing". This investment method is also praised by many people, and the founder of Long Tou School, Xiao Xiong's House, is one of them.Teacher Xiaoxiong started to learn investment by himself in 2007, adhering to the concept of value investment, and worked hard in the US stock, A-share and Hong Kong stock markets. From 2007 to 2014, the cumulative investment income reached 211%.

The Changtou.com (www.ichangt·uc·m) created by Teacher Xiaoxiong uses a systematic teaching method so that every financial novice can learn to analyze the fundamentals of investment objects after a series of courses. analyze.After graduation, you'll know how to judge whether a company is worth investing in by calculating the gap between its true intrinsic value and its market price.

Although Buffett's success cannot be replicated, his theory is worth learning for students who invest in financial management.On the road to wealth and freedom, all roads lead to Rome, and there are proven effective methods to learn, so why not do it?

In the "Introduction to Value Investing Course", Changtou.com offers free courses especially for college students with zero foundation. If you are also interested in Buffett's investment methods, come and listen!

Bashen's success story

Why is Buffett known as the "stock god"?In the ever-changing stock market, what amazing achievements did he create?Which classic cases are still memorable today?Here, the editor will lead you to briefly review Buffett's classic investment cases.

1. Coca-Cola: $13 billion investment, $70 billion profit

In 1980, Buffett bought a 1.2% stake in Coca-Cola for $10.96 million at a unit price of $7 per share.By 1985, Coca-Cola changed its business strategy and began to withdraw funds and invest in beverage production.The unit price of its stock has risen to $51.5, a five-fold increase.As for how much he earned, the amount can make investors all over the world speechless.

2. GEIC·: Government Employees Insurance Company, with an investment of 0.45 million US dollars and a profit of 70 billion US dollars. Buffett spent 70 years continuously researching old-fashioned auto insurance companies.Time and time again, the enterprise's superstar manager, Jack Byrne, turns the tables in times of crisis. $1 in retained earnings creates $3.12 in market capitalization growth, and this excess profitability creates excess value.Because GEIC Company has a huge margin of safety under the risk of bankruptcy. In 20 years, this company has made a profit of 20 billion US dollars in 23 years, and its value has increased by 50 times.

3. The Washington Post Company: Invested $0.11 million, made a profit of $16.87 billion. Since 1973, Buffett secretly nibbled away at The Boston Globe and The Washington Post in the stock market. His intervention greatly increased the profits of The Washington Post. , an average annual growth rate of 35%.From 1975 to 1991, the Washington Post under Buffett’s holdings created super capital profitability with a 10-fold increase in earnings per share, and a 30-fold profit in 160 years, from $1000 million to $17 billion. The Washington Post Company is well-deserved star.

4. Gillette: Invested 6 million yuan, made a profit of 37 billion U.S. dollars

As a business legend that has monopolized the razor industry for more than 100 years, Gillette is a brand that is constantly innovating and difficult to imitate, and has a super sustainable competitive advantage.This company gave birth to a talent that even Buffett admires, Coleman Mockler, who led Gillette to bring continuous growth in the international market. USD 1 of retained earnings creates an increase in market value of USD 9.21, making a profit of USD 14 billion in 37, creating a 6-fold increase in value.

5. Metropolis/ABC: Invested 3.45 million US dollars and made a profit of 21 billion US dollars. As a 50-year-old TV station, it also monopolizes the media industry and creates a high market share through ratings. There is a Buffett who is willing to send his daughter Married excellent CE at the helm, and attracted a group of capital masters for low-price mergers and acquisitions and low-price repurchases.Buffett bought at a very rare high price, made a profit of 10 billion US dollars in 21 years, and increased his investment by 6 times.

6. American Express: A 14.7-year-old financial company with an investment of 70.76 billion U.S. dollars and a profit of 125 billion U.S. dollars. It is a symbol of the prestige and status of the rich and a leader in the high-end customer segment.It was Harvey Gruber, an excellent financial talent, who revived American Express.From diversification to specialization, high-end customers create high profits, and highly specialized operations generate high profits. 11 years of continuous holding, with a profit of 71 billion U.S. dollars and an increase of 4.8 times.

7. Wells Fargo: $4.6 million invested, $30 billion profit

As a century-old bank that started from a four-wheeled carriage, it is also one of the most successful commercial banks in the United States and the most efficient bank in the world. In 15 years, the profit was 30 billion US dollars, and the value increase was 6.6 times.

Through the above successful cases, can you see the rules?That's right, Buffett's investment style is very unified, and almost every successful case is a perfect display of his investment philosophy.

But is "value investing" really that mysterious?What is the evaluation standard and value determined by?How to value a company?How to judge whether a company has a moat?I believe that as a financial novice, you must be full of questions about these.Long Tou School's "Elementary Course of Value Investing" can answer all the above questions!

In the elementary class, Mr. Xiong will teach you how to analyze the company's pros and cons, judge the moat and make a simple valuation of the company through the three financial tables (namely, the balance sheet, the comprehensive profit and loss statement, and the cash flow statement).If you are interested, don't miss it!

Buffett also failed

Although Buffett is known as the god of stocks, he is a person after all.On the occasion of the 2015th anniversary of taking charge of Berkshire in 50, Buffett stated the most "heavy" investment failure in his life.Let's guess first, which deal is it?

The answer is revealed below. Unexpectedly, it did not happen in a long time ago, but in the past 2014. This is the British Tesco (Tesc·) whose investment broke out in a financial scandal.Buffett laments:
I made a huge mistake in this investment through laziness. At the end of 2012, we owned 4.15 million shares in Tesco, which was and is the UK's leading food retailer.Our cost for this investment was $23 billion, about the same as the market value of these stocks.

In 2013, I was slightly disappointed with Tesco's management at the time, so I sold 1.14 million shares for a profit of $4300 million.My idle approach to selling shares turned out to be costly.Charlie Munger called this type of behavior "thumb-sucking."It was magnanimous of him to say that, considering the cost of my delay.

In 2014, Tesco's problems increased day by day. The company's market value shrank, its profit margin shrank, and its accounting problems were exposed.In the business world, bad news often follows: once you see a cockroach in the kitchen, you're met with its "relatives" a few days later.

(End of this chapter)