Top Investors: Lin Yuan, Dong Baozhen, Duan Yongping, Li Lu

Let’s continue discussing these four industry giants,

Lin Yuan,

Dong Baozhen,

Duan Yongping, and Li Lu.

As mentioned earlier,

actually, in investing, choosing the industry,

selecting the target,

when it comes to investment ability,

Mr. Lin Yuan is the most impressive,

because investing boils down to three aspects,

one is stock selection,

another is timing,

which means buying at relatively low prices,

and then holding,

there are basically three types,

of course, there’s also selling.

Among these three,

first,

Mr. Lin Yuan is a person with considerable patience,

like the Moutai he bought,

even earlier than Dong Baozhen,

he bought it in 2003,

shortly after it went public,

and has held it ever since,

not selling a single share,

this kind of patience is not common.

Mr. Dong Baozhen also sold his holdings,

made some profit and sold,

but Mr. Lin Yuan has never sold,

so you can see his patience.

And this patience is innate,

I believe it is innate,

he himself said he was born with it,

so this quality is rare and hard to find.

Of course, some people can also train themselves,

to become more patient,

but this trait is somewhat related to genetics,

so when he says he is a born investor,

that is definitely not arrogance.

He speaks the truth,

just that some people can’t accept it.

Stock selection is choosing stocks,

and he’s very good at this.

Perhaps among all people,

his ability to select stocks,

especially choosing industries,

makes him the best among these four.

So, looking at these three main factors,

regarding timing,

I think it’s average.

For stocks,

he has also talked about in videos,

what stocks to buy in the first phase of a bull market? What to buy in a bear market? How the first phase of a bull market looks,

and the second phase? He wants to switch stocks,

and has also shared some insights,

which are quite general,

I think it’s okay,

but I don’t believe his main profit comes from this.

I mentioned before,

learning from the giants,

learning their strengths,

their advantages.

Actually, the stock market is overall,

my understanding of investment is like this,

investment is about certainty,

which is managing or recognizing certainty.

What is certainty? It includes three aspects,

first,

market certainty,

whether it’s a bull or bear market.

In this cycle,

you don’t want to buy at the high point,

and sell at the low point,

this certainty is whether the market is in a bull or bear phase.

The second certainty,

is the certainty of corporate operation,

whether the company is good or bad,

what the future holds,

its growth potential,

is it a sunset industry or a growth industry? Whether the product has demand, and so on,

this is the second certainty.

The third is investor certainty,

whether you are greedy,

fearful,

using leverage,

or constantly watching the market, etc.,

these are related to human nature.

These three certainties,

personally, I think at least the first two correspond to these two giants.

Lin Yuan,

his greatest advantage,

is the high certainty in industry and stock selection,

so when Lin Yuan chooses stocks,

look at how he makes his choices.

If you select stocks,

basically follow his method,

because over the past decades,

more than 30 years,

his investment record is basically similar to Li Lu’s.

Li Lu started around the mid-1990s,

but actually earlier than Li Lu,

at the rise of China’s stock market,

in 1992,

he began investing.

Li Lu was probably still in school then,

so he might have entered the investment world even earlier than Li Lu,

and his success record is also better.

His success record might even surpass Li Lu’s.

Therefore, I believe his investment ability is the strongest.

He has experienced all kinds of investments,

including convertible bonds,

pre-IPO stocks, and has made money from all,

trying various types.

Now, he covers the entire investment field,

even international markets,

with very precise industry judgment.

His timing ability is also good,

but,

timing is extremely difficult.

So, some things,

you might not be able to learn,

even reading many books won’t help.

Timing is a skill of slaying dragons,

it’s very hard to master,

often ending up doing the opposite of what you want,

that’s what makes Lin Yuan so impressive.

You can learn how he researches industries,

or understand what industries he chooses,

understanding his logic is also good.

Once you grasp this point,

the first is the uncertainty of companies and industries,

which allows you to stand on the shoulders of giants.

Mastering this,

you grasp certainty,

which is the most important pillar of investment.

The second,

uncertainty of market cycles,

that is, bull and bear markets.

Understanding the cycle of bull and bear markets,

actually, uncertainty is not risk,

but an opportunity.

I’ve said in other programs,

it’s like daring to buy in a bear market,

and daring to sell in a bull market,

at least daring to buy in a bear market.

The person who understands this most deeply is Mr. Dong Baozhen,

because I mentioned earlier,

the greatest certainty in the stock market is volatility,

the essence is volatility,

which is the cycle,

the cycle is the transition between bull and bear markets,

so buy during a bear market.

Dong Baozhen’s two books, “The Spring of Value Investing in a Bear Market,”

I’m not recommending books for him,

I don’t know Mr. Dong Baozhen,

I have no contact with him,

I’m just saying these two thin books might help you,

after you finish reading them,

you’ll dare to buy stocks in a bear market.

What stocks to buy? The stocks recommended by Mr. Lin Yuan,

this statement couldn’t be more straightforward.

So, as long as you have these two giants’ insights,

Mr. Dong Baozhen helps you dare to buy in a bear market,

and utilize this certainty of the market.

What certainties does the market have? Bull and bear markets,

cycle certainty.

If you dare to use the market cycle to operate contrarily,

violating your human nature to buy.

Mr. Dong Baozhen’s two later books,

I haven’t read them, but I also suggest everyone take a look,

like “Moutai’s Big Game” and “Bank’s Big Game.”

Of course, the banking sector hasn’t reversed yet,

it’s in a trough now,

whether it will rebound is another matter,

but in this contrarian investing,

you need to buy more as it falls.

The more it falls,

the more risk is being released,

as long as its value can recover,

buy more as it falls,

the more shares you buy, the cheaper they are,

and the more money you’ll make in the future,

the space is created by the decline,

the more shares you hold, the more profit you make.

So, buying in a bear market is key.

That’s why Mr. Dong Baozhen’s two books solve your psychological issues.

These are mostly psychological issues,

two aspects,

one is fear,

the other is crowd psychology.

When Moutai’s price was so low and so severe,

all media reports said Moutai was no good,

public experts also said Moutai was no good.

At this point, you should take advantage of their opinion,

because everyone thinks it’s no good,

everyone sells,

and dares not buy,

this result will be very low.

So, should you buy at this point? The second step is to buy,

and you need to convince yourself,

overcome your fear.

So, when writing this book,

Mr. Dong Baozhen not only describes the crowd’s fear,

but also his own inner fear.

How to overcome your fear,

and buy it.

So, these two aspects of human nature,

most uncertainties are caused by personal factors.

Of course,

using leverage and greed is one thing,

but Mr. Dong Baozhen didn’t emphasize this much,

though even he likes to use some leverage,

which I don’t fully agree with.

But conquering fear in human nature,

Mr. Dong Baozhen explains very well,

the fear of the crowd,

media, and experts,

and your own fear.

You only need to act,

like a great achiever,

you must do what others dare not do.

In stock investing,

most people lose money,

even if you don’t understand the target,

as long as you go against the crowd,

you will likely make money over time.

Because most people lose money,

especially those who understand stocks.

Basically, even if you don’t understand stocks,

as long as you go against these people,

you are their opponent,

and you will eventually make money.

The logic is so simple,

not to mention if you follow Mr. Lin Yuan’s stock choices,

you are basically walking on two legs,

losing money in the stock market is very difficult.

Of course,

you must eliminate the habit of constantly watching the market,

because if you keep watching,

even if you pick the right stocks,

as Mr. Dong Baozhen said,

if you buy with a margin of safety,

the ability to hold is also very important,

you’re not as gifted as Lin Yuan,

who picks good stocks and holds forever.

Many things are rooted in human nature,

most people keep watching the market,

you need to break this habit.

Buy contrarily in fear,

and Mr. Dong Baozhen helps you solve this problem.

So, you need to stand on the shoulders of giants,

but you must know whose shoulders you’re standing on,

some people’s left shoulder isn’t good,

some people’s right shoulder is good,

some people’s right shoulder isn’t good,

some people’s left shoulder is good.

You need to leverage the strengths of your own mind.

The third person is Mr. Duan Yongping,

Duan Yongping is a follower of Buffett,

he has extensive experience in business management.

He has a characteristic,

which is only doing what he’s familiar with,

not doing what he’s unfamiliar with.

This is also the capability circle concept emphasized by Buffett,

avoid touching things you’re not familiar with,

avoid involving companies you don’t understand.

He keeps emphasizing,

repeating again and again.

Buffett has been instilling his investment philosophy.

Actually, Buffett hasn’t given specific investment instructions,

but he has never explained in detail,

because he is a foreigner,

speaking English,

living in a different era,

and his target investments may differ from yours.

Whereas Lin Yuan and Dong Baozhen are Chinese,

using our native language.

So,

when learning specifically in this area,

it’s easier to grasp.

Buffett is more about philosophy,

and Mr. Duan Yongping is essentially a follower of Buffett.

He isn’t a disciple,

Buffett hasn’t personally taught him anything,

but he believes in Buffett’s philosophy.

Because Buffett’s philosophy is a great way,

which is very important in value investing.

Your big direction is correct,

not doing what you’re unfamiliar with.

Basically, if you’re not familiar,

you won’t lose money,

and won’t face big problems,

you might not earn much either.

But investing is like warfare,

you need to be invincible,

not losing money,

then making money depends on luck,

when a bull market arrives,

you naturally make money.

When should you buy? When prices are low,

and Mr. Dong Baozhen has already helped you solve this.

What to buy? Mr. Lin Yuan has helped you with this.

And what shouldn’t you buy? Mr. Duan Yongping told you,

don’t buy what you’re unfamiliar with.

How to become familiar? Watch videos daily,

study companies constantly,

if Lin Yuan says a company is good,

you slowly research it.

If you still can’t understand,

and lack confidence,

then don’t buy,

because during the continuous decline of stocks,

although you buy more as it falls,

it still solves your psychological issues,

but Mr. Dong Baozhen also clearly states,

you must understand this company,

because when the stock market falls to absurd levels,

and everyone says it will go bankrupt,

you will also be afraid,

you must truly understand this company,

so you must understand.

Once you’re not familiar, don’t do it,

only when you are truly confident in this company,

then dare to buy more as it falls.

So, truly utilizing the certainty of cycles and confidence,

daring to buy contrarily,

daring to operate against human nature,

first, you must conquer your human nature,

which is subjective,

conquering your human nature,

using others’ human weaknesses,

others’ fear,

your greed.

On the other hand, objectively,

rationally,

you must truly understand this company.

So, Mr. Duan Yongping’s principle of not doing what you’re unfamiliar with,

is about this.

So, how to understand,

like Mr. Lin Yuan,

by continuously researching,

then you’ll be clear.

Additionally,

Mr. Duan Yongping also mentioned two specific aspects.

One is his strength,

which is his business model,

you need to understand the business model,

to understand this,

you need to understand the industry,

or understand the company,

this is also very important.

But unfortunately,

this is indeed a high-difficulty area.

Because of its difficulty,

you can’t just randomly learn everything,

try to touch all industries,

like Mr. Zhang Lei,

which is the most taboo in value investing.

You must focus and concentrate,

only then can you reduce difficulty,

just like knowing 18 weapons,

but not being able to use any,

if you practice one sword,

or like Cheng Yaojin’s three axes,

you can be invincible in the world.

It’s about narrowing your focus,

and then specializing in one direction,

to achieve breakthroughs.

Because in investing,

you only need to focus on a few companies,

to reach higher levels of wealth.

Many wealthy people have achieved this by focusing on just a few companies,

and earning a lot of money,

so the essence lies here.

The business model is a high-difficulty move,

and because of its difficulty,

you can’t study a company’s business model today,

and another industry tomorrow,

that won’t work,

and you’ll end up being someone else’s chives.

Half-knowledge,

misunderstanding,

or just hearing a few words from others.

So, Mr. Duan Yongping’s principle of not doing what you’re unfamiliar with,

is about paying close attention to industry models,

if the industry model is good,

the company is quite good.

You don’t need to look at too many financial statements,

just a rough understanding is enough.

The requirement for margin of safety isn’t high,

mainly focus on its growth potential.

Especially now, as industries develop rapidly,

it’s even more important to understand industry models.

Particularly for internet and high-tech companies,

recognition of industry models is crucial,

so everyone keeps learning.

The third strength of Mr. Duan Yongping is corporate culture,

which is also highly regarded,

because he has management experience himself,

so he knows the importance of corporate culture.

And corporate culture,

these things,

can’t be reflected directly in wealth,

after all, financial statements can’t show how much corporate culture is worth.

Therefore,

in a company,

corporate culture might be the most important,

because a company’s profit comes from revenue.

Internal management is needed,

to turn revenue minus costs into profit.

At the same time,

good sales work must be done,

to ensure products are sold smoothly.

Products are made by people,

these things seem to be financial statements,

but the source of a company is people,

how a group of people work together,

has a lot to do with corporate culture.

Alibaba’s success,

besides many other reasons,

also relates to its positive corporate culture.

Back then, many companies like Alibaba existed,

but why did only Alibaba survive? On one hand, it’s luck,

on the other hand, it might also be related to the company’s corporate culture.

Therefore,

corporate culture is vital for a company’s development.

Additionally,

I think corporate culture is not just the company’s trait,

but can also be inspired by reading related books,

like “Built to Last,” etc.

You are a clockmaker or a timekeeper,

but my personal understanding of corporate culture,

I think it’s not just these things,

because every company,

every industry,

needs a matching corporate culture,

it’s not a one-size-fits-all.

It’s a high-probability event,

if a company has culture,

employees,

and innovation ability,

more willing to collaborate,

more willing to correct mistakes,

it applies to many industries,

but some industries require special corporate cultures.

I don’t want to elaborate on these,

because corporate culture must align with specific industries,

specific companies,

or even different stages of the same company’s development,

it’s not that simple.

Maybe a growing company needs a certain corporate culture at the start,

but once stabilized,

it actually needs another kind of culture.

Sometimes, corporate culture is set at the beginning by the founders,

but whether it can be maintained is very challenging.

But if you always keep the personality of a young child,

it might be more useful for innovation.

But as you age,

constantly pursuing innovation may not be a good thing,

it might be better to be more stable,

I don’t recommend starting a business at 60.

So, this issue needs to be analyzed case by case.

Of course,

this is another topic,

especially for growth-stage companies’ corporate culture,

which is also what venture capitalists and those working in the primary market need to consider,

and on this point,

I don’t want to elaborate.

So,

Mr. Duan Yongping values not doing what you’re unfamiliar with,

only by doing so can you identify good business models and industries,

and focus.

He uses this method to identify companies,

I think his words are concise,

but indeed, the core of investment is this.

Of course,

these are just about stock recognition,

his entire scope,

not doing what you’re unfamiliar with,

including business models,

corporate culture,

are all about helping you select stocks.

Earlier, I talked about stock selection,

timing,

and holding,

he focuses more on the first—stock selection.

He is somewhat similar to Mr. Lin Yuan,

just that Mr. Lin Yuan is naturally willing to hold,

but didn’t mention why he can hold for so long.

Finally, about Mr. Li Lu,

he talks about long-term investing,

like BYD,

bought over ten years ago, then it rose and fell.

After the decline, ten years passed,

and now it’s rebounding,

so he is a long-term investor.

He is truly a disciple of Munger.

Duan Yongping is just a Buffett follower,

he only believes in Buffett’s philosophy.

Li Lu was basically trained directly by Munger,

his heavy holdings,

focusing on trend changes,

social changes,

corporate changes,

and making money from these changes.

Of course,

although he invests long-term,

he also occasionally adjusts his positions frequently,

these two are not contradictory,

and perhaps in the future, I will discuss this.

Some people have this style.

Adjusting positions,

I also often adjust positions,

and adjusting positions is not contradictory to long-term holding,

just like I said before, long-term investing and value investing.

Long-term investing doesn’t necessarily mean value investing,

value investing is often long-term,

but they are not the same,

that’s another topic.