Buffett's advice to beginners

In 2006, Duan Yongping became the first Chinese to have lunch with the stock god. At dinner, Duan Yongping asked Buffett: "what can't be done in investment?" Buffett replied: "Don't short, don't borrow money, the most important thing is not to do what you don't understand. "

Don't do what you don't understand. Today let's talk about the relationship between cognition and investment.

"thinking that you understand and really understanding are two different things."

Duan Yongping60People born in the past1989In 2000, he became the director of Guangdong Zhongshan Yihua Group Daily Chemical Electronics Factory, and created an output value in just three years.10The "little bully" of 100 million yuan1995Duan Yongping established Bubugao Electronics Co., Ltd., which once again replicated the success of Xiao Bawang.

In 2001, Duan Yongping bought 2.05 million shares of NetEase, Inc at a price of less than US $1, accounting for 6.8% of the shares, earning a return of more than US $100 million. when Jobs was alive, Duan Yongping took a heavy position in Apple Inc, and Apple Inc's market capitalization exceeded one trillion yuan in 2018. He made a lot of money again.

As a result, Duan Yongping is also known as China's Warren Buffett, and some media even call him "Duan Fett". In terms of investment logic, Duan Yongping is deeply influenced by Buffett. Over the years, the companies that have really invested heavily are no more than10Home, companies that have been held for a long time are generally3Home.

Duan Yongping never speculates, does not invest oneself does not understand the field, to the sure enterprise will take a heavy position to attack, the long-term hold.

Duan Yongping firmly believes that "if there is no investigation, there will be no right to speak." Before making a decision, he will consult all the business and people information of the investment company to understand the company's business model. From the perspective of industry cycle and internal operation, we will see more information that others can not see.

Duan Yongping, who has had entrepreneurial experience, really understood Buffett's value investment theory. He told the audience that he did not necessarily understand it, thinking that there was a very long distance between understanding and really understanding.

This is true of Duan Yongping, especially of Buffett. If you fail to copy your homework, it will be the worst to follow the steps.

2020The March meltdown of US stocks led to the bankruptcy of Buffett's bottoming plan and eventually cut off aviation stocks; Bank of China crude oil exploded and investors were cheated by negative oil prices, all due to limited knowledge of the underlying company's products, resulting in great losses.

Buffett has the decisiveness and capital to withdraw in time to learn from failure, while we, as small investors, mostly buy a little bit with a small gambling attitude, based on our understanding of the epidemic. It is believed that airlines should be able to restore a certain amount of passenger flow quickly, and the further tightening of aviation policy between China and the United States has also proved that Buffett's withdrawal is a timely stop-loss strategy.

In any case, investment is a prediction of the future, but the future is essentially unpredictable, so prediction is probability. Therefore, the only way you can do better than others is to grasp as many facts as possible, and to truly know what your bosom friend knows and what your bosom friend does not know. Nothing is 100% sure, but if you have absolute cognitive understanding and confidence every time you do it, you can do it very well over time.

Advice for investment beginners

What if ordinary people don't have the energy to conduct huge research and thoroughly study a company's operating logic, profitability, organizational structure, financial performance, and so on? We can "stand on the shoulders of our predecessors" and try some investment methods planned by professionals, such as index funds, fixed investment, and so on.

There are risks in every way of investment. let's take a look at how to recognize the risk of investment.

First of all, what is the source of risk? There are only two kinds: permanent loss of principal and insufficient return. But the real source is lack of cognition (lack of hard work + cognitive limitations) and inability to withstand fluctuations.

So to understand personal risk preferences and the risks of wealth management products, here's a test question:

Suppose there are two types of investments: investment An expects a 10% return and may bear very small losses, while Investment B expects a 30% return but may incur a larger loss. What will you do with your investment?

1. Invest all in A with less return and less risk.

two。 Invest in both An and B, but most of the money is invested in A.

3. An and B each invest half of the capital.

4. Invest in both An and B, but most of the money is invested in B.

5. All invested in B with higher returns and higher risks.

The answer to this question basically covers five types of users, with options 1-5 corresponding to cautious type, robust type, balanced type, aggressive type and radical type, respectively.

Niuniu chose 3, which is a balanced investment, which neither wants to be too conservative to lead to too low return on investment, but also does not want to take too much risk. Therefore, Niuniu's asset allocation is as follows:

Monetary assets (savings, monetary funds)10% Murray 20%

Bond assets (treasury bonds, corporate bonds, medium-and long-term fixed income financial products, partial debt funds)30% 40%

Stock assets (stocks, warrants, partial stock funds)40% Mutual 60%

The other four types are up and down 5% and 10% on the basis of balance.

Take fixed investment as an example, how can we know whether a fund is suitable for us to invest?

Investment rookies should first choose the type of fund according to their own risk preference, which is a hybrid type with greater volatility, stock type? Or is it a currency as stable as savings? Conservative investors can mainly allocate monetary and bond funds, sound investors can mainly invest in bond and partial stock products, and enterprising investors can buy partial stock according to specific conditions.

In addition to our own risk tolerance, we often face "actively managed funds or passive index funds?" "the dilemma.

In the end, whether to choose passive or active is related to the situation of investors themselves. Investors who have strong judgment on the market are expected to get higher returns when they choose passive funds, while those who want to worry-free investment can choose active managed funds.

Of course, these two methods have their own advantages and disadvantages: the advantage of choosing active management is that the management cost is low, but it may also be wrong about the risk of declining performance of people or fund managers. the advantage of choosing index type is that you don't have to look at people's face, but the disadvantage is that the ability of market research and judgment and the ability of dynamic adjustment are high.

Many people regard volatility as the first criterion of choice, which is obviously unreasonable. Volatility is not the key, and the index that rises and falls sharply cannot achieve the compound interest effect.，They have speculative value.，The value of investment is insufficient. What we have to choose is the ability to fluctuate upward, in fact, we are talking about growth, growth capacity, rising good funds to set investment, long-term investment to achieve profit tumbling or the need to invest in a sound index.

In addition, for a fixed investment fund, we have to evaluate its strength in many ways:

Although the fund has diversified the risk in time and the stock portfolio of the fund itself, we can still choose the appropriate type of fund to build the corresponding investment portfolio according to different risk tolerance.

For example, investing in a portfolio with weak correlation can reduce the volatility of the portfolio and optimize the risk-return ratio. The combined allocation of Hong Kong stocks and US stocks will effectively reduce the volatility of the portfolio compared with the single investment in the A-share market.

Avoid black swans. If we choose a fund manager who looks most like Warren Buffett in the A-share market, we pin all our hopes on him. But if his performance is abnormal, then the performance will inevitably dive, so we should not put all our eggs in one basket at any time, but should be appropriately dispersed.

Buffett often says that if you want to be a good investor, you must first become a good businessman; if you want to be a good businessman, you must also become a good investor to allocate your capital.It is a very good starting point for beginners to start by choosing a product within their own ability and studying it thoroughly. If you can start from this foundation, you will be on the right path to becoming a good investor.