The secrets Buffett and Duan Yongping won't tell you - Top Cryptocurrency Trading Platform

The confidence to invest comes from a belief in the investment philosophy.

Warren Buffett started doing business and investing from a young age. After more than ten years of effort, by the age of 26, he finally integrated business and investing into one. Today, in 2025, at 96 years old, he remains actively engaged in the front line of investment with both effort and enjoyment. However, despite Buffett’s astonishing achievement of wealth comparable to a nation over these 70 years, a closer look reveals some different insights worth savoring.

Buffett’s returns across various investment phases over 75 years: Youth period (1950-1956) approximately 55%-60%; Private partnership period (1956-1969) before fees about 30%; Berkshire Hathaway period (1965-2024) at 19.4%. When combined and broken down, these annualized returns all surpass the same period’s S&P 500 index. We know Buffett has always liked to benchmark his performance against the S&P 500. It can be said that he has been continuously beating the S&P 500 throughout his life. This long-term stable excess return is not derived from short-term gains or speculation but from his steadfast adherence to value investing, a deep understanding of business fundamentals, and strong risk control. Especially during the massive scale of Berkshire Hathaway, even with huge capital, he can still consistently outperform the market, which is rare. Behind this is his strict screening of economic moats, management quality, and reasonable pricing, as well as a disciplined mindset in restraining in bull markets and being daring in bear markets. These non-quantitative factors form an uncopyable investment system, amplified by compound interest over time. The deeper reason behind this achievement is his unwavering and continuously expanding circle of competence. He never chases hot trends nor blindly expands his investment boundaries but focuses on thoroughly understanding certain types of enterprises, capturing undervalued opportunities in familiar fields.

Buffett’s investment is the ultimate practice of his value investing philosophy, combined with a time-friendly discipline, creating this world-class investment miracle. When dissecting Berkshire Hathaway’s (1965-2024) 19.4% return, it’s notable that from 1965-2000, the annualized return was as high as 26.7%, but from 2000-2004, it dropped to 9.4%. During the same period, the S&P 500’s annualized compound return was 10.4%, Berkshire’s excess return was +9.5%. From 2010-2024, Berkshire’s annualized return was 11.2%, with the S&P 500 at 10.3%, resulting in only +0.9% excess. However, even when broken down, these returns still outperform the S&P 500. Yet, in the past 24 years, Berkshire’s excess return has declined, which is an undeniable fact. Moreover, in my personal judgment, Berkshire’s annualized return comes from operating earnings plus the combined gains from investing surplus funds and insurance float (i.e., physical business plus stock investments). Since the return on equity (ROE) of operating businesses is generally above 20%, I believe Buffett’s stock investments in the secondary market over these 24 years have not outperformed the S&P 500 (although some wholly owned companies he acquired through investments are included, I emphasize that this analysis focuses on his equity investments in the secondary market over these years).

This is the secret I believe Buffett wouldn’t tell you. His investment returns are declining, with the decline measured by the decreasing excess over the S&P 500. So, why has this happened? Is Buffett’s value investing philosophy no longer suitable for today’s tech era?

The same question applies to “China Buffett” Charlie Munger’s disciple, Dong Yipeng. From 2002, when he invested in NetEase and gained over 100 times, to 2011, when his Apple investment yielded over 18 times, and to 2013, when Moutai’s investment returned over 10 times, over these 24 years, Dong’s average annualized return exceeded 36%, which is very impressive—probably surpassing Buffett’s returns during the same period. Given these extraordinary achievements, it’s worth learning from him, and he is also willing to share his insights, making his evangelism among Chinese value investors even more admirable. However, in 2025, in January, he said he bought Moutai, and in October, he increased his position. I also wrote an article titled “How should we view Dong Yipeng’s Moutai purchase?” commenting on this move. Dong’s purchase of Moutai reflects his practice of his value investing philosophy—there’s no right or wrong, especially for outsiders. But the issue of the return on his recent purchases warrants reflection. His standard for investment is simply to beat bank deposit yields. We need to clarify that, compared to Buffett’s benchmark of the S&P 500 during the same period (annualized return of 10.4%), Dong Yipeng’s standard is probably lower (based on the US S&P 500 from 1965-2024). Dong always emphasizes that his investing is a side hobby, an amateur pursuit, aiming for returns higher than inflation and bank deposits. Of course, we know his main business is Bilibili and other well-established companies and golf, which he no longer needs to worry about. But for ordinary investors, if they set the same opportunity cost or return target (by the way, Dong does not set specific return goals for himself—this is interesting and worth discussing later) as their baseline, is that acceptable? Secondly, under this reference standard, Dong has achieved nearly the highest 20-year annualized return I’ve seen. Can ordinary investors replicate such high returns if they start now? This is why some tech enthusiasts call those who buy liquor stocks now “Old Dong” (a neutral term here, with no praise or criticism). Old Dong’s stocks are mainly dividend-paying value stocks loved by traditional value investors, including Moutai. In 2025, whether Dong or the previous “Old Dong” investors, buying Moutai at 1,400 yuan, I believe, based on Dong’s view, the return over ten years will surpass bank deposits. But I also believe that the future 10-year return rate will not exceed Dong’s original 22-year average of 36%. Whether it’s Apple bought in 2011 or Moutai in 2013, the returns by 2024 are unlikely to be higher. The reason is that it’s not yet 2035, and I cannot break down the returns like Buffett’s 75-year investment performance. My personal view is that the future 10-year return of Dong’s Moutai investment may decline to a level similar to Buffett’s post-2000 returns, but measured by his own standard, it’s still likely to succeed.

This is the secret I believe Dong Yipeng wouldn’t tell you. Why are today’s young investors reluctant to follow the “Old Dongs” in buying traditional value stocks? The main reason is the different return expectations. The underlying logic is complex—some due to risk preference, some due to limited cognition, some due to investment cycle considerations… But what everyone faces is the same market, the same stocks, and some foreseeable outcomes that can be rationally discussed.

Buffett and Dong Yipeng are both evangelists of value investing. Not understanding is not doing. Buying stocks is buying companies. Even in the era of AI and tech rise, they both openly admit their limitations, always investing within their circle of competence, with a rational attitude of knowledge and action, being friends of time. My view is that learning value investing, learning Buffett and Dong Yipeng, is about understanding how they achieve high returns, how they stick to their circle of competence, and how they let compound interest continue to grow, ultimately creating miracles.

The confidence to invest comes from a belief in the investment philosophy.

In the article “Buffett and Dong Yipeng Won’t Tell You Secrets (Part 1),” I detailed the investment returns and benchmarks of these two top contemporary investors. Why are their returns different—one clearly declining, the other, based on my personal judgment, is that Dong Yipeng’s 2023 investment in Moutai will perform worse than his earlier investments? What are the differences and similarities between them?

Buffett’s returns after 2000 have declined for several reasons. First, Buffett is getting older—born in 1930, by 2000 he was 71, and from 2000-2024, he was 71-94. Think about what elderly people at that age are doing. It’s undeniable that no matter how capable Buffett is, he cannot escape aging. His body is aging, his energy wanes. Fewer tasks can be handled, fewer reports read, and on May 3, 2025, at Berkshire Hathaway’s annual shareholder meeting, he suddenly announced his retirement at year’s end. Although I see this as another sad event after Munger’s passing at 99, I also think it’s a natural outcome that must be accepted. Second, Berkshire’s capital size grew from around XXX in 2000 to XXXX in 2024. Buffett has always emphasized that as capital grows, investment returns tend to decline. Over these 25 years, the scale has continued to increase. Third, since 2000, the main engine of global economic growth has been high-tech companies like internet, mobile internet, chips, and AI. For Buffett, who is already elderly, these are outside his circle of competence, so he does not participate in investing in them. As a result, he missed these new era darlings. Even his 2016 investment in Apple was based on Apple being a consumer goods company, not a tech company. He probably also sold out in recent years. This reflects Buffett’s consistent practice of aligning his actions with his investment philosophy. Fourth, every enterprise has its development cycle. Even good companies he once favored and held long-term, like those with invincible business models such as Moutai, cannot sustain high growth forever. They may enter maturity with declining growth rates or decline into recession. This also causes his holdings’ returns to slide. All these factors…

In this new era and development trend, before the dual swords of time and capital scale, everyone’s investment returns will decline, especially Buffett, who is over 70. Yet, Buffett still achieved a return higher than the S&P 500 during this period, truly deserving the title of contemporary stock god.

Dong Yipeng’s investment from 2002, starting with NetEase, has been astonishing, with a compound annual growth rate estimated over 36%. He is also called the “Chinese Buffett.” However, regarding his continued increase in Moutai holdings in 2025, I believe his future 10-year annualized return on this investment will be lower than his previous 36%. The main reason is that every company has its cycle—no matter how good, including invincible Moutai, sustained high growth is impossible. In recent years, Moutai’s growth has slowed, with an estimated 2025 growth rate of 9%-10%. Of course, as China’s economy recovers, this rate might rise again, but my personal judgment is that it won’t be higher than before. So, I expect his 10-year return to be lower than the 36% average he achieved over 22 years. But Dong’s benchmark has always been bank deposit yields, so his “exam score” has always been 100. Dong himself has repeatedly said that his investing is just a hobby, he’s lazy, and only understands a few companies well. So, within his circle of competence, buying Moutai at 1,400 yuan is fine. I believe the result will be very good and satisfying for him. But for ordinary investors, this benchmark is clearly insufficient. The top investors have their own circumstances and standards. How should we learn and practice our own investing?

“As long as there is imagination in the world, Disney will never be finished.” — Walt Disney

Buffett first bought Disney stock in 1966, 43 years after Disney’s founding. In 1923, Walt Disney and his brother Roy Disney founded the “Disney Brothers Studio” in California, initially making a living with Alice comedies. By 1928, Walt conceived a new character—Mickey Mouse—on a train, and the first synchronized sound cartoon “Steamboat Willie” was released, causing a sensation. Mickey quickly became a cultural icon, ushering in the era of licensed merchandise. In 1955, Disneyland opened in Anaheim, California, pioneering the “theme park” model combining tickets, merchandise, and experiences. Then came the TV show “Disneyland” on ABC, which used TV to promote movies and parks, forming a cross-media synergy. In 1966, Walt Disney passed away, and the company was taken over by his brother Roy Disney. At that time, Buffett was still running his partnership in Omaha. On January 30 of that year, he partnered with Munger for the first time, establishing “Diverse Retail Company,” and had not yet bought See’s Candies. Buffett’s investment philosophy was still rooted in Graham’s “cigar butt” approach. Disney’s market cap then was only about $80-90 million; P/E ratio below 10 (pre-tax profit of $21 million). Wall Street generally viewed Disney as a “project-based company,” relying on the success of individual films, with uncertain prospects. That year, Buffett took his daughter to see “Mary Poppins,” not just for entertainment but to observe children’s reactions and confirm Disney’s IP appeal. He also realized that classic films like “Snow White” could be re-released every 7 years, creating “content compounding.” Later, he visited Walt Disney (who died on December 15, 1966), and toured the new “Pirates of the Caribbean” attraction. After witnessing Disney’s focus and passion, Buffett decided to buy $4 million worth of Disney stock, accounting for 5% of Disney’s shares and over 10% of his partnership’s assets—an aggressive position. Another reason was that at that time, the company had over $40 million in net cash (almost half of its market cap), and intangible assets (IP, brand) were not on the balance sheet. For Buffett, who adhered to traditional value investing, this was an excellent opportunity to buy at a low price. Visiting the company and chatting with the founder Walt Disney was a key difference from his teacher Graham. Shortly after Buffett bought Disney stock, Disney’s founder Walt Disney died. The stock price was in panic, but Buffett held firm. “Mary Poppins” (first released in 1964) continued to be shown worldwide, and its derivatives brought good income. Wall Street finally realized that even without Walt Disney, the company had “a cash-printing IP,” and in 1967, the stock price recovered somewhat. However, Buffett sold all his Disney shares in late 1967, mainly because he needed $8 million to acquire “National Insurance Company,” and Disney’s stock had risen about 55%, turning $4 million into $6.2 million. With Walt Disney’s death, creative and management uncertainties increased. Plus, Buffett’s “cigar butt” approach suggested that once the market recovered and value was restored, he could sell. So, he liquidated his Disney holdings.

In hindsight, Buffett admitted in his 1995 letter to shareholders: “In 1966, I was brilliant; in 1967, I was extremely foolish.” If held until 1995, $5 million would have grown to over $1 billion (138 times); if held until 2025, it would be worth over $8.5 billion (based on Disney’s market cap of over $170 billion). The key lesson: I shouldn’t have treated Disney as an “undervalued asset” to trade, but as a “perpetual money-printing machine” to hold. This reflection was prompted after Buffett bought See’s Candies in 1972, confirming that Munger helped him evolve from a monkey to a human, leading to this realization and his second encounter with Disney.

In 1969, Buffett dissolved his partnership and took over Berkshire Hathaway, maintaining his partnership with Munger. In 1986, Berkshire invested in Metropolitan Communications, acquiring 18.75% and becoming the largest shareholder. Buffett trusted the CEO Tom Murphy and COO Dan Berk, often saying: “I’d give them my entire fortune to manage, without even checking the accounts.” This investment accounted for over 25% of Berkshire’s net assets at the time and was its largest single investment before 1988. Coincidentally, in 1995, Disney’s then-CEO Michael Eisner proposed acquiring Metropolitan. Murphy hesitated, but Buffett actively facilitated one of the largest media mergers in US history—$19 billion. The plan was to exchange all stock, but to accommodate the deal structure, they accepted some cash. Even so, they received a large amount of Disney stock, giving them indirect participation in a company with unparalleled franchises. Buffett ended up with over 24 million Disney shares (worth $1.3 billion) and $1.2 billion in cash. In 1995, Buffett said: “We bought Disney in 1966 and sold it in 1967. That was a costly mistake—one of my biggest errors, despite many others. Selling was especially foolish because we knew the company well and recognized its extraordinary economic traits.” But a few years later, in his 1999 shareholder letter, Disney was no longer mentioned. Only in 1996-1998 did Buffett refer to Disney stock. Later, SEC filings show that from Q2 2001 onward, Berkshire no longer held Disney shares, indicating full liquidation between 1999 and 2001.

In contrast, China’s Buffett successor, Dong Yipeng, made different choices. In May 2020, he bought Disney at around 110–115 yuan. Starting early 2020, Disney’s stock fell from a high of 150 yuan to 77 yuan in March due to the pandemic, then rebounded to about 110 yuan by May, as market sentiment slightly recovered but theme parks remained closed, movies delayed, and streaming spending increased. Dong seized this “right-side” buying opportunity, believing Mickey Mouse doesn’t need agents or job-hopping. He said, “Finally, I had a chance to buy Disney stock,” and “The pandemic is temporary, but IP is forever.” As Disney’s stock continued to rise, reaching a high of 201 yuan in 2021, Dong’s comments persisted: “Disney+ is losing money, but user growth is rapid. Long-term, streaming could be a plus, not a minus.” “I like Disney’s products, especially its content assets. ‘The Lion King,’ ‘Frozen,’ ‘Star Wars’… these stories can be told for a hundred years.” However, Disney then declined sharply, reaching 76.98 yuan in 2023, slightly below the 77 yuan low in 2020. At this point, Dong’s stance reversed: “I’ve always liked Disney’s products, but I never understood its business model.” “It looks powerful but is hard to make money—film box office is uncertain, theme parks are huge investments, and streaming still loses money. It’s a very tiring business model.” He also revealed his small position: “My Disney holding is less than 1%, a ‘small money for recognition’.” “Old Buffett doesn’t buy, but that doesn’t mean he can’t. He just doesn’t want to take the risk, while I’m willing to use small money to gain understanding.” Seeing his initial excitement, then six years of decline, and finally reflecting that he bought with only 1% of his money—“If I could do it over, I’d add that money to Apple—because I’m more confident I understand Apple”—he concludes, “I still hold it now, but I won’t add more. Not sleeping well.”

It seems Dong always hopes to surpass Buffett, but in the Disney matter, he has not succeeded. Whether he surpasses Buffett in Apple remains to be seen in the coming years.

Most of the above content can be verified through Buffett’s shareholder letters, “The Snowball,” and Dong Yipeng’s posts on the Xueqiu platform. My additional point is that Buffett’s second purchase of Disney was not a proactive buy but was obtained through the Metropolitan acquisition, exchanging stock. He also did not heavily buy more Disney stock on the secondary market with cash, although in 1995 he tried to swap all for Disney shares, but due to others also wanting shares, he had to accept a mixed deal—about half cash, half stock. Buffett said in 1995: “We bought Disney in 1966 and sold it in 1967. That was a costly mistake… But fate gave us a second chance: in 1995, after Metropolitan/ABC was acquired by Disney, we received a large amount of Disney stock. This allowed us to re-engage with a company with unparalleled franchises—its story assets can generate income repeatedly, almost without star salaries.” He also said, “Walt Disney didn’t create just a movie company, but a perpetual content orchard.” In 1996, he added: “Many ask why I sold Disney in 1967. The answer is simple: I was too young, too Graham-like. I saw the film copyrights on the balance sheet as amortized to zero, but didn’t realize that children would fall in love with Snow White again every seven years. Now we’re back—not because we’re smart, but because of luck.” “Mickey Mouse is the best ‘employee’ I’ve ever seen: he never strikes, doesn’t need dividends, and can work worldwide.” As Disney’s films like “Hercules,” “The Hunchback of Notre Dame,” and others exceeded expectations in box office from 1995 to 1997, Buffett chased the high, reaching a peak of 51.2 million shares in 1998, but then the stock declined sharply, and Buffett reduced his holdings significantly. Despite making money on this company, he missed the subsequent growth.

From this analysis, it’s clear that neither Buffett nor Dong Yipeng truly understood Disney. Buffett’s involvement spanned 60 years (from first buy in 1966 to 2025). In 2023, he said, “We don’t invest in Disney because its future capital expenditures are huge, and free cash flow is hard to predict reliably.” Both bought and sold, making profits, but due to misunderstanding the company, they couldn’t hold long-term. Dong Yipeng admits, “When I bought, I was actually clueless, mainly trusting the IP rather than having a clear judgment of management’s strategy.” Holding for six years, he still didn’t make money. If he could do it over, he wouldn’t buy Disney. Although neither of these top investors achieved major success with Disney, it remains one of the greatest companies in the world. Many Chinese companies aspire to Disney’s business model—Wanda’s Wang Jianlin, Pop Mart’s Wang Ning, Huayi Brothers’ Wang Zhongjun, Huaqiang Fangte’s Li Ming, etc.—showing Disney’s greatness and difficulty to imitate or surpass. Since its IPO in 1957, by 2025, its total return (post-adjustment) is about 13,600 times. That’s the charm of a company over 100 years old.

I also want to add a secret about Buffett: earlier I mentioned that Buffett’s reason for selling Disney in 1967 was partly to fund the acquisition of National Insurance. For Buffett, Disney’s future earnings represented his opportunity cost. Buffett himself has expressed regret over selling. But I believe that opportunity cost was worth it—he paid over $1 billion (as I mentioned earlier) for the acquisition of National Insurance. Why do I think it was worth it? Did National Insurance directly bring Buffett over $10 billion in gains? Not in absolute terms. The key is that Buffett saw the float of the insurance company, and after acquiring it, he truly became the legendary investor—“National Insurance taught me: the best business is one where others pay you, and you still make money.”

“When Richard Branson, owner of Virgin Atlantic Airlines, was asked how to become a millionaire, he replied simply: ‘It’s easy! First, become a billionaire, then buy an airline!’” — Buffett

In 1989, Buffett bought American Airlines preferred stock for $358 million, believing that as an industry leader, it could leverage scale and route networks, with fixed dividends and mandatory redemption providing safety margins. He underestimated the fierce industry competition and rigid cost structure. The early 1990s recession and Gulf War hit the airline industry, oil prices soared, and passenger demand dropped, causing the stock to fall from $35 in 1989 to $4 in 1994. During this period, American Airlines even couldn’t pay interest for two years. But after the company recovered in 1998, Buffett used the redemption clause to exit with a profit of $250 million, mainly not from stock price appreciation but from the value of the preferred stock. He later regarded this as a typical value trap.

Since 2016, Buffett has heavily invested in the four major US airlines, totaling $8.8 billion. When the pandemic hit in 2020, the industry suffered a severe blow, and stock prices plummeted. Buffett initially increased his holdings of Delta Air Lines by nearly 1 million shares at about $46 per share, but a month later, he cut his position at $26 per share. By early May, he announced full liquidation of American Airlines, Delta, Southwest, and United, with an estimated loss of at least 48%. The secret was that within a month of Buffett’s liquidation, airline stocks rebounded strongly. Buffett later admitted he underestimated the impact of the virus on the industry.

In China, Buffett’s disciple Dong Yipeng bought FRNT airline stock early on, believing oil prices would fall, benefiting airlines. Oil prices did decline, and the company was profitable. But in 2008, the credit card company demanded full cash payment, and the CEO suddenly declared bankruptcy, leading to the company’s collapse and heavy losses for Dong. This made him realize he had made a “completely clueless” mistake.

During the pandemic in 2020, influenced by Buffett, Dong Yipeng bought Delta Airlines with a 1% position. During holding, due to uncertain business models, high debt, and demand fluctuations, he felt anxious and couldn’t sleep, recognizing the high complexity of the airline industry beyond his circle of competence. When Buffett announced the full exit from airline stocks in May, Dong also had some criticism but persisted. Although he eventually made millions in profit, he still views this as an “outside circle of competence” operation and reflects that he shouldn’t speculate or venture into unfamiliar fields. He believes in sticking to what he doesn’t understand.

The secret here is that in 1989, American Airlines’ annual interest rate was 9.25%. They also once offered to transfer their preferred stock at half price, but no one took it, so they ultimately withdrew and liquidated successfully. Buffett regretted this for many years but re-entered airline stocks in 2016. Why? Because the fierce competition of the 1990s had changed—these four airlines formed an oligopoly. Their profitability greatly improved: in 2016, the combined net profit of the four US airlines reached $13 billion, up 230% from 2012. Delta’s net profit margin rose from 2.75% in 2012 to over 11%, with high seat utilization over 80%. This fundamental improvement turned the airline industry from a “value destroyer” into a stable cash flow generator. Buffett believed he understood these companies and that their fundamentals had become the kind he liked—transforming from “smoke butt stocks” to “good businesses,” so he re-invested. But why did he sell in 2020? Because the pandemic, a “black swan,” drastically changed the industry’s fundamentals—demand plummeted, cash flows dried up, and debt surged—invalidating his previous logic. Buffett recalled the painful decade of US airlines from 1989-1998, and with no safety margin, he had to cut losses, incurring significant damage. This also resonated with Dong Yipeng’s experience. He kept asking why Buffett bought at the bottom in February 2020.

The common reasons for Buffett and Dong Yipeng’s airline investment failures are mainly:

1. Insufficient understanding of the industry’s nature: Airlines are capital-intensive, with high fixed costs and low pricing power. Product homogeneity leads to price wars, difficulty in forming competitive barriers, and profit challenges. Both failed to fully grasp these fundamental issues, underestimating the investment risks.

2. Ignoring external risks: Airlines are highly sensitive to economic cycles, pandemics, oil prices, and geopolitics. Recessions reduce demand; pandemics cause flight cancellations; oil price swings impact costs. Neither fully anticipated these external shocks, especially the impact of black swan events.

3. Beyond their circle of competence: Buffett usually invests in companies with stable cash flows and clear business models; Dong emphasizes only investing in what he understands. But airline business models are complex and uncertain. Their investments in airlines violated their principles to some extent, leading to biased decisions.

4. Attracted by low valuation: Buffett’s two airline investments were driven by low valuation, trying to replicate “cigar butt” strategies (the second with some good company attributes). Dong also believed that declining oil prices made airline stocks undervalued. But they overlooked deep issues behind low valuation, such as high debt and vicious competition, falling into value traps.

5. Cognitive biases: Buffett’s successful contrarian bets during the financial crisis led him to try to replicate “counter-cyclical” strategies in airlines (especially in February 2020), ignoring fundamental differences between airlines and finance. Dong, influenced by Buffett, believed in airline recovery potential and followed suit, without fully independent judgment. Both show cognitive biases, lacking objective analysis based on actual industry conditions.