Source: Kigaku Club

1. Legendary Heroes of American Baseball

The first story, from the secrets of America's legendary baseball heroes...

Legendary Major League Baseball star Ted Williams had an average run rate of 0.482 in his 22-year Major League career from 1939 to 1960, and was selected for the Star Game 17 times. He was the last major league batter to hit more than 40% this season, and his last career hit was a home run.

He is the greatest legendary hero in American baseball. What does he rely on?

The secret is that he will throw the pitcher over, divide it into 77 slots, and then insist on only waving the sweetest good belt; all bad balls will pass.

This persistence made him a baseball legend.

However, investing is easier than playing baseball, because if an investment opportunity comes up today, you can skip it if you don't understand it, and you won't be struck out by skipping 3 good balls. Even if you miss 10 good goals, wave your bat on the 11th good goal, and hit a home run, you can still enjoy the sweet fruit.

2. Why does Buffett insist on not investing in Microsoft?

Second story, why does Buffett insist on not investing$Microsoft (MSFT.US)$?

Buffett is so familiar with Bill Gates, just like a father and son; it's impossible for him to know that Gates is amazing. But he still insisted on not investing in Microsoft, why?

Because he wasn't sure how Microsoft would profit, it would suddenly overturn the ship in a short time. It's not just because the boss is so powerful that he can turn things around.

Although he himself knows that this chance may be minimal, instead of investing in Microsoft, it is still better to invest$Coca-Cola (KO.US)$It was reassuring to come. The chances of Coca Cola being overturned are far lower than Microsoft's. Richard Branson knows this very well.

(Note: Richard Branson, founder of the Viking Group, uses innovative methods to make big money in many different fields. (In the 1990s, they founded Viking Cola, worked hard for more than 10 years, tried to beat Coca Cola, and ended up losing money.)

And Buffett has invested in Coca Cola for almost 30 years, and the dividend has doubled more than 20 times (not more than 20%, it's more than 2000%!) Coca Cola's profits are still growing.

3.

Investment guru Howard Marks once said: Investing is an amateur's game.

What does that mean?

His book uses tennis as an example. If you want to be an amateur tennis player, you don't need to learn Nadal's deadly speed of light, or learn how to fight back with Federer's sharp backhand; you only need to do basic skills to ensure that both attack and defense reach a certain level, and keep mistakes to a minimum, and wait for your opponent to make mistakes, so there's no problem being an amateur champion.

Because I'm young and love to play basketball, this is the same as my experience with basketball.

If you want to have an advantage in amateur games, you don't need to practice Stephen Curry's oversized triple or gorgeous dunk, let alone practice LeBron James's violent dunk; you only need to strengthen the physical strength, defensive ability, rebounding ability, dribbling, and passing the ball of all team members to reduce the possibility of mistakes, and your opponents will find it difficult for you to get involved, because your opponent's score will be very low on you.

And practicing these basic skills is much easier than practicing slam dunk.

For most people, unless you're determined to be a master investor, you don't need to pursue a 20% compound return over the years. As long as you work hard, measure your income, and roll over your savings using a compound annual return rate of 10%. By age 50, it's not a problem to have a 30 million pension.

The point is: there must be no big failure in the middle!

(Don't think that a 10% compound return on total assets over a long period of time is simple; this defeats the market by more than 3%. (Most people buy a house, buy insurance, buy a fixed deposit, and the return on total assets will be lowered even lower)

Howard Marks mentioned in 40:38 seconds of the Google speech video: The annual performance of a fund is ranked 27th to 47th every year among the 100 funds, for 14 consecutive years. What is the overall ranking of this fund over the past 10 years?

4th place.

why? Why isn't it 37th in the average?

It represents other funds that used to generate high returns in some years, but in other years they have rotted out.

If a method can make a lot of money in some years, but lose a lot in some years, then what's the use?

Let's say I earned 50% in 2015, 50% in 2016, 50% in 2017, and 50% in 2018... After 10 years of iteration, my 1 million will become tens of thousands by 2024?

237,000.

So as long as you can throughout your investment career, don't make big mistakes, and get all the free points, you will definitely be able to beat 90% of people.

Investment Principle 1: Don't lose money. Second investment principle: Don't forget the first one.

—— Buffett

4.

If you take a close look at Berkshire's performance and take a close look at the changes in net worth over the years of the stock disaster, you'll find that Buffett always won the shorts and lost less than others, not the bulls earned more than others. This difference alone has allowed him to beat the market by more than 100 times in 50 years in terms of return!

The most important thing to invest is to avoid failure rather than seize every success. From 1965 to 2014, Berkshire's return rate was 18,26,163%, or about 18,000 times, while the S&P 500 was only 11196%, or about 112 times.

In other words, almost all of Buffett's money-making machines are solid and serious about making money every year. Few machines like Buffett have declined for several years. (There are still a few examples of decline, such as the Encyclopedia, which fell due to the rise of the Internet, but people also made money for a long time. These profits all gave Buffett a bet on other targets, which is considered a merit and retirement)

Almost every money-making machine Buffett buys makes more and more money.

5.

Conclusions:

1. Never touch a business model you don't understand, even if it sounds like the future is bright.

Be especially careful with emerging industries. There are usually only a few people who can dominate in a new field; unless you're an expert in this field, it's hard to know who will win in advance. Ninety percent of companies will lose in the fierce competition, and in the end, they will all lay back to their graves.

2. Only invest in business models that you're sure will be profitable for a long time.

3. It's not enough to just make money for a long time. You need to carefully select a few machines that you think can make more money and have the highest growth rate from among these machines that are sure to make money for a long time.

As for the multiple scatters you want to buy? Munger said it would be enough to bet on the 3 most powerful companies, but his heart is huge. Buffett said 6. Perhaps he thought it would be too expensive to only bet on 3 companies; it would still be too expensive to misread it once.

Other masters vary in degree of dispersion. This has a lot to do with everyone's personality differences, depending on how big your heart is and how deep you can do your own research.

In principle, the deeper your research, the more you can endure fluctuations, the more focused your bets will be. My personal approach is that when I think A's potential return rate is clearly higher than B, I can't buy even one share, so my shareholding is more concentrated.

I've tried my best to be straightforward; I hope no one invests in something they don't understand.

Editor/jayden