Essence Edition Are you suitable for buying stocks?

Chapter 7: Buffett's Miraculous Skills (2)
Why is it the most "heavy" failure? Buffett made the following statement: The after-tax loss of this investment was 4.44 million US dollars, equivalent to one-fifth of Berkshire's 1% net worth.Only once in the past 50 years have we sold an investment with a realized loss of 2% of our then net worth.On two other occasions, we experienced investment losses equivalent to 1% of net worth.All three big losses occurred in 1974-1975, when we sold stocks at very cheap prices in exchange for money to buy stocks that we thought were cheaper.

In other words, the three worst times in the past were not caused by Buffett's subjective laziness.

Previously, Buffett had admitted at least six huge investment mistakes in his shareholder letters over the years, summed up in the following six lessons:
1. Invest in companies that have no sustainable competitive advantage. In 1965, he bought the Berkshire Hathaway textile company, the predecessor of the Berkshire company that made him famous.The textile industry is a sunset industry, and the pressure from overseas competition is huge. In 1985, Balao sadly closed down the factory.

2. Invest in depressed industries.Buffett invested US$1989 million in preferred shares of American Airlines in 3.58, but his investment has shrunk sharply as the airline industry has been in decline.He regretted this investment.When asked once what he thought of the Wright brothers who invented the airplane, he replied that someone should shoot them down.

3. Invest in stocks instead of cash. In 1993, Buffett bought the shoe company Dexter for $4.2 million, but he replaced cash with shares of Berkshire Hathaway. The stock is worth $20 billion.

4.太快卖出。1964年巴菲特以1300万美元买下当时陷入丑闻的美国运通5%的股份，后以2000万美元卖出，但如果坚持到现在，这些股票价值超过40亿美元。

5. Although seeing investment value, there is no action.Buffett admits that although he is optimistic about the future of the retail industry, he has not increased his investment in Wal-Mart.

His mistake cost Berkshire Hathaway shareholders an average of $80 billion a year.

6. Too much cash.Buffett's mistakes all come from having too much cash.To overcome this problem, Buffett believes that he must wait patiently for an excellent investment opportunity.

Buffett said that he has learned a lot from these six wrong investment actions.However, he also pointed out that these were not the most serious mistakes.His worst fear was making a mistake that would damage his reputation.

He wrote in a letter to Berkshire executives at all levels: "We can afford losses, even serious losses, but we cannot afford even the slightest damage to our reputation. damage."

In the field of investment, loss is the most inevitable thing.Even a master figure like Buffett will inevitably experience failure, let alone us ordinary people.However, there are too many people who do not have scientific investment methods, and rush into the stock market and funds just because of impulse, and end up stuck.And such consequences can be avoided through systematic learning.

For you who love investing, has Buffett's failure lessons also given you some inspiration?

Buffett you don't know

1. Buffett's first real business activity was selling drinks.As early as six years old, Buffett was selling Coca-Cola along the street, buying half a dozen Cokes for 25 cents and selling them for 20 cents a bottle. At that time, his profit rate was about [-]%, and he has maintained it throughout his career. at this level of profitability.

2. During the study period, making money or even being "stingy" cannot win the respect of classmates.Buffett has poor grades in sports. In addition to showing his outstanding talent for numbers in math class, the introverted Buffett has never been able to find a good way to prove himself.In the winter of his 12th year, Buffett moved his family to Washington, DC.Leaving the hometown where he grew up, the shy and introverted Buffett ran into trouble.Coupled with the rebelliousness of adolescence, Buffett began to prove himself in various extreme ways.

In "Snowball", Buffett once described himself like this: "I lost my old friends, and I couldn't make new ones,... I don't have a developed motor nerve, and I don't have a ticket to integrate into the group." Although he participated in the baseball and football teams , but because he wears glasses and doesn't like brutal collisions, he doesn't do very well.As a result, Buffett's grades have gradually changed from B and C at the beginning to "full river red". The only special thing is that his typing class is very high.

In the second and third grades of middle school, Buffett even started stealing things with his classmates.They'd go to Sears in town, and "we'd just blatantly steal there, steal stuff we didn't need," Buffett said.He stole a bunch of unused golf balls and kept them in a drawer, never using them or selling them.During that time, Buffett did everything from stealing, lying, pranking, and even instigating his classmates to swim in the golf course pond naked.

According to Buffett, it was "Carnegie Communication and Interpersonal Relations" that changed him when he was young.He was excited to discover that Carnegie was right and that the book would help him "make new friends quickly and easily" and "be popular."From then on, he treated people with sincerity and kindness, and more and more people began to like to get along with him.

As a result, Buffett embarked on the road of development from a bad boy to a stock god.

3. Buffett still lives in the old house in his hometown of Obaha, which has become a signature move of his frugal outlook on life.However, in fact, he has 5 houses, but only lives in two of them.

4. The legend of Buffett’s investment in Coca-Cola is widely known. What is less known is that the former general manager of Coca-Cola, Donald Keogh, and his family were the neighbors of Buffett’s family more than 50 years ago.Buffett was a fledgling investor at the beginning of the year. He went to Keogh's house several times and repeatedly lowered the "investment threshold" to entrust funds, but he was still rejected in the end.

5. Most stockholders have not seen the CE of CICC for more than ten years, but when Buffett was 10 years old, he and his father visited Sidney Weinberg, who was at the helm of Goldman Sachs.Sidney hugged Buffett as he was leaving the house and asked, "What's your favorite stock, Warren?" Buffett would remember that line for the rest of his life.68 years after this embrace (in 2008), he invested/aided Goldman Sachs in the financial crisis.Like the bottle caps of Coca-Cola and the Washington Post when he was a teenager, the relationship between Buffett and his investment objects can often be traced back decades.

6. Buffett's father is a member of Congress, and his political style is the same as his son's in the investment circle: lone wolf doctrine.Do not form too many cliques in the political/investment circle, and use political/investment ideas (rather than interpersonal relationships) to determine the choice of votes/stocks.

7. Buffett was also obsessed with technical analysis. He read Garfield Drew's book on odd-lot trading methods three times, and also studied books by Edwards and McKee.Buffett didn't believe he had found the "truth" until he discovered Graham's "The Intelligent Investor".

8. Buffett is known not to invest in technology stocks.What everyone does not know is that the two dark horses in the IT industry, Intel and Microsoft, are both related to Buffett.

In 1991, the then editor-in-chief of the Washington Post introduced Buffett and Bill Gates at a picnic held at Bill Gates' parents' house, and their friendship began since then.Buffett claims that he and Bill Gates are a strange combination. He once praised Bill Gates like this: "My ability is not enough to comment on his achievements in technology, but I think he has a superior business mind. If Bill Gates sells hot dogs, and he will definitely become the king of hot dogs. He is an invincible figure, and if he is in my line of work, he will also be outstanding. But on the contrary, I can’t do his business. Bill Gates Is a good friend of mine, who I think is probably the smartest guy in the world, and I have no idea what those little things [computers] can do."

In the earlier 60s, Buffett made a friend, Bob Noyce, the founder of Intel INTEL.Noyce was working at Fairchild at the time.Those who are familiar with the history of Silicon Valley know that Fairchild is the genius incubator of Silicon Valley, and AMD and Intel were founded by Fairchild.Although Buffett admired Noyce, he did not invest in the great company Intel that was born around him.For Buffett, the margin of safety is not just talk.Sun Wukong draws a circle for Tang Seng with a golden cudgel, and leaving this circle is dangerous; Buffett, who strictly abides by the margin of safety and ability circle, and is not tempted by the outside world, must be more worry-free than Tang Seng if he goes to learn scriptures.

9. Despite his low-key style, Buffett is actually a master of public relations.In the 70s and [-]s, he appeared on "Forbes" magazine, appeared as a hero in the super best-selling book "Super Currency", and entered the board of directors of "Washington Post", all of which made him shine.When the business reaches a certain level, money alone is not enough. As the son of a member of Congress, Buffett knows this very well.

10. Buffett likes to send a letter to shareholders every year, talking about Berkshire's business situation in the past year and some of his own views; and his old partner Charlie Munger also has the same habit.Their letters to shareholders are available for free download on Berkshire's official website.Someone summed up the writing styles of the two, saying that "Buffett speaks complicated things so that everyone can understand; while Charlie is more like a doctor of philosophy, explaining simple things profoundly and thought-provoking."

Gossip is coming
Do you think the editor will end this issue so easily?How can we show our bad taste without some gossip?

In September 2013, the 9-year-old billionaire and tycoon George Soros, known as the "financial giant", married his 83-year-old Japanese bride. This is his third marriage.Although Buffett is much more low-key than Soros, Buffett's marriage is also full of drama.

In 1951, after graduating from Columbia University's Department of Economics, Buffett returned to his hometown of Obaha, where he fell in love with his wife Susan Thomson at first sight.Although he is very talented in making money, he can't win the girl's heart.The lovely Susan was in a relationship with a handsome Jewish guy at the time, but she had no time to talk to Buffett, who only "bragged".

But how could the persistent and shrewd Buffett easily give up his beloved?The following tricks are very worth learning for young men. The girl ignores me, so what should I do?Find the right direction to dig the wall!So, Buffett decisively changed his strategy, started on his father-in-law, and brainwashed him every day: Look, the man your daughter is dating now is Jewish. Although you don't like it, Susan likes it.Am I half-Jewish, or a real Christian, which meets Susan's requirements as well as yours, doesn't it?And that kid is very poor. Not only do I have a good family now, but I will also make a lot of money in the future. Just look at my father and you will know, right?Besides, we are still neighbors, so you can rest assured if you know everything!

Just like this back and forth to build a relationship with the father-in-law, Susan's father's heart slowly turned to Buffett.So I began to encourage Susan and Buffett to try dating: "He is a good man, daughter, just try to understand him, if you fail to make friends, you will not lose!" Susan, as a respected Dad's good girl also began to slowly accept Buffett under Dad's serial bombing.Fortunately, after really getting to know Buffett, they quickly fell in love, and the "stock god" finally embraced the beauty.

Buffett and Susan's wedding day

However, although the prince and princess will be together happily, they still have to live a life of daily necessities.After marriage, Susan became a full-time wife, fully taking care of Buffett and his family's life.But Buffett is so focused on his career that he pays less and less attention to his family.After more than ten years of marriage, Susan became tired of taking care of her children and her husband every day, and wanted to pursue her youthful dream of singing.However, this song can sing a problem. Susan, who has left the family, is more and more unwilling to be bound by family chores, and even proposes separation in the end!In this way, in 1977, after 25 years of marriage, the 45-year-old Susan made up her mind and moved to San Francisco alone, leaving Buffett alone in astonishment.

Therefore, men, even if they get married and have children, they still have to take into account the emotional needs of their wives.Otherwise, no matter how rich you are, you will not be able to keep a heart that wants to leave.As for women, you must never give up yourself for the sake of your family. Your career will always be the preservative for your life.

Although Susan left, she still cared about Buffett and understood that without her care, this man's life would be a mess.So, she did something that is difficult for married couples all over the world: find a mistress for her husband, and she found more than one mistress.

But Lao Ba is really not a person addicted to beauty, what he needs is a helper who can manage his life.Astrid Monks is such a helper. She was originally a waitress in a restaurant, but later she smoothly integrated into Buffett's life and gave him meticulous care.

Do you think there will be bloody plots such as the junior three fighting the main room?wrong wrong wrong!The life of Buffett's threesome has always maintained a very strange harmony: no matter what kind of formal occasions Buffett attends, he always brings his first wife, Susan, and gradually it becomes Buffett speaking on the stage, and his wife and cohabiting girlfriend sit together. Clap below.The king and queen are living happily together again!

In September 2004, Susan died at the age of 9.It wasn't until 72 that Buffett officially married Estelle Monks.At this time, Monks has been silently guarding Buffett for nearly 2006 years.For Buffett, Susan is his spiritual destination, and Monks is an indispensable part of life.

There is no success or failure in a relationship, being with the one you love is happiness.Old Ba's character is not worth learning completely, and not all women can be as magnanimous as Susan.I hope that all friends who learn to invest will cherish their possessions and get a win-win situation of wealth and emotion!

(End of this chapter)