Source: Passing the Light in the Vastness by Yao Bin. In order to achieve great success, concentrate on solving a few important problems that can be accomplished with 20% of your time. This is the concept of important few and trivial many. To truly succeed, one must focus and be fully concentrated. In terms of product structure, the operating incomes of 100-300 billion yuan products are 401/1288/60 million yuan, respectively.
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James Altucher's Chinese version of "The King of Long-term Investment" would actually be more precise if translated directly as "Permanent Investment Portfolio: How to Choose Stocks That Can Be Held Long-Term". The book was published in 2008. In this book, Altucher believes that the essence of investment is to constantly seek opportunities according to the rules of the game, not to worry about meaningless things and things beyond one's ability to control. The wise way to make money in the stock market is to hold for the long-run instead of short-term speculation, and one does not need to keep monitoring the market.

Because the stock market is like a soap opera, the script and acting are not that great. Therefore, the best way is to let it play out on its own, and you don't have to constantly pay attention to it. Altucher made it clear that his goal was to own stocks of companies that would still be around 50 years from now. Altucher places great importance on demographic trends, economic fundamentals and development trends, and factors such as his own competitive strength. If these factors can be used for investment, then long-term investment is likely to achieve considerable returns through such reasonable operations.

Altucher likes the investment concept of a portfolio that benefits from a single investment for a long time. For investors, one of the key factors in successfully creating a long-term investment portfolio strategy is to live as long as possible. It is said that former CEO Steve Ballmer once told a shoeshine boy, "If you want to buy stocks that can be held for the long-term, avoid those so-called stars with strong 'personalities', as well as the stocks that are discussed on TV and in newspapers by authorities every day." In 2024, Ballmer ranked 8th on the Forbes global billionaire list with a fortune of $121 billion.$Microsoft (MSFT.US)$"Learn from great investors" is the primary strategy in Altucher's "long-term investment strategy". The content of "learning" includes "imitation". The so-called imitation refers to observing the experience of other investors, adopting their successful actions, and avoiding their unsuccessful actions. Imitation emphasizes how the actor duplicates the successful actions of other actors. Imitation is both an innate creative ability and an active creative activity. It is the source of knowledge for value investors. The imitation of value investors mainly comes from "past or present events". These "past or present events" are mainly presented in classical papers, master biographies, and interviews with people.

Learn from great investors

In Altucher's "Long-Term Investment Strategy", the primary strategy is to learn from great investors. "Learning" includes "imitation". The so-called imitation refers to observing the experience of other investors and adopting their successful actions, and avoiding their unsuccessful actions. Imitation emphasizes how the actor duplicates the successful actions of other actors. Imitation is both an innate creative ability and an active creative activity. It is the source of knowledge for value investors. The imitation of value investors mainly comes from "past or present events". These "past or present events" are mainly presented in classical papers, master biographies, and interviews with people.

The first person to learn from and imitate is, of course, Warren Buffett. Altucher said that when he wrote "The King of Long-term Investment", Buffett's worth had already reached $75 billion, and that wealth came from his accumulated investments over the past 50 years. Altucher believes that in the next few years, Buffett's goal is to figure out how to turn $75 billion into $100 billion.

Altucher praised Buffett as a great investor. Buffett's unparalleled investment record dates back to the 1950s. In his other "classic" work, "Trade Like Buffett," Altucher pointed out that early on, Buffett began to trade stocks frequently and used his own invented "butt-end" rule to buy and hold stocks, and the trading price of small and super small stocks often fell below their real value, so it often brought the expected returns to Buffett. Since then, Buffett's cash reserves have exceeded $50 million.

Later, due to Buffett's large-scale investment, there were other factors that he needed to consider compared to ordinary investors. In general, once Buffett starts to decide to buy, he will hold it for the long term, so following him will reduce investment risks. In his investment philosophy, he belongs to long-term investors, he constantly seeks those investments that can rely on demographic trends for investment over the next few decades. He is generally not interested in small undervalued stocks, because these stocks are small compared to his large cash reserves, and investing in such stocks does not bring any substantial economic benefits.

Research shows that Buffett's investment is indeed worth investors' follow-up. In the past 10 years, if investors completely followed Buffett's stock investments, their return rate is often twice that of the same period's S&P 500 index a few months after buying stocks. If investors continue to invest in stocks that Buffett has filed on his disclosed investment list, then their annual return rate can reach 24.6%, and sometimes only need four months, while the return rate of the same period's S&P 500 index is only 12.8%.

Meanwhile, Altria also believes that the investment portfolios of some value investors and aggressive investors have high reference value. We can pay attention to their investment trends and understand which stocks have higher cost performance and which new trends are emerging. Value investors generally tend to buy stocks that are priced lower than their actual value. A typical example is a stock whose total market value is lower than the total value of cash in its bank. Too many such cases occurred during the stock market crashes of 2000 and 2002. Stocks purchased by aggressive investors are generally not undervalued, and the management situation of the company is generally very poor. These aggressive investors will then use their shareholdings in the company to intervene in the appointment and removal of the company's management.

We may not be able to buy stocks that will rise from $10 to $0.1 million, but it's also a good thing if we can buy stocks that rise from $400 to $0.1 million. Most investors have done this. At the 2003 Berkshire Hathaway annual meeting, Altria met someone who bought 200 shares of BRK stock in 1976 when the stock price was about $100 per share. At the time when the stock doubled, he sold 100 shares, thinking it would make him break even. However, the 100 shares he sold were valued at $14 million by 2008.$Berkshire Hathaway-A (BRK.A.US)$/$Berkshire Hathaway-B (BRK.B.US)$Please use your Futubull account to access the feature.

Altria likes to learn from excellent value investors and pay attention to their investment portfolios. For example, Sequoia Fund created by Bill Ruane. In 1976, when Buffett closed his hedge fund, he advised his investors to invest in the Sequoia Fund. Ruane set up a company specifically to operate the funds from the original Buffett investors, and the average annual return of Sequoia Fund is 15.7%. Sequoia Fund not only holds shares of Berkshire Hathaway, but also holds stocks of companies such as Costco and Lowe's. Investors' Future is a masterpiece by Professor Jeremy Siegel. In this book, he lists some interesting data about dividends. He pointed out that since 1871, most of the inflation-adjusted stock market returns come from dividends. That is to say, if dividends are reinvested in the stock market, 97% of the income comes from dividends, and only 3% comes from capital, that is, from stocks appreciation. He also pointed out that in 1957, the 20 best-performing stocks in the Standard & Poor's 500 index were all dividend-paying stocks.$MasterCard (MA.US)$Companies that continuously increase dividends, such as banks and some retail companies, have also made great progress. Companies that have been increasing dividends for more than 25 consecutive years have joined the dividend classic club collected by the S&P 500 index.$Best Buy (BBY.US)$From 2001, according to data from the past 7 years of bull market, bear market, and market instability, the annual return of the Standard & Poor's dividend classic index fell to 8%, while the annual return of the Standard & Poor's 500 index also fell to 3%, but both beat companies that do not pay dividends. This advantage is mostly due to the rise of the securities revaluation gain index in 2002. In a bear market, dividend-paying stocks perform better than speculative stocks because speculative stocks are often more prone to collapse than dividend-paying stocks or "boring" stocks.

"Continuously paying dividends" is something that Altria considers belonging to "sustainability". Sustainability is important because it indicates the direction of development of things. Just like the sun rises every day, the sun will still rise tomorrow. A permanent securities portfolio investment can make us sleep soundly every night. If invested for 50 years, our descendants can be worry-free. If we don't bet on this, then all our plans are just empty talk.

A company that can increase dividends for 25 consecutive years and still increase its profits indicates that the management and operation model of the company is quite effective. If there is no major situation affecting the company's stock, it is difficult to lower dividends, because lowering dividends will cause investors to lose confidence. Therefore, if an enterprise is not confident that its profits can pay dividends for the next year, it will not increase dividends. In fact, academic research has long shown that an increase in dividends indicates that future profits will also increase.

In November 2005, Siegel mentioned in an article titled "Ben Bernanke's Most Bullish Stocks" for Yahoo! Finance that when Bernanke was elected chairman of the Federal Reserve, he only held one stock. Altria Group is the predecessor of Philip Morris, so we can also see that Bernanke is very bullish on the stocks of companies that always increase their dividends.$Altria (MO.US)$In the article, Siegel introduced some information about Philip Morris: "Since 1992, Philip Morris' dividend return rate has reached 5.2%, while the Standard & Poor's 500 index has only 1.9%... Philip Morris regularly exposes the fallacy that fast-growing companies on Wall Street should not pay dividends. Philip Morris has continued to grow successfully and still pays large dividends to shareholders ( in fact, I found that the company still has a relatively high profit growth rate)." Therefore, it is not surprising that Philip Morris joined the Dividend Classic Club. Companies that join the Dividend Classic Club are companies that have increased dividends for more than 25 consecutive years collected by the S&P 500 index.

In the document, the S&P 500 index elaborated in detail the future development of the dividend classic index. The document compares the dividend classic index with the Standard & Poor's 500 index using various statistical methods. The conclusion is that in the past 15 years, the dividend classic index has surpassed the Standard & Poor's 500 index; the dividend classic index has lower risk than the Standard & Poor's 500 index. A typical example in the dividend classic index is the stock of Philip Morris. Buffett likes this kind of stock too. For example, stocks to be held for a long time.

Since 2001, according to data from the past 7 years of bull market, bear market, and market instability, the annual return of the Standard & Poor's dividend classic index fell to 8%, while the annual return of the Standard & Poor's 500 index also fell to 3%, but both beat companies that do not pay dividends. This advantage is mostly due to the rise of the securities revaluation gain index in 2002. In a bear market, dividend-paying stocks perform better than speculative stocks because speculative stocks are often more prone to collapse than dividend-paying stocks or "boring" stocks.

"Continuously paying dividends" is something that Altria considers belonging to "sustainability". Sustainability is important because it indicates the direction of development of things. Just like the sun rises every day, the sun will still rise tomorrow. A permanent securities portfolio investment can make us sleep soundly every night. If invested for 50 years, our descendants can be worry-free. If we don't bet on this, then all our plans are just empty talk.

A company that can increase dividends for 25 consecutive years and still increase its profits indicates that the management and operation model of the company is quite effective. If there is no major situation affecting the company's stock, it is difficult to lower dividends, because lowering dividends will cause investors to lose confidence. Therefore, if an enterprise is not confident that its profits can pay dividends for the next year, it will not increase dividends. In fact, academic research has long shown that an increase in dividends indicates that future profits will also increase.

In November 2005, Siegel mentioned in an article titled "Ben Bernanke's Most Bullish Stocks" for Yahoo! Finance that when Bernanke was elected chairman of the Federal Reserve, he only held one stock. Altria Group is the predecessor of Philip Morris, so we can also see that Bernanke is very bullish on the stocks of companies that always increase their dividends.$Bank of America (BAC.US)$,$Johnson & Johnson (JNJ.US)$etc.

Choose stocks to be held for a long time.

The subtitle of "Long-term is King" is "How to select stocks that can be held for a long time", this is the focus. The future development trend of the company is influenced by many factors, so how to build an investment portfolio that can withstand the test of 50 years is a major challenge in the investment field. But obviously, we have no way to predict the future development of the company in 50 years, because these conditions will change greatly with the passage of time, such as poor management, changes in production lines, or more fierce competition. These factors may all cause huge changes in the company.

From an investment perspective, there are some methods to reduce risks. Artuchel's solution is to "seek" from three perspectives:

① Find companies that have always been concerned about huge population trends. For example, a company that produces and develops drugs to treat obesity-related diseases, or a company that treats sleep apnea.

② Find companies that are supported by good investors behind the scenes. Buffett often says that he likes to hold stocks permanently, which means they think that the field the company is engaged in has a huge demographic trend.

③ Find companies with intangible assets that will not disappear for a long time. These assets are not assets reflected on the balance sheet, but refer to cash, customer base, tangible assets, and intellectual property.

From the range selected by Altucher, he is still very advanced, not confined to companies with dividend classics. Within these ranges, there are 13 fields, including computer antivirus, cancer vaccine research and development, high-end luxury goods, beauty and body shaping, high-quality patent rights, internet remote storage, creative industries, water resources, incurable diseases (including heart disease, cancer, Alzheimer's disease, gout and asthma), pharmaceutical weight loss, etc. Among them, some belong to complex fields but have investment prospects. Some of these fields are still highly valued even today. For example, it has already emerged in the field of diabetes treatment and drug weight loss.$Eli Lilly and Co (LLY.US)$And.$Novo-Nordisk A/S (NVO.US)$Two companies, whose market caps are over 900 billion US dollars and 6000 US dollars respectively.

Altucher requires that its investment targets should be able to sleep safely every night. First, check whether the invested company meets the requirements: the policy of relying on demographic trends remains unchanged, because the trend of population growth in the next 50 years is inevitable. Secondly, it is necessary to find companies with bright prospects, good investment basis, and good balance sheets. Thirdly, for small-scale enterprises and more speculative research and development companies, it is necessary to determine whether they have the ability to enter new business fields.

What kind of company will perform well in the next 50 years? Altucher believes that companies with a large number of high-quality patents as intangible assets, and whose actual value is currently unreasonably underestimated by the public, will perform well. Especially if the business scope of the company complies with demographic trends, or some long-term investors have conducted detailed analysis and investigation of the company's situation, proving that these patents or some discoveries and inventions really have high investment value. At this time, most investors have not yet realized this point. Such companies are worth our attention.

Mark Herschel and Wilson Richardson of the University of Kansas published an article entitled "Is Scientific Indicators for Evaluating Patent Quality Valuable to Investors" to explore the above issues. It is difficult to estimate the quality of a patent, so investors use many standards to evaluate the quality of a patent. For example, after patent X, there are many patents and patents related to patent X, which will increase the value of patent X, or a certain patent involves many other patents in other fields, and then the value of this patent will also increase. Their conclusion is that the higher the quality of the patents owned by a company, the lower the company's P/E ratio, and the higher the future price of the company's stocks.

Baroque Lev, a researcher at New York University, has conducted corresponding research on this field. His research shows that based on the amount of R&D expenditure spent by the company, we can predict the performance of the company's stocks in the future market. The results show that in most cases, the more R&D expenses, the better the company's stock performance in the future market.

In 2008, Buffett acquired $0.162 billion worth of stocks in Sanofi-Aventis, a comprehensive large-scale pharmaceutical manufacturing enterprise that also has thousands of healthcare products. We all know that investing in any company requires beginning with constantly accumulating small advantages. Because during the baby boom, the continuous increase in the population age, led to the healthcare industry having broad investment prospects. Investing in Sanofi-Aventis can enable us to make good use of several overlapping trends.

Altucher rarely discusses wars and geopolitical disasters, but he notices that there have always been wars on our planet. Therefore, investing in the defense industry should be a good idea. But relative to investing in strong demographic trends, investing in the defense industry will also have many variables, because wars often have to do with the political cycle. Even if there are often wars and terrorist attacks, we should always remember: buy on dips.

The investment process is actually a process of constantly accumulating small advantages and trying to avoid making mistakes. Continuously accumulating small advantages is an eternal truth for investors. Look for people who are smarter than you and always pay attention to their movements. This is what Altucher calls "learning from great people". Although they are not always right, they are at least more experienced than us. The key to success is to be aware that there are many difficulties on the road ahead, and to come up with ways to reduce our pressure and reduce the possibility of making mistakes.

Editor / jayden