Life Tutor Author and Copyright: Notes on Happy Life

—— Comments on the Practical Manual of Value Investment (Part II)

Abstract: After learning that Mr. Tang's new book, Practical Manual of Value Investment (Part II), was published, I was extremely excited, so I snapped it up at the first time and couldn't wait to finish reading it. In view of the fact that Mr. Tang has introduced the main contents of the book in Tang's study room, and many other readers have systematically summarized the contents of the book, this paper will not repeat the specific contents of the book, but share some gains and feelings after I read it. This paper mainly includes three parts: origin, harvest and ending. The origin part briefly introduces the background of my attachment to Teacher Tang, the harvest part focuses on sharing my main gains and feelings from reading this book, and the ending part mainly looks forward to a better future.

Part I: Origin

I entered the stock market at the end of 2116, and wandered around the so-called short-term paradise, concentrating on the delivery orders of legendary short-term experts, and hit a wall everywhere in day trading.

Fortunately, with the recommendation of my colleagues, I read Peter Lynch's book "Overcoming Wall Street" in 2119, and I turned to the door of value investment. In the following period of time, I gradually read some books introducing the investment ideas and concepts of Buffett, Munger, Fisher and others, and became more and more firm in Buffett's value investment concept. However, because my IQ level is limited and my business experience is almost zero, although I have a firm value investment concept in my heart, I don't know how to start with the company's financial report.

just when I was in a daze and didn't know how to start studying the enterprise, I happened to see Teacher Tang's "Teaching You to Read Financial Report by Hands". Subsequently, I followed the lead and read and studied The Romance of Baman and The Practical Manual of Value Investment. From then on, the three magic weapons of "Tao", "Skill" and "Device" have been collected, and you can begin to summon the Dragon.

Part II: Harvest

Buffett once said that stock investment actually only needs to learn two courses, namely, how to look at the market and how to evaluate enterprises. Teacher Tang's thoughts are also in the same strain as Buffett's. This book teaches readers how to face stock price fluctuations and how to estimate intrinsic value through theoretical narration and case analysis.

My insights in methods and mentality, coupled with some unexpected happiness, have made * * * isomorphism the main gain of my reading this book.

1. Those unexpected delights

1. I was lucky enough to know Mr. Tang

On the basis of reading the three magic weapons, I felt smoother, more profound and richer in reading the Practical Manual of Value Investment (Part II). For an ordinary person like me, Mr. Tang's Practical Manual of Value Investment (the Second Series) is like a teacher who teaches students how to study and take exams.

If there is an investment school in the world, the value investment school founded by Benjamin Graham is undoubtedly an excellent one. The Babbitt Investment Department founded by Buffett is undoubtedly the most influential department in the value investment college. As the head of the department, Buffett has been committed to publicizing the idea of value investment and told us to study hard. For gifted students, you can get excellent results by listening to the dean's ideas and combining them with your own thinking. However, for ordinary students like us, it is obviously not enough to listen to the propaganda of the old man. At this time, Mr. Tang, as a classroom teacher, stood up and taught ordinary students how to study and how to take exams by constantly outputting words and sharing his own learning experience and methods.

There is a saying in Zuo Zhuan: "There is a virtue in the world, followed by meritorious service, followed by a statement. Although it will not be abolished for a long time, this is called immortality."

Without the book "Practical Manual of Value Investment", many ordinary investors with average qualifications, including me, don't know how long they will have to explore on the road of investment. The investment method shared by Mr. Tang allows us to master the correct investment method better through mechanical imitation and copying homework (comparative case imitation analysis method). So by reading this book, I got to know a popular excellent teacher. Of course, the understanding mentioned here is only my unilateral understanding, but I am very happy to know it unilaterally. Teacher Tang taught us how to invest better with humorous language and how to live better with unique personality charm. It is no exaggeration to say that Mr. Tang is the guiding light on my life growth road.

2. Enhance the cognitive expansion pattern

There is a very interesting sentence in the book. After careful observation and thinking, the rich man's son finally realized that rice was originally produced in rice tanks. This sentence touched me deeply, which was caused by the cognitive limitations of the rich man's son. If he can be more curious, observe and think more, maybe he can draw a conclusion closer to the facts. At this point of writing, I remembered a passage in Zhuangzi:

"Well frogs can't talk to people in the sea, but stay in the market; Summer insects can't talk to the ice, but also to the time; Qushi can't talk to Taoists, but be tied to teaching. Now that you are out of the cliff and looking at the sea, you know that you are ugly, and you will be able to talk a lot. "

The vision and pattern of "well frog" and "summer worm" are limited by environment or life length. Although, like them, people's horizons and patterns will be limited by the environment and the length of life, we can break the restrictions, broaden our horizons, enhance our cognition and broaden our patterns through reading and learning.

Mr. Tang's pen name is "The Tang Dynasty, which is always curious". Perhaps it is that insatiable curiosity that makes Mr. Tang, who has never been to college, explore, learn, broaden his horizons and break the limitations of cognition. No matter in the investment field or in our daily work and life, we should learn from Mr. Tang, always keep a curious heart, constantly explore new knowledge, actively try new things, and gradually change from "well frog" and "summer worm" to "disciple of Tangmen who can speak Dali".

3. Life also needs to make choices

Investment is to compare and choose between different investment targets. By the same token, life is constantly comparing and choosing. From the choice of outlook on life, world outlook and values, to the choice of major or work industry, to the choice of free time every minute of every day, life is a constant choice. Some people pursue fame and fortune, some people pursue great wealth and great wealth, and some people pursue peace and security. Some people choose financial industry, some choose manufacturing industry, some choose education industry, and some choose civil servants. For spare time, some people choose to watch variety shows, some choose outdoor sports, some choose to read books, some choose to play games, and some choose to have dinner and chat with friends. In short, everyone has different life choices.

When it comes to the choice of life, Mr. Tang once said in WeChat official account's message that the changes of the times are beyond our expectation, and it is easy to make the mistake of linear extrapolation without knowing it by looking at the future with the eyes of the present.

Mr. Tang believes that no matter life, investment or children's education, we should let interest be the guide. If luck explodes and interest happens to meet the wind, it will be icing on the cake and realize the so-called "Davis double click". Even if luck is bad and interest perfectly avoids hot spots, at least you can gain "a thousand dollars is hard to buy and I am willing". However, if you give up your interest and concentrate on chasing hot spots, once you are unlucky and step on the wrong rhythm, you will encounter "Davis double play", and you will lose the game and be wronged for life.

I quite agree with Mr. Tang's point of view. I hope I can follow Mr. Tang and make continuous efforts to become a leader in my interest as soon as possible.

2. Gains from methods

1. Valuation is comparison

After reading this book, I was deeply impressed by the view that "Valuation is comparison".

Teacher Tang said: Valuation is to compare the real rate of return between the optional investment objects, just like choosing the obviously larger one between two apples. Money is the same, and the comparison is over.

Although it is a comparison, don't get into the data and get out. As an investor, we only need to make a rough valuation of the future operating net cash flow of the enterprise. That is to say, Mr. Tang has repeatedly stressed that when valuing enterprises, it is better to be vague and correct than accurate. Buffett has an image metaphor. When a person who may be 311 pounds or 321 pounds comes over, we can see at a glance that he is a fat man, although we don't know how much he weighs. Munger also said that he had never seen Buffett holding a calculator to calculate the discounted cash flow of an enterprise.

2. rapid valuation method in Tang dynasty

"it is better to teach people to fish than to teach them to fish."

how to estimate the intrinsic value of an enterprise reasonably is a complex and simple problem.

Teacher Tang is respected because he is willing to share his fishing process without reservation and teach everyone how to fish, instead of simply showing his fishing achievements.

Buffett never explained his valuation method clearly, he just said the principle of valuation. On the basis of Buffett's investment philosophy and valuation principles, combined with his own practical experience, Teacher Tang put forward a very practical rapid valuation method (hereinafter referred to as Down's rapid valuation method). From the perspective of investment, the rapid estimation method of Tang's is undoubtedly one of the core contents of this book.

Tang's quick estimation method can be summed up in only one sentence: after three years, you can buy a position that can earn 111% at a reasonable valuation price, and you can get a 31% discount for highly leveraged enterprises. For cyclical enterprises, Mr. Tang shared the application and practice of Schiller's price-earnings ratio valuation method through two cases of Focus Media and Shaanxi Coal Industry.

I believe that many disciples of Tangmen, like me, are on the road of slowly understanding and mastering Tang's fast estimation method by reading Mr. Tang's books and WeChat official account, and are creating more and more wealth for themselves while gaining happiness and comfort. How beautiful!

3. Don't worry too much about sunk cost

In the case of Focus Media, Mr. Tang said that "buying and selling does not depend on whether the stock is floating profit or floating loss, nor on how much time and energy I have spent on it. The key is to compare the market value of the stock with the equivalent cash when the error is determined."

I quite agree with Mr. Tang. Teacher Tang clearly explained the concepts of sunk cost and opportunity cost in this easy-to-understand vernacular. When we make a decision, we should, like Mr. Tang, completely ignore the sunk cost and seriously consider the opportunity cost.

The floating profits or losses of stocks are indeed the demons that many investors can't get rid of. For a long time in the past, I have been influenced by the demon of floating profit and floating loss, and even when I make a buying decision, I will be influenced by the last selling price. I believe that everyone, like me, after reading this passage, will completely get rid of the influence of floating profits and floating losses and embark on the right investment road.

many people will be troubled by similar demons in their lives, and they are stubborn about the time and energy they have paid, and are unwilling to make timely adjustments to their decisions. Even many entrepreneurs will encounter such troubles in corporate governance. When making decisions in work and life, you can also refer to Mr. Tang's point of view to get rid of the impact of sunk costs and make more rational decisions.

4. You don't need to take over the investment

The chapter "You don't need to take over the investment" touched me the most. Before reading this section, I always thought that no matter whether it is speculation or value investment, in the end, it is only through the rise of stock price that the difference between buying and selling stocks can be earned, but value investors will buy when they are undervalued and sell when they are overvalued by analyzing enterprises. Taking LU ZHOU LAO JIAO CO.,LTD as an example, Mr. Tang boldly assumed and carefully verified, revealing a phenomenon of subverting cognition. If you invest in an excellent enterprise, and are lucky enough to catch up with the long-term bear market, and the stock price continues to fall, you will make amazing gains and even be listed on Forbes' rich list. Perhaps you will be surprised when you hear this conclusion, but if you look closely at Mr. Tang's verification process, you will feel that this is indeed the case. It's better to listen to your words than to study for ten years. After reading this chapter, I was deeply shocked and more confident in value investment.

in addition to investment, this chapter also has a wide range of guiding significance to life.

In many cases, objective facts are often quite different from our intuition, but people mostly like to make decisions based on intuitive judgment. In fact, we only need to carry out some uncomplicated objective analysis, and we can pierce the window between intuition and facts, draw more reliable conclusions, and avoid the adverse effects of making decisions by intuition, so why not?

5. Make rules and strictly enforce them

Teacher Tang said that "investors need clear and even rigid rules".

the rules don't need to be brilliant, tall or fancy, but they must be clear. As long as it can take advantage of Mr. Market, you can set your own price. To illustrate this truth, Mr. Tang shared an example of Chu Shijian, the former chairman of Hongtashan Group, planting oranges in contracted barren hills. Chu Shijian set the size of digging holes for farmers, and said in an interview with the media: In fact, there is no scientific basis. It is okay to be a little bigger or smaller than this standard, but without this standard, farmers may be very wrong. This is also true for investment.

rules have been made, and more importantly, they are implemented and implemented. People are not machines, they have feelings and are easily influenced by the environment. Especially those investors who think they are smart, they often make flexible adjustments to the rules according to the actual situation. Even those who admit that they are not smart enough will inevitably be influenced by recency effect over time and easily change or even forget the rules they have already set in their hearts.

I remember that Mr. Tang shared it in WeChat official account's message in Tang's study room. The best way is to write it down and execute it mercilessly when the trading point in the rules is triggered. Perhaps this is the soul of the word "dull".

6. The macro environment is not predicted

Investment does not need to predict the macro environment. Teacher Tang said that macro prediction is waste paper. Buffett has repeatedly said in public that he does not look at macroeconomic forecasts.

That's true. The macro environment is beyond our prediction and influence. Macro factors will indeed bring obvious market fluctuations in the short term. What investors should do is to lengthen the investment cycle and let the good and bad effects brought by macro factors hedge each other. Looking at the extended cycle, many short-term violent fluctuations will appear very gentle. Numerous successful investment masters have helped us explore this broad road to wealth.

Mr. Tang's point of view is also of great guiding significance to our lives.

if you look from a distance, you will feel that the wind and waves are small, but if you volley, you will know the sea level. No matter how magnificent the historical picture is, how thrilling the historical moment is, as long as the time is long enough and the distance is far enough, it may eventually turn into an understatement in the history books, and even gradually be forgotten as time goes by. No matter how small.