Since the beginning of this year, the global capital market has encountered many negative factors, including interest rate hikes by the Federal Reserve, shrinking of the balance sheet, and the escalation of the conflict between Russia and Ukraine, which have caused major shocks in the global capital market. Is it a venture investment or a safe haven investment?
The stock god Buffett was once questioned in 2020 that the sword was old and the return on investment was low, but his performance this year has far exceeded expectations. In particular, the Russian-Ukrainian conflict has led to a sharp rise in oil prices, which has caused Buffett's worth to skyrocket by 50 billion yuan. This is the only rich man among the world's top 10 richest who has risen in value this year. The main reason for Buffett's rise in value is that due to Buffett's recent increase in his stake in Occidental Petroleum, which rose 45% in a week in the war, Buffett's worth was once ranked in the top five of the Bloomberg Billionaires Index.
Since the beginning of this year, Buffett has ended his continuous lack of major acquisitions in the past six years. There have been three major acquisitions. One is Berkshire Hathaway's acquisition of insurance company Alleghany for US$11.6 billion, and the other is purchase worth more than 7.5 billion. The U.S. dollar Occidental Petroleum stock recently purchased a $4.2 billion stake in computer and printer maker Hewlett-Packard on April 6, local time, holding about 121 million shares of the company. rose after.
Contrarian investment is a consistent feature of Buffett. After suspending major acquisitions for six years, Buffett began to acquire high-quality companies in large sums, which is also a favorite of investors. This has driven the stock price of Berkshire Hathaway, a company owned by the stock god Buffett, to break through $520,000 per share recently, hitting a record high and ranking first in the list of stocks with the highest unit price in the world. According to Berkshire Hathaway's annual report in February this year, Buffett's Berkshire Hathaway has a huge cash reserve of about $150 billion, waiting for opportunities to invest. The recent large-scale purchases undoubtedly saw an opportunity, especially when the entire global capital market was greatly fluctuated by the conflict between Russia and Ukraine and the impact of the Fed’s interest rate hike and balance sheet reduction, Buffett began to become greedy. Buffett’s well-known saying is: " I am fearful when others are greedy, and I am greedy when others are fearful." Now is the time when many investors are fearful and Buffett is greedy, which can give us a great inspiration for investors in the A-share market.
In the past 6 years, the author has attended Buffett's shareholders meeting in Omaha 4 times, listened to the insights of Warren Buffett and Munger, and introduced Buffett's value investing to A-share investors for the first time. At present, Buffett's value investment has been deeply rooted in the A-share market. Although in the past two years, due to the excessive growth in previous years, high valuations and the impact of the epidemic, many value investment targets have fallen sharply, but this has not been the case. There is no denying the correctness of value investing. In fact, Buffett will be questioned by the market every 4 years, but it has finally proved that Buffett's value investment is the magic weapon for long-term investment victory.
How to view the short-term decline in stock prices is an important part of value investing. Buffett believes that there are three most important factors in value investing. One is the intrinsic value of the company, the second is the margin of safety, and the third is market volatility. That is to say, we must do a good job in value investment. First, we must study whether the intrinsic value of the company is a good company; second, we must wait for a price with a margin of safety, that is, when the market is extremely panicked; To put stock price volatility in perspective.
Graham is Buffett's mentor. Buffett and Graham likened the market to Mr. Market, and the volatility of stock prices reflects Mr. Market's erratic and moody temper. If you focus too much on short-term stock price volatility, you are likely to sell your high-quality chips at the lows and miss future gains. So Buffett once said: "If you can't watch your favorite stocks drop by half without changing your face, you are not suitable for value investing." If you don’t feel happy, it means that you are not really optimistic about it.” Of course, this requirement is too high, and only investment masters who overcome human greed and fear can do it. For us ordinary people, how to recognize the fluctuation of stock price can be said to be the key to successful investment. Many investors become overly optimistic when the stock price rises, and extremely pessimistic when the stock price falls, and even sell high-quality chips at the bottom, which is very unfortunate.
Doing value investing is easier said than done, especially in the current concept of value investing with greater significance. Because after more than a year of continuous adjustment, many high-quality leading stocks have fallen out of value. But at the bottom of the market, even if the stock price is already low, there are still many investors who will sell high-quality chips in fear, which is very unfortunate. These chips are called blood chips.
Templeton, a master of contrarian investing, once summed up the success of value investing and contrarian investing into three elements: the first is to buy when the market is extremely pessimistic, the second is to buy at a price with a margin of safety, and the third is to buy The holding time should be long enough after the investment. Templeton has held shares for an average of 4 years in his lifetime, which is indeed too high for A-share investment, but if you deploy high-quality stocks or funds at the bottom, you must hold it for at least one to two years. Make successful investments. Short-term chasing up and down and frequent trading are the root causes of losses.
The reason why Buffett in the stock market has been able to obtain an annualized return of 20% and a cumulative return of nearly 40,000 times in the past 60 years is because he has been making contrarian investments. Now doing contrarian investing in the war, investing in stocks with large contrarians has once again demonstrated Buffett's investment characteristics, and it is very worthwhile for many investors to learn and think.
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