read a good book and would like to share with you: "5 Truths I Realized During Lunch with Buffett". The book was written in 2014 by Guy Speer.
Guy Speer's life story
Speer is a top student of Oxford and Harvard, after graduation he entered Wall Street and worked. But in the first few years, the work on Wall Street, in the author's words, was to go deep into the tiger's den.
Speer's first job was in an investment bank. In this investment bank, the only way to realize its value is to facilitate transactions.
It turns out that good deals are usually snatched up by big investment banks like Goldman Sachs and Morgan . The small investment bank where Speer works can make deals by finding some very sensational opportunities and selling them to The naive, hopeful and uninformed masses.
What made Speer even more painful was that his Oxford and Harvard degrees were worth little more to his employers than certificates to adorn their deals and documents.
was even close to being implicated in securities fraud in the end. It made Spier very painful for a time. In order to escape the need, he went to the park to play chess with people every day at lunch time to relieve his worries. After
, Speer also read " Smart Investor " in a bookstore by chance, and read the biography of Buffett . After a series of transformations and introspection, he embarked on the right path of value investing.
The first half of this book is about Spear's whole growth story, which is very exciting and interesting. One of the links that made me feel particularly interesting was the opportunity to prompt Speer to reshape his own thinking. He actually went to listen to a Tony Robbins success speech.
"Tony Robbins is a self-made billionaire with a successful career. He is the most successful world-class potential development expert today." flavor, its courses are also full of various brainwashing. As a high-achieving student who has received elite education and has come all the way, Spier refused at first. In short, by chance, Spier went anyway.
When a person is in the abyss, even this kind of success can be a positive force to get him back on track.
Speer's take on this is that it's a wise approach to life: as long as there's an opportunity to do something that's uncertain but has the potential to succeed, it's worth trying.
Recalling that when I first heard about stock investment, I naturally thought that gambling was dangerous. But the opportunity to promote cognitive transformation also stems from this trying mentality.
Robbins' success theory inspired Spear to re-examine his elite education, regain a positive attitude, and start to learn from some truly great and successful people in the investment field.
Speer founded his own private equity fund, -Sapphire Fund, in 1997. The initial investment came from one million dollars from his father. After a period of operation, plus additional investment from Speer's father, and later joined by two of his father's business partners, Sapphire Fund opened with a net worth of $15 million.
Until 2014, Sapphire Fund’s accumulated income was 463%, with an annualized rate of about 10%; The S&P 500 Index had a cumulative income of 167% over the same period, with an annualized rate of about 2.9%; , annualized at 9.7%.
is not very powerful in terms of 's absolute income, but is already very good in terms of relative income. You know, during this period, we experienced the Internet bubble in 2000, the "911" incident in 2001, the financial crisis in 2008 and so on.
In June 2007, Speer and investment guru Monish Pabrai bid $650,100 for the opportunity to have lunch with Buffett.
Warren Buffett’s fanatic
The title of the book is “Five Truths of Epiphany”, but it’s not epiphany. Before the lunch, Speer was already a big fan of Buffett.
Speer is an almost pixel-perfect imitation of the iconic Buffett, following what he learned from success studies.
“I keep reading about him, researching the stocks he buys , trying to replicate his greatness as much as I can. I’ve been visiting Omaha for his corporate year for over a dozen years before we filmed a charity lunch I will."
Speer also joined a Buffett fan club called "Huang Burke".
Later, Speer moved to live in a secluded small city. The layout of the office tried to imitate Buffett, and the way of handling interpersonal relationships also came from learning Buffett. In the end, he even learned how to play bridge.
In short, Speer not only learned Buffett's investment philosophy, but also thoroughly learned Buffett's life attitude and philosophy of life, and reshaped his heart in the process and gained happiness.
In the growth of life, the luckiest thing is to find a lighthouse that can bring light to oneself.
5 truths
truth 1: stick to your principles
stay away from leverage , this is the most important principle.
Speer recounts how he survived the 2008 financial crisis, when his fund, , fell nearly 50% in a year and “bleeded from every pore”. It was only at this time that
deeply realized that Buffett's biggest advantage was not only his amazing intelligence, but also his structural advantage: he had permanent funds.
Buffett said that when investing, character is more important than IQ. But Speer learned from his own experience that even more important than character is the structural advantage of having permanent capital.
Truth 2: Stay away from crazy crowds and noise
Buffett said that the most important quality for an investor is to remain rational.
But being rational is not easy. We cannot expect to use consciousness to control the subconscious mind, and to overcome irrational tendencies through brainpower is difficult to achieve.
just admits that he cannot fully control the brain, accepts that the brain is not perfect, but there are ways to improve the situation.
Self-control is difficult, so change the environment to restrain yourself. It is difficult to maintain concentration, so eliminate all possible disturbances in the surrounding environment; it is difficult to control diet, so do not let food appear at home.
The same goes for staying rational, staying away from irrational situations. For example, Buffett lives in Omaha, minimizing unnecessary meetings and so on.
In short, through a series of physical isolation, create a rational environment for yourself, which helps to maintain rational thinking.
Truth 3: Always keep innocence and curiosity
very much agree with the author's sentiment: If your life outside of investing is in trouble, in chaos, or inhibited, then it is difficult for you to make good investments.
Investment is not everything, the pursuit of happiness is our real goal.
Buffett's " tap dance to work" is what successful investing really looks like.
Make yourself happy and make investment work full of fun, which is the state worth pursuing.
remembers that for a while, seeing Lao Tang reading a lot, he had to finish reading the books that Lao Tang had recommended, but at his own speed, he couldn't catch up at all, and he was very anxious because of this.
Later, I heard Teacher Tiannan say that learning from a master is not necessary to become a master, the most important thing is to become a better self.
indeed, maybe neverIt is far from keeping up with Lao Tang's reading volume, but it doesn't matter, reading happily and gaining something is enough. The purpose of reading is to become a better self, and the purpose of investment is also to obtain a happy life, not for competition.
Truth 4: Cultivate and maintain valuable interpersonal relationships
The person who helped Speer the most was the investment master Monish. Here's how Speer described him:
"I saw how focused he was on building a real friendship first, and how he was constantly trying to give, not take. He wasn't pushy. He didn't impose. He seems to be asking himself: What can I do for them? Sometimes he will encourage you or give you advice; sometimes he will introduce you to other people; sometimes he will Give you a book as a gift, or euphemistically express your opinion of you."
"I have seen that Mohnish has built an amazing network of people through these practices. People bless him and are willing to find ways to help him , to thank him for his kindness. This incomparably powerful effect of gathering firewood can only be obtained by the giver, not the taker.”
Always be a giver in interpersonal relationships. All the givers in the book study hard.
Truth 5: Be true to yourself
The last epiphany is very philosophical.
The stock market is a magical place that can pierce all our weaknesses, such as arrogance, jealousy, fear, anger, self-doubt, greed, infidelity, cowardice and so on.
If you want to be successful continuously, you must face your own weaknesses and maintain a state of extreme honesty and introspection at all times.
Buffett's relentless criticism of his own mistakes is a reflection of this extreme candor.
Knowing your circle of competence clearly, not deceiving yourself and others, and being honest with yourself is the foundation of our survival in this market. If we habitually deceive ourselves, the building of investment will eventually collapse.
Structured and systematic investment methods
Speer also put forward some specific suggestions, which are very practical. Of course, this is suitable for him, and we can use it as a reference.
establishes a more structured and systematic investment method for himself, which can make his behavior more regular and predictable, and reduce the complexity of the decision-making process. Given the limited processing power of the brain, it makes sense to simplify everything.
can design some key investment processes for himself, including which materials and reading order to read when finding stocks, who to discuss with, how to trade stocks, and so on. Form some action processes and steps, and there will be no problems in the general direction.
Speer's 8 rules for investing:
Rule 1: Try to look at the stock price as little as possible, if you can't do it yourself, then find a way to physically isolate it.
Rule Two: If the promoter can personally benefit from my purchase, don't buy it.
Rule#3: Don't talk to company executives, no matter how attractive, persuasive, or agreeable they may seem.
Rule 4: Research investment information in the correct order, starting with the most objective and official information, leaving the least objective to the end, for example, read the research report of a brokerage at the end.
Rule Five: Discuss your investment ideas only with people who have no selfish interests. The goal of the discussion is not to get the right answer, nor is it a quiz, but to share experiences and information.
Rule Six: Never buy or sell stocks when the market is open.
Rule Seven: Make sure you buy enough stock for you, even if you buy it and lose half, you are willing to hold it for two years.
Rule 8: Do not discuss your current investment to avoid interfering with your rational operation when you may regret it later.
last line of defense: checklist
checklist ideas, comeFrom Atul Gawande, professor of surgery at Harvard Medical School. In his words, "rescue work has become extremely complicated, and even our top experts cannot avoid some small mistakes." Professor Ge Wende described an intensive care specialist at Johns Hopkins Hospital, The job of Doctor Pronofoster. Dr. Pu took a page and listed all the necessary steps to avoid infection. These steps are "dumb style", but in fact, doctors will skip at least one step in at least one third of patients. After
started using the checklist, the hospital has reduced many infection deaths.
In fact, this is a set of working methods used in many fields.
For example, when I was working in a design institute, the drawings of a project had to go through a "three-level proofreading" process before the drawings were produced, and each design institute would also have detailed proofreading rules, which is the "checklist" of drawings .
Designers’ drawings should first be sent to proofreaders for proofreading to ensure that there are no low-level mistakes such as mistakes, omissions, collisions, and lacks; It is to be handed over to chief engineer for approval to ensure that the project as a whole meets the design requirements.
The more complex the field, the more useful the "checklist" becomes. For this very complicated field of investment, even top expert Buffett will make mistakes. Summarizing valuable lessons from failure cases and forming an investment "checklist" will help to avoid making low-level mistakes.
Speer and Monish sorted the mistakes they had made into categories, and summed up about 70 items. Before pulling the trigger every time, they took out the "check list" from the drawer, checked each item, and saw See if you missed anything.
But Speer stresses that creating one's own "checklist" is not a job that can be outsourced. What is applicable to others may not be applicable to yourself. Only by starting from your own experience and knowledge, and carefully analyzing the mistakes you have made, can you find out where you are prone to repeated mistakes.
From this point of view, every mistake I make is a precious asset. Just as Buffett nailed the mistake of investing in Berkshire on his forehead forever, although the cost was huge, it was the wisdom learned from it that shaped Buffett's subsequent success.
strives to update his own version of the investment "checklist" every year.
Finally, the book list listed by the author is also very nutritious and worth reading.
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➡From here, go to a better future
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