Source: Barron's Chinese Author: Nicholas Jaskinski Evan Greenberg, CEO of Chubb Ltd, has a highly influential fan - Warren Buffet, CEO of Berkshire Hathaway. Berkshire Hathaway disclosed last month that it held 6% of the shares in Chubb, one of the world's largest insurance companies, by the end of 2023. Berkshire itself is a major participant in the insurance industry, but it is not the only buyer. In the past year, Chubb's stock return, including dividends, was about 40%, surpassing the S&P 500 index's total return of 25%, and making the company's market capitalization reach $110 billion. This increase in market capitalization reflects Chubb's outstanding performance, which is attributed to its prudent underwriting practices and conservative management of its investment portfolio of about $140 billion. The company's earnings per share increased by 48% in 2023 and its book value per share increased by 21%. Greenberg is the son of Maurice "Hank" Greenberg, the former CEO of American International Group (AIG). Greenberg worked at AIG for 25 years, rising through the ranks. He left the insurance company in 2000 and took over Ace Limited in 2004. The company merged with Chubb in 2016, the largest M&A in the property and casualty insurance industry at the time. Today, Chubb is the largest commercial insurance provider in the United States, and the company is also known for its high-end homeowner insurance for the wealthy. However, about half of the company's premiums last year came from outside the United States. Asia has always been a growth area where the company is bullish: Although Asia accounts for 40% of global GDP, the insurance industry accounts for only 26% of the global insurance market share. This gap is expected to narrow over time. Greenberg sits on the board of several nonprofits that focus on international and Asian affairs. Barron's recently interviewed Greenberg about his underwriting philosophy, the challenges of dealing with increasingly frequent climate disasters, and US-China relations. Following are the edited excerpts of the conversation.

Born on August 30, 1930, Buffett has 94 years of life experience and 83 years of investment experience. According to biographer Roger Lowenstein, he is hailed as the "Omaha Prophet". Buffett bought his first stock at the age of 11.

Warren Buffett is one of the world's best investors, famous for making billions of dollars by buying stocks he believes are undervalued and holding them for the long term.

In the 1960s, when Warren Buffett bought shares of Berkshire Hathaway, the stock price was around $8. As of the end of October this year, the price of Berkshire Hathaway's Class A shares, which have never been split, exceeded $680,000.

In the process of leading Berkshire Hathaway for the past 60 years, Warren Buffett has accumulated some experience in creating value. Barron's Weekly summarized Buffett's five major investment experiences.

1. Failure is a part of success.

All people who live to be 94 have experienced failure. The ability to deal with it calmly and learn from mistakes is the most important characteristic of Buffett's career.

In recent years, Berkshire Hathaway has had several missteps. By the end of 2023, Berkshire Hathaway divested its holding in General Motors (GM), which was a disappointment for the company. The timing of selling Apple (AAPL) in the second quarter of 2024 also seems less than ideal.

However, Buffett's most successful investments - such as Geico, American Express (AXP), or Coca-Cola (KO) - far surpass these losses. Over the past 40 years, the annualized return of Berkshire Hathaway's Class A shares has been 17%, compared to 11% for the S&P 500 Index during the same period.

This reminds us that to be a good investor, usually only need to do the right thing in a little over 50% of the time.

2. Cash is not king, but don't be afraid to hold it.

In the past, Buffett did not hesitate to criticize the view that "holding cash is a viable investment strategy."

In 2008, Buffett said in an interview with Charlie Rose, the anchor of the Public Broadcasting Service (PBS), "When people talk about cash being king, if it just sits there and does nothing, then it can't be called king."

However, this does not mean that it is the correct practice to blindly buy stocks or other assets that you are not completely satisfied with for the purpose of investment.

Buffett has shown through his own practice that in periods of market turmoil, sometimes you can completely refrain from participating. This year is a good example. Currently, Berkshire Hathaway's cash holdings have reached a record level of nearly $200 billion. Buffett said at the 2024 annual Berkshire Hathaway shareholders meeting, "I think those of us sitting up here don't know how to use cash effectively, so we don't use it."

3. It's okay to change your mind.

Buffett advises investors to hold stocks for the long term, but also advocates changing strategies when necessary. For example, Buffett has never liked investing in banks or their stocks, but in 2011 he bought $5 billion worth of preferred shares in Bank of America (BAC) to help the struggling bank at the time. Recently, Buffett has started selling Bank of America's stocks.

Buffett also changed his views on Apple (AAPL) and this year (before Berkshire's market cap reached $1 trillion), he reduced his Apple stocks by over 50%.

Buy the company, not the CEO.

This is another valuable investment advice. Buffett said: "You should invest in a company that even fools can run, because one day a fool will run that company."

Buffett does not buy companies that rely on excellent management to succeed. He believes that even with a very good CEO, a company with a poor fundamental cannot be revived.

如今这条经验尤为重要，一些市值庞大的公司的CEO——比如差点要和埃隆·马斯克(Elon Musk)“笼斗”的马克·扎克伯格(Mark Zuckerberg)，或者爱穿皮衣的黄仁勋(Jensen Huang)——凭借一己之力成为了名人。

Many investors see buying Tesla (TSLA) stocks as a way to invest in Musk, but Buffett might tell these investors that what really matters is Tesla's fundamentals.

5、不要买《蒙娜丽莎》这类艺术品，把钱用来投资。

巴菲特曾在1996年说：“如果你不愿意持有一只股票10年，那就不要考虑持有它10分钟。”这也是一条非常有价值的投资经验，这句话说的是复利的力量。

巴菲特用达芬奇的名画《蒙娜丽莎》来解释复利：如果16世纪法国国王弗朗西斯没有花4000埃居——相当于0.02 million美元——购买这幅画，而是将这0.02 million美元用于能够获得6%年回报率的投资，那么到1963年，法国国库将增加1000 trillion美元，是法国国家债务的3000倍。

与此同时，1962年《蒙娜丽莎》的保险估价“仅”为0.1 billion美元。

Author Morgan Housel of "The Psychology of Money" points out that Buffett earned most of his money after the age of 60, mainly thanks to the simple mathematics of compound investing.