Old age Buffett, lian Po old


Author | | Ye Jing source new eyes from | hit the net when we suspect that old-fashioned capital institutions represented by Mr Buffett was ended, the first month of 2022, the global technology stocks fell sharply, only 92 – year – old Mr Buffett’s worth ten richest bucked up $2.39 billion,The stock market value of Berkshire Hathaway, which he controls, topped $700 billion.The investment arena is a gladiatorial arena, and it is never easy.Many people quit before the age of 50. Andre Kostolani, a German investment guru, stopped at 35.Peter Lynch lasted only 13 years, leaving at 46 with a head of grey hair. Only Buffett and his partner Munger, still in the line, the annual investor conference has become the focus of the investment world.The controversy about Buffett continues: wrong airline stocks and oil prices, high suction and low selling of bank stocks, the U.S. stock market fell when choosing to hold the currency on the view;Big position in Apple but still missing out on Internet technology;Berkshire hathaway posted a net loss of nearly $50 billion in 2020 and was even photoshopped for a retirement letter;Its annual performance (2.4 percent) also significantly underperformed the S&P 500 (18.4 percent).His insistence on value investing made it hard for him to accept that technology companies were changing too fast and had no shares to invest in.What people forget is that he’s Warren Buffett.In 2008, Buffett became the richest man in the world purely by investing, and the name of the stock god is widely known.In the 12 years since, he has consistently ranked in the top five on Forbes’ list of the world’s richest people.Eating hamburgers, loving DQ ice cream, drinking cherry Coke, occasionally playing the piano in public, and still thinking clearly even at the age of 90.More than any other “stock god”, buffett is worth studying in his twilight years.Low, safe, high quality Buffett’s stock career starts with GEICO, an insurance company.GEICO insured public servants with stable incomes and good health, and its revenue was solid. Its direct-mail policy sales method saved costs, and its average gross profit was more than five times higher than that of the industry. Buffett made considerable gains by investing in GEICO.Buffett focused on the deal because his teacher, Graham.Graham, a major shareholder in GEICO, is a classic defensive investor.In his book The Intelligent Investor, he divided value investment into two aspects: one is the basic value of a stock, that is, the stock price is determined by the actual value;Another is that investors after locking the basic value of the stock, should find out the undervaluation by the market, the price is lower than the actual value of the potential stock investment.This is also known as “cigarette butt investing”, focusing on the margin of safety and buying companies at bargain prices.Sell at a profit later when Mr. Market’s weighing machine effect kicks in.When Buffett worked with him, the two made a fortune picking up cigarette butts by catching price differences in different markets.In 1956, Graham retired and dissolved the company. Since 20 percent of the company’s revenue came from arbitrage after 30 years, they parted ways and Buffett focused on the techniques of arbitrage, while Graham’s investment philosophy took root in Buffett’s heart.Buffett founded his first partnership on the back of his successful investment in GEICO.Soon, he discovered the National Fire Insurance Company of the United States this “cigarette butt”, through private equity, control of its 10% of the shares, for his partner company to earn the first bucket of gold.He then invested in Sanborn Maps and Dempster Machinery, still using the arbitrage taught by his teachers.From 1957 to 1961, when the Dow rose less than 75%, Buffett’s portfolio gained 251%.But buffett later pick up cigarette butts in the use of the teacher system, found that some companies continue to hold after return to net operating assets earn more, and to find graham earned the most money in his life that company is GEICO insurance company, after earning 50% continue hold, buffett told the teacher calls into question the investment concept of “carry”.In 1963, Buffett invested in a “cashless concept” American Express company, affected by the “sea water posing as cooking oil” incident, American Express faced huge compensation on the point of bankruptcy.After investigation, Buffett saw the exclusive right of Amex company, which “monopolizes 80% of the check market and ranks first in the bank card business”, and believed that the quality of the head of the company was excellent. Such a company did not meet the data indicators emphasized by Graham.But it also means a gradual shift in Buffett’s investment philosophy, which focuses on long-term ownership of stocks with growth potential and hidden non-financial indicators that cannot be quantified.He also met a lifelong confidant, the west Coast philosopher Charlie Munger, who pushed him in a different direction from Graham.In contrast to Graham’s “cigarette butts” arbitrage, Munger looked for truly high-quality companies, “holding good companies at the right price rather than buying bad ones at a low price”.In 1965, Munger convinced Buffett to buy See’s Candy, a company that made $400 million in profits on tangible assets of $8 million a year, and whose strong and enduring competitive edge in the marketplace gave it significant pricing power.After that, Disney, Coca-Cola, the Washington Post…Mr. Buffett diversified his investments, but he didn’t abandon Mr. Graham’s mantra of buying lots of stocks priced below their intrinsic value.Indeed, it was not until 2000 that Mr Buffett’s focus shifted from “picking up cigarette butts” to Mr Munger’s “quality over value”.Review buffett’s investment history found that insurance, consumer goods, asset light has been his focus.Insurance companies provide Berkshire with a large source of low-cost capital, through the insurance industry’s massive float (the reserves an insurance company needs to cover future claims that it does not own but can invest profitably).Whether equity investments, or holding group in all kinds of industries (insurance, confectionery, department stores, Banks, and the media, the tobacco industry, and soft drinks, razor industry as well as from the encyclopedia to the shoe industry, various industries), continued gives them plenty of ammunition, the control of Berkshire has gradually become the leading enterprises in the United States.In the 21st century, gray-haired investment veterans faced the Internet boom and found that the world had changed.Despite his conservative investment strategy, he did not choose to dissolve the company.Never one to stick to rules, Buffett quickly acquired a strategic view of the Internet.Network is a good business tool, an octogenarian buffett, with the help of the annual general meeting of shareholders, charitable activities, take part in the TV talk show way hype, the auction activity “buffett lunch” is the location of the red, he holds to the context of the even through the lens to build your own Internet IP, spanning two centuries old investor,Injected more energy and visibility into his company.In 2011, Buffett made his first foray into technology stocks. Berkshire bought IBM, a machine company, to become the largest shareholder for three years. However, Buffett thought that “it was a failure of investment”, because the average purchase price was $170, the stock price fell all the way, and only $150 per share was sold in 2015.The reason is that the rise of cloud computing has led to profound business changes in the IT industry, with a large number of enterprises reducing data center investment and turning to cloud services such as Amazon’S AWS.Around 2010, when the decline of traditional hardware manufacturers, the rise of the new mobile Internet, the lack of Internet gene of large companies can not keep up with the technological transformation, it is inevitable to be hurt by this wave.Buffett didn’t catch up with the Internet company this wave tuyere hardware transformation, although the public always annoyed miss AWS, but even in the time to replace the IBM with amazon, also do not accord with his stock selection criteria: technology changes quickly, always ran out a bunch of new concepts, new species, he look not to understand, but at the time of the amazon, often in a state of losing money.Ridario likens investing to hunting, in which the most important thing is to control risks. It is the same as investing, and risks can only be minimized by understanding and controlling them.Older investors like Buffett and Munger thought, “I don’t want to play a game I don’t know, and I might end up ruining my reputation that I’ve worked so hard to build over the years.”Berkshire Hathaway stepped on Apple’s tail in 2016, investing $6.747 billion to hold about 1.1% of Apple’s shares, which remained unchanged for three years until apple’s stock price took off between 2019 and 2021, and Berkshire finally earned $130 billion.In buffett’s list of ten big positions disclosed last year, Apple ranked the second, with a shareholding ratio of more than 19%. The high-tech property is incompatible with other insurance, manufacturing, energy and consumer goods, which does not accord with Buffett’s view that “all high-tech companies’ stocks are regarded as model stocks and refused to buy”.Remember before a company named Xerox stock price fell to $1, completely low price high value standard, but the stubborn Buffett or not moved.Was Buffett forced to change by circumstances?Munger is widely believed to have steered the apple investment, not himself.There are two theories that convinced Buffett to accept an investment in Apple. First, Apple had $200 billion in cash flow that could be spent even if it went badly wrong, plus a 10% annual dividend, meaning it couldn’t understand the concept of tech stocks and its financial metrics won over Buffett.Another says buffett first observed his 5-year-old granddaughter start playing with Apple, which he saw as more of a consumer goods company than a tech company.The BYD investment case, which had been called “Foresight” by the Chinese fund manager Li Lu, was also introduced to Munger’s case.At this time, some people put out the Buffett three no vote principle (invisible things, future things, things with wheels), plausibly argued that the old school capital institutions represented by Buffett in the last century is “old fashioned”, doomed to be eliminated by The Times, but is it really so?Last year, after the Federal Reserve’s crazy release of water and the influx of retail investors, the upsurge of the US stock market was more based on the flood of liquidity and the boost of retail investors, and the fundamentals were not solid.Preserving capital is Buffett’s top investment priority, so Berkshire has bought back a lot of its own stock since last year. Musk once described Buffett as “a porter of capital.”At the end of the third quarter, Berkshire’s cash pile was a record $149.2 billion.The large amount of money further narrowed Buffett’s options, can obtain high yield investment volume, mostly in the tens of billions of dollars, he is also waiting for such an opportunity.Mr. Schroeder talks about What Mr. Buffett calls’ cash, ‘a call option with no expiration date and no strike price that he is willing to hold at ultra-low interest rates when he thinks it is cheap.Cash has a lower return than equity over the long term, and holding cash may mean giving up equity returns.Increasing cash holdings, however, gives Mr Buffett more options, giving it a value that cannot be measured by yield in the event of a risk event.Tesla, ESG, Bitcoin, metaverse, Web3.0…Investment draught every year, but the stock god sit tight.Some say he is very old, but others see his height calm.Zuckerberg’s Meta (formerly Facebook) shares recently plunged more than 26%, and Buffett has repeatedly praised Facebook as a good company, but he doesn’t buy it, saying it’s hard to value and predict long-term growth.The highly iterative nature of technology is not good for long-term investment. Talking about Facebook’s impact on the 2016 US presidential election and public opinion, Munger also directly criticized the excessive use of social networks by politicians today, with great concerns about the boundaries of personal speech and the management of private information.As for the market bubble caused by the meta-universe and Bitcoin, they think it is a completely stupid investment.”Catching up with the market often costs more than defining it from scratch,” and big bets in the market are eventually corrected.Berkshire doesn’t care if other people make money or add big positions. Buffett adheres to his own investment principles. If he doesn’t understand, for example, he didn’t invest in many big tech stocks in history.Just as Mr Buffett described his secret to getting rich on Wall Street early on: be greedy when others are fearful and fearful when others are greedy, he remains a cautious, conservative long-termer.When we all suspect that the old school capital institutions represented by Buffett are coming to an end, in the first month of 2022, global technology stocks suffered a sharp fall, the wealth of the top ten billionaires only 92 years old Buffett bucked the trend and increased by $2.39 billion, while the stock market value of Berkshire Hathaway he controls also broke through $700 billion.Experts say Berkshire could be the next trillion-dollar company, joining the likes of Tesla, Amazon and Microsoft.Queen was Wall Street of “science and technology” Kathy wood suffered the worst start in this year to open, plummeted 7%, hit the biggest one-day fall since established, ano website home page, the most prominent position, we only invest in disruptive innovation, wood elder sister like to vote for the company to change the world, and buffett likes to invest not by the company to change the world.This is perhaps the biggest difference between the new and the old.Water does not compete, contend is gushing, for investors, perhaps time is more important than speed.The opinions expressed in this article are those of the author.The purpose of forwarding is to transmit information, and the content or data is for reference only. 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