What is the difficulty of value investing? Getting rich slowly or getting rich quickly - Universe Official Cryptocurrency Exchange Platform

Many people believe that value investing is very difficult,

At the same time, they also think that value investing requires long-term investment,

This long-term is disliked by everyone,

Hard to persist,

So they think it’s very hard.

Some people I know around me,

Say they agree with value investing,

But because it requires long-term,

They feel it’s less profitable than short-term trading,

So they choose not to learn or practice value investing.

I can only smile,

Because I know they think the process of holding ten-bagger stocks is too painful,

Takes too long,

Unable to achieve the short-term profit or large gains they seek.

In fact,

It’s precisely because they don’t understand value investing that they find it difficult,

And think it requires a long time.

First,

Value investing and long-term,

Have no necessary connection.

Maybe it’s because they’ve heard some of Buffett’s discounted cash flow methods,

Thinking they need to understand a company’s lifetime cash value,

Before investing,

And therefore think it’s long-term.

It could also be because Buffett often says,

He would never sell Coca-Cola stock (though he has said similar things about many stocks,

But in the end, he still sold them),

And think that’s too long-term.

If we buy a stock,

And need to hold it for a lifetime without selling,

What profit do I make? I want to make money through trading to buy a villa and a yacht,

Achieve financial freedom (I’m sure this is what some friends around me think).

Actually, value investing has never said it’s related to time,

It only talks about buy points and sell points,

And before buying, of course, is waiting,

And before selling, is also waiting.

And what is waiting? Does it necessarily mean long-term? Obviously not,

If you buy today,

And a week later, a sell point appears,

Why not sell? The founder of value investing, Graham, even required,

Stocks must be sold within two years! The specific rule is that if the stock you buy rises 50% in the short term, sell immediately,

If after holding for two years it hasn’t risen 50%,

You also need to sell.

Is this related to long-term? Obviously not, it’s short-term,

In fact, it’s even short-term.

Second,

Waiting long-term is long-term,

Very difficult,

Waiting for the right buy point,

Waiting for the profit-taking sell point,

This is a very painful long process of endurance.

People with such ideas,

Are not the typical value investors’ imagination,

And unique.

What is waiting? If you don’t even know what you are waiting for,

What’s the point of waiting? If you know what you are waiting for,

Why would it be difficult,

Why would it be endless?

Third,

Value investors need to have a strong mind and patience for long-term holding,

To withstand sharp fluctuations in stock prices,

Only after experiencing ups and downs, turbulent waves, can they possibly achieve final success.

For example,

Buffett started buying BYD in 2008,

And sold later,

Because during that time, the stock price was cut multiple times but he remained unmoved,

“Persisted” through the painful 14 years,

Finally achieving over 30 times return.

Is this really the case? The real situation is,

He and Munger dance tap-dancing happily to work every day,

Spending the joyful 14 years with smiles,

And finally getting over 30 times return.

I started from zero and built my own business,

Later, after coming into contact with value investing, I immediately understood, accepted, and agreed.

Initially, I thought it was because I was an entrepreneur,

My understanding of companies naturally extended to understanding others’ companies,

So I found it easier to accept value investing.

But later I found,

Many other entrepreneurs (business owners who have been in business for many years) simply don’t understand investing,

And even less understand value investing.

And what about most people who have never run a business or managed a company? Is it even harder for them to accept? (I can’t imagine how those who have never run a business but are excellent investors do it,

But such people do exist.) So I think it’s possible that value investing is hard for most people to accept.

One,

Value investing is difficult,

Because it requires a long-term vision and not to seek quick gains.

This is obviously still about long-term investing,

But it’s not correct.

As mentioned earlier,

It has nothing to do with whether it’s long-term or not.

Buffett’s famous phrase “Nobody wants to get rich slowly” misleads many,

In his lifetime, 99% of his total wealth came after age 55,

Which further illustrates the power of compound interest,

And why people need to pay more attention to the long-term,

Look further ahead,

And only then can they succeed.

Is this really true? Come,

Give me Buffett’s 1% of wealth before age 55,

And I am willing to get rich slowly before age 55.

Just give me 100% certainty.

Let me slowly get Buffett’s 1%, which is about 1.5 billion USD,

That’s about 105 billion RMB.

Who wouldn’t want that? That’s crazy.

Drinking too much chicken soup,

Could it cause high uric acid?

Two,

Value investing is difficult,

Because it requires going against the trend,

Being fearful when others are greedy,

Being greedy when others are fearful.

In 1986,

Buffett said in his letter to shareholders, “Be fearful when others are greedy, and be greedy when others are fearful.” Coupled with his brilliant investment career,

This hollow phrase is regarded as a classic by Chinese stock investors.

Since I first heard this phrase, I deeply doubted how many people understand: what is greed,

Is it buying 1%? Or 50%,

Or 100%? Is that greed? Others? Who are others? People you know? Or Buffett? How do I know how greedy others are? When are they greedy? Who are they greedy for? Fear,

Is fear asking me not to buy stocks? Or do I need to cut my holdings,

And how much to cut to be considered fear? 10%? 90%? Who can tell me? Anyway, Buffett didn’t directly answer these questions.

But I already know the answer.

If someone accepts my previous advice,

And allows their circle of competence to play its proper role,

Then when they realize they cannot understand value investing,

And are willing to give up investing,

That’s really great,

At least they do not act when they don’t understand,

And not acting means no loss.

Not losing already means beating 90% of the market.

Then what if someone says,

If you don’t understand value investing, can you still invest? Of course yes,

There are countless ways to invest,

But the harsh reality of society will hit you hard,

And make you realize,

Oh,

Not all roads lead to Rome!

At a lunch in Sundance, Utah,

Buffett was invited to exchange ideas with several tech industry leaders,

During which Amazon founder Jeff Bezos asked Buffett a common question: “You are one of the wealthiest people in the world,

And your investment philosophy is so simple,

Why doesn’t anyone copy you?” (“You’re one of the wealthiest guys in the world, and your investment thesis is so simple. Why doesn’t anyone copy you?”)

Buffett replied, “Because nobody wants to get rich slow.”

(“Because nobody wants to get rich slow.”)

I think many people have heard this story,

And this very famous phrase, “Nobody wants to get rich slow.”

If we add up Buffett’s wealth before age 50,

And compare it to what he accumulated after 50,

It’s about 0.1% versus 99.9%,

Not a typo,

It’s one-thousandth instead of one-hundredth.

So,

The phrase “getting rich slowly,”

Buffett has been practicing his whole life,

And even now at 96, he continues on the path of slow wealth accumulation.

Although he is already incredibly wealthy.

An American elder,

Using nearly a lifetime of practice,

Proves the effectiveness of his methodology,

Of course, you can also think it applies to him personally,

And may not be universally applicable.

For our country’s development,

Making money in the financial sector,

Is still in its infancy,

It’s normal not to think this industry can make long-term profits,

After all, most people around think gambling is more significant.

We have major differences in national conditions compared to Buffett.

Anyway,

In front of truth,

It’s too cruel.

Let’s examine what’s wrong with this phrase,

“Nobody wants to get rich slowly,”

Why? If someone told me,

I could get rich slowly,

Even just 1% of Buffett’s wealth,

What reason do I have to refuse? I believe everyone is willing to get rich slowly,

As long as there is certainty,

That is, if we live to 100,

And during the process from age 1 to 100,

Our wealth grows compoundingly day by day,

Why wouldn’t we accept and be happy? Right.

Everyone is willing.

So what’s the problem? Still about certainty,

No one guarantees that if I use Buffett’s method,

I will definitely get rich slowly.

Or,

Without his method,

After college,

Let me start a business,

Or do manual labor,

If you dare to guarantee that after 40 or 50, I will achieve financial freedom,

And I can only do this slow wealth accumulation for life,

How could anyone not be happy? The key issue is still certainty.

When the sky rains and the daughter-in-law marries,

What can we change? Who will give us certainty? So,

The phrase Buffett said,

Seems reasonable,

But in fact, it’s very hard to do.

It requires too many assumptions,

To be willing to accept,

The so-called slow wealth accumulation.

So I think it’s pointless to criticize others’ chasing and panic selling just based on this phrase.

Nobody wants to get rich slowly,

I want to further ask,

How slow is “slow”? One day,

One year,

Ten years,

Or sixty years? How rich is “getting rich”? Ten million? One hundred thousand? If you give me these specific numbers,

Of course, someone would be willing.

Buffett likes to say many similar things,

Like “When others are greedy,

You should be fearful; when others are fearful,

You should be greedy,” I expressed some views on this in my article “Why is value investing difficult (Part 2).”

For those familiar with Buffett,

Of course, they understand this is his way of thinking,

For those unfamiliar,

Such chicken soup would taste bad.

Slowly getting rich,

Should correspond to quickly getting rich,

Getting rich fast,

Do you have the ability to get rich quickly? Legally,

It seems very difficult.

For example, I also went through a life-and-death process when I started my business.

So, slowly getting rich,

Seems more reasonable,

At least it’s legal.

Why do true value investors accept Buffett’s idea of getting rich slowly? Because compound interest is the eighth wonder of the world.

In the early stages, the capital is small,

The effect of compound interest is very weak,

But in later stages, it can be exponential like a nuclear bomb,

Even unimaginable.

In my early years of investing,

I foolishly opened an Excel sheet,

And wrote down all my funds,

Then dragged the cells with annual growth rates of 3%,

5%,

10%,

15%,

Because I was young,

I dragged it out to 70 years later,

And found the data terrifying,

It gave me a huge shock at the time,

I looked at the simple Excel sheet for many years,

Whenever I felt impulsive,

I would open it and look,

And then continue to read peacefully.