Article/Meiyu Life Aesthetics

I am glad that I do what I like every day in my life, and

work with people I admire.

I tap danced to work,

and when I got to the office,

I always felt like I was lying on the couch painting the ceiling.

"Tap Dancing to Work" takes time as the axis and systematically introduces Buffett's investment philosophy from the perspectives of social background, political environment, and business operations. This book has many chapters, which may seem fragmented, but in fact it focuses on all aspects of Buffett's investment career. Rather than a book, it is better to say that this is a "newspaper clipping" - all old content; the sources of the clippings are also different: there are Buffett's own articles and speeches, excerpts from shareholder letters, and many others described by others. Buffett. The title of the book comes from something Buffett often said: Although I am over eighty, I still tap dance to work every day because I love my job so much. Martial arts masters are invincible with their swords and people integrated into one; while masters in life are those who integrate their people and affairs with ease. In fact, this book has nothing to do with tap dancing. Its subtitle is "Warren Buffett's Happy Investing and Life Wisdom." He mainly talked about three points: choice, focus and integrity. These three points are not only his investment principles, but also his fundamental philosophy of life.

We often hear this sentence: choice is more important than effort. When it comes to investing, if you know how to choose, you will definitely make a lot of money. That is equally important in life. For example, when we make friends, we must first distinguish which friends have the same interests as ourselves and those who are just ordinary friends. Then the second step is to make a choice. You can make deep friendships with like-minded friends. Making friends requires energy and maintenance. Some people are very lucky to have one or two life-and-death friends in their lifetime. And there are some people who usually make a lot of friends, most of whom are just casual acquaintances. If something happens, no one is willing to help. So the choice is very important. This is also a kind of wisdom in knowing people!

Buffett will invest most of his funds in a few stocks that he is optimistic about, such as American Express. He said that it took a lot of effort to find these few stocks that he was satisfied with.

But Buffett is not a gambler. Every time he buys a company's stock, he will meet directly with the chairman. He acquires companies but does not use management systems to constrain actual managers. He lets those outstanding managers show their talents, and in many cases they become lifelong friends. But when company managers change and their abilities are not recognized, Buffett will also exercise his rights and vote with his feet. He always adheres to his principles: simplicity, tradition and inaction.

He always remains mysterious and principled in his investment actions. When starting a private equity fund: He asked investors to have absolute trust in him. He invested 90% of his wealth into the partnership and said clearly: "I am in the same boat with you." Once a partner rashly broke into Buffett's office and wanted to know where his money was invested. Buffett was chatting with a banker at that time. The secretary's reception didn't work, so he insisted on seeing Buffett. Later, Buffett left for a while and came back and told his secretary: Return that person's money to him and let him leave. Buffett said: They should all know my investment rules. I only report my investment status once a year. This is the prestigious "Letter to Investors" published every year by Berkshire.

Integrity not only refers to lying, but more importantly, to make others believe in you and make others think that you are a common person. In fact, it is not an easy thing to do. First of all, you must keep your word, don't make big promises, and do what you promise others. There should be feedback and give people a sense of certainty. Only after years of accumulation of integrity can people trust you, and this kind of accumulation is like walking on thin ice, and you must always operate with caution.

If we ask ourselves to use the three wisdoms of choice, focus, and integrity to settle down, I believe we can also tap dance to work.

Let’s sort out a few of Buffett’s famous quotes, and maybe we can gain some insights from them:

Buffett abides by Graham’s two iron rules: first, never lose money; Second, never forget the first principle. He never reveals his trump card easily, but always continues to learn. Charlie Munger said: "Warren is the best continuous learning machine in the world." When you spend a lot of energy thinking that you have thoroughly studied the master, the master has improved again.

There are many ways to make profits in the stock market, but for long-term investors, there are essentially only two sources of profit from investment. One is the growth in intrinsic value brought about by the growth of the company, and the other is The return of the stock price from undervaluation to reasonable valuation brings about an increase in valuation.

Happiness also comes from the social significance of investment. Capital is one of the scarce social resources. Invest capital in entrepreneurs you respect, appreciate and admire, so that excellent companies can have lower financing costs and more sufficient resources. You will know that your investment optimizes the allocation of social resources. This is also a source of happiness.

To increase the return on equity, a company needs to do at least one of the following:

Increase the turnover rate, that is, the ratio of sales revenue to total assets;

Cheaper leverage;

Higher leverage;

Lower corporate income taxes;

Higher operating margins.

Inflation is a far more destructive tax than any tax enacted by our legislature. The "inflation tax" has the uncanny ability to swallow up money. For a widow with a bank deposit earning 5% interest, 100% income tax at zero inflation is the same as 5% inflation at zero income tax. In any case, these two methods of "taxation" deprived her of any actual income. Every penny she spent came from principal. However, she would undoubtedly be outraged by a 120% income tax without noticing that 6% inflation is the economic equivalent of a 120% income tax.

"What is not popular, has no merit?" Buffett chuckled and said, "Actually, this is where the big fish are caught. On Wall Street, the market is very pleasant** *Knowledge will usually cost you a lot."

In Buffett's eyes, a "good company" must meet several basic conditions: a strong franchise; and above-average net asset income. rate; relatively small capital investment; ability to release cash flow.

Buffett discusses pricing issues with executives from See's Candies and The Buffalo News once a year, and he always appears proactive. He said that as CEO of the entire group, he has a unique perspective on pricing issues: "A lot of managers are only responsible for one business. The equation in his head tells him that if the price is a little too low, it is not a big deal." problem; but if the price is too high, he will feel that he may be destroying the only thing in his life. No one knows what the price increase will bring. For the managers of the subordinate companies, it is like a Russian roulette. For the CEO of the entire group, since there are still many important tasks in his life, it will not feel like a gamble. Therefore, I think it is best to have someone who is experienced and has some distance from the specific business. People can deal with pricing issues for a certain situation."

Buffett said that the experience he accumulated in the business world is very helpful to his investment ability, and vice versa. He said: "Investment can help you broaden your horizons and be exposed to many new things that are not directly related to you. As an investor, you must understand the reasons behind things, for example, why there will be fewer and fewer retail companies. If If you want to be a truly good investor, you must turn your head and learn from the investment experience of the past 50 years. You must also learn the knowledge of capital allocation. Instead of putting all the water in one bucket, you should learn more. Find some buckets."

"On the other hand," he continued, "could you please explain to a fish what it's like to live on land? It might take you a thousand years. Explain a day's life on land. The feeling of running a business for a day also has the same value. It will make you feel like walking on your own feet. "The final conclusion is: it feels like "two boats". Great!

A smart brain is very important, but after reaching a certain level, IQ is no longer a key indicator for judging the quality of investment managers. Buffett said: "You don't need a rocket scientist. Investment is not a game where an IQ of 160 beats an IQ of 130." An investor's ability to strip away personal emotions and make rational decisions is much more important than the size of his brain. "When others are making decisions out of short-term greed or fear, rationality is crucial," Buffett said. "This is when money is made."

Charlie Munger once said of Buffett: "There were 1,000 people in my class at Harvard Law School. I knew all the top students, but no one could compare with Buffett. His brain is like a super-rational, logical machine. As long as he speaks , you can hear the wisdom working."

I personally have other examples of "cheap acquisitions" that are stupid, but I'm sure you get the idea: buying a quality company at a reasonable price. It is far better to buy a company with mediocre performance at an attractive price. Charlie Munger understood this very early, but I was a bit late to it. Now when we buy companies or common stocks, we always look for companies with first-rate business and first-rate management.

As described by Newton's first law of motion, an organization will resist any change that is inconsistent with its current direction; meaningless work will continue to expand to fill people's available time, corporate projects Or mergers and acquisitions will keep happening and suck up available funds; any leader's desire for expansion, no matter how foolish, will soon be supported by detailed return rate and strategic studies prepared by subordinates; the behavior of peer companies, whether it is expansion, acquisition, Setting management salary standards or other measures will be blindly imitated.

In fact, no matter what kind of asset, its price growth rate cannot be higher than its profit growth rate for a long time. This is an inescapable reality.

The purpose of investment is not to evaluate how much impact this industry can have on society, or how much room it has for development, but mainly to look at the competitive advantages of a certain company, and more importantly The question is how long this advantage lasts. Products or services with a broad and long-lasting "moat" can truly bring sweet fruits to investors.

For its annual Most Admired Companies ranking, Fortune asked the CEOs of six of its most admired companies to tell us which CEO they most admire. Ken Chenault, CEO of American Express, chose Buffett because he said he had an incredible blend of high intelligence and business acumen with the ability to interact emotionally. The perfect fusion of space.

Only do what you like, only work with people you admire, only do things you are good at, and invest in companies you can understand.

There are only two sources of profits for long-term investors: A. the growth in intrinsic value brought about by corporate growth, and B. the increase in valuation brought about by returning from underestimation to reasonableness.

Making choices is sometimes a kind of clumsiness. Don’t rush for success. Use your own familiar fighting methods within your own capabilities to fight the battles you are good at.

"If the water is weak, only take one scoop." The key to the success or failure of investment is how deeply you understand the scoop you take.

Follow Graham's margin of safety and Fisher's growth, plus enough patience.

The importance of return on equity and main business and cash flow. Be careful of companies using accounting techniques to hide the truth.

We should remain in awe of rules and logic, and we will not do anything that exceeds the capabilities of each of us. We need to learn to overcome obstacles rather than solve problems for problem companies.

Always stay positive and energetic. Negativity cannot solve problems.

Buffett is one of the greatest managers in history. He was the most successful in corporate mergers and acquisitions in the 1960s; he was also the most successful in fighting inflation in the 1970s; his appetite has always been diversified, which has allowed him to create a company that spans many fields. Giant enterprise. Within the field of professional managers, he should have his own place.

Over the years, Buffett has not only maintained a brilliant record in various investment fields, but also has been consistent in other things with his unique calm, humble, and even stupid way of doing things: in business management. , stock options and accounting reform, entrepreneurial ethics, and views on the stock market.

ABC founder Tom Murphy added: "He gets up every morning and goes to work to have fun. For him, it's not work. He only spends time with people he likes ***, so there is no pressure. "

Zweig said, "The greatest happiness for a person is to discover his life's mission in the middle of his life, in his creative prime." From this perspective, Buffett is really a very happy man.