Chapter 5 Lecture 4 Even the stock gods cannot escape the financial crisis

Even in the current financial crisis, Buffett still sticks to his value investing strategy. It is impossible to draw accurate conclusions by evaluating Buffett's investment success or failure based on short-term gains and losses. With the outbreak of the financial crisis in the United States, the global stock market plunged wildly. Buffett, known as the "stock god", held funds and happily started his trip to buy bottoms.However, according to authoritative surveys, Buffett did not sit on the sidelines in this financial crisis. His own losses were as high as 16.3 billion US dollars, ranking third in the list of top ten losers in the US stock market.So, how should we treat this "stock god" who suffered heavy losses?

Buffett believes in a long-term investment strategy, but this investment strategy must be based on a long-term and stable stock market in order to make money.So today, don't look at his loss of 16.3 billion at this moment, but look at how much money he can make in the past 50 years.You should not compare with his highest point, but compare with his original investment, and you can see how much money he can make.He is a person who looks at the long-term, so he cannot judge his merits and demerits by how much he loses in the short-term.I believe that as long as the financial crisis is resolved smoothly and the stock market returns to normal, he will definitely make a lot of money, that's for sure.And that's why he's buying a lot at this moment.If it rebounds as he expected, then he will make a lot of money, and maybe he will be the one who makes the most money.

In fact, what Buffett understands is understood by every business school graduate in the United States.In the United States, there are only two schools that teach MBA through case teaching, one is Harvard and the other is the University of Virginia. Except for these two universities, other universities do not use case teaching, and do not talk about cases at all, and all other universities The textbooks used are the same, the exercises used are the same, and the standard answers are all the same. Therefore, after every MBA student in the United States learns, he understands the same things.Therefore, Buffett understands the same things as others, and the level of financial analysts he employs is exactly the same as my students.

The reason why he can make money is that he is different from ordinary people because he can endure loneliness, which ordinary people cannot.After he estimates the real value, he must wait until the stock market plummets before entering the market, and he will not enter the market until the stock price of this company plummets, otherwise he would rather not do it.And this person is very pragmatic. I think his investment philosophy is that he never believes in myths and high technology.The so-called high-tech here refers to high-tech in finance, such as hedge funds, such as IT Internet, such as the wealth myth of investment banks, he does not believe in them all, he only believes in Coca-Cola, he only believes in General Electric.

Because these traditional companies use mathematical models to be the most accurate. This kind of mathematical model cannot be considered high-tech, investment banks, or even hedge funds, but only traditional industries. The money is invested in traditional industries.Moreover, each stock has estimated its true price, and after being bearish, he will enter the market when the market price is lower than its true value. Therefore, in the long run, he will make money. There is no doubt that Buffett has superhuman patience and perseverance.At the same time, it has another side of being decisive.When the financial crisis hit, Lehman Brothers asked Buffett for help, but Buffett was unmoved, but when Goldman Sachs called, Buffett, who was drinking Cherry Coke, finalized the $5 billion investment in just a quarter of an hour plan.How does Buffett view business?How do these perceptions affect his investment decisions?

He won't buy IT, what kind of new type of finance such as hedge funds, he doesn't play, he thinks it is bad.In fact, he was right - the IT bubble is more, the wealth myth of investment banks has also been shattered, and the myth of hedge funds has also burst. He bought a lot of stocks this time, including Bank of Merrill Lynch, General Electric, Goldman Sachs, and even a tool manufacturer in Japan, another energy company, and Huiyuan Juice, all of which are traditional companies.Why did he buy it at this time?He believes that on July 8, 1932, the Dow Jones index hit a new low in the world, but in March of the following year, after Roosevelt became president, the index immediately rose by 30%.And throughout the 20th century, although the United States experienced two world wars, the Great Depression, and multiple financial collapses, the Dow Jones Index climbed from the initial 66 points to 11,497 points.What is the Dow Jones Index?The Dow Jones Index is a traditional industry, including banks, including Coca-Cola and General Electric.What he bought was the traditional industry dominated by the Dow Jones Index.He firmly believes that in the long run, the Dow Jones Index must go up, so it will fall temporarily when the economy is in recession, so now is a good time to enter the market, and it will definitely rebound in the future.

Chinanews.com, June 29th: Zhao Danyang, a Chinese investor known as the "Godfather of China's private equity funds," recently bid for a chance to have lunch with "Stock God" Buffett at a record-breaking transaction price of more than 2.11 million US dollars.This is the second time a Chinese has won the bid since Duan Yongping, the founder of Bubugao Electronics Co., Ltd., won the lunch with the stock god in 2006.He can accompany up to 7 friends to have lunch with the stock god in New York. According to Hong Kong's "Ming Pao" report, Zhao Danyang is the general manager of "Children's Heart China Growth Investment Fund".In the "Lunch with Buffett" auction, he bid $2.11 million and became the winner.He will have dinner with Buffett at the Smith & Wollensky Steak House in New York and ask the stock gods about investing, but Buffett will not disclose which stocks he is buying and selling.

The five-day annual online charity auction was held on eBay with a reserve price of $25,000.A total of 9 people participated in the bidding. When the auction entered the final stage, two bidders competed fiercely, and the asking price of both parties increased by 7 times in just two hours.Zhao Danyang's winning bid was more than 80 times higher than the reserve price, and more than twice as many auction winners as last year. An eBay spokesman said this year's auction was one of the most expensive in the company's history and the most expensive online charity auction in history. "Lunch with Buffett" began in 2000, and this year is the fourth consecutive auction record.The auction was held on-site for the first three years and moved online after 2003.Mohnish Pabrai, a Californian investor who made a lot of money by imitating the investment model of the stock god, won the opportunity to have lunch with the stock god with a price of 650,100 US dollars last year, and cashed out a few days ago.

Proceeds from the auction will be donated to the Glide Foundation, a San Francisco charity that helps the poor and homeless.As the auction took place, foundation employees and board members gathered at a San Francisco hotel to watch the results, all in high spirits.A spokesman for the foundation said: "People were cheering and screaming. According to "Forbes" statistics, Buffett currently has a net worth of 62 billion US dollars, ranking first in the 2008 global rich list.He has pledged to donate most of his wealth.