Andy Xie, China does not Warren Buffett

 In 2007 the old text, for reference only and does not constitute any solicitation or investment advice.
Andy Xie: China has no Buffett
Xie = text May 17, 2007
story of China's current lack of investment in the stock market Buffett value investing are two important elements, one is the valuation and the other is the sustainability of profit model
not unfamiliar. Recently, his name appeared more often. because many people take their success in the Chinese stock market, due to the use of the wisdom of Buffett.
China really emerged a growing number of Palestinian Buffett-style investor? is not the case because the market hit a new high? I thought for a long time, but the opposite answer. imitate Buffett thinks a lot of people, in fact, is speculative. China's stock market is in bubbles and excessive enthusiasm, and that this is the most reluctant to invest in the market, Warren Buffett.
Hong Kong Kam
many people are in the current bull market in this round of big fortunes. Of course, this is an achievement . However, the money would mean close to Buffett it? I doubt it.
investors need to experience the great test of time. Buffett has created in his life, 28% of annual revenue levels, this very growth in 10 years or 30 years, 11.8-fold increase of 1645 times. I know some investors from the bull market that began in 2005, has been made in the 6 times to 10 times earnings. in such a short period of time to achieve such returns is not easy, but it does not transform them into Buffett. Their success may come from skills may also come from luck. In fact, some strong evidence that they fully benefit from the market success trend, that is luck, rather than the individual's investment skills. that make money faster, and go.
1997, the Hong Kong stock market gains across the board the property market, investment climate hot. it seems everyone is to join the stock market or property market, it is few people can concentrate on work during the day. It was not without envy said to me, people spend the money they earned something like designer clothes, while itself as Buffett does not care. While everyone understands the market in such investment is walking a tightrope, but no one believed the bubble burst in front.
At that time, few people can think of, the Thai baht collapse of such a secondary currency will destroy the entire bull market. baht crash caused a In this economic crisis suffered heavy losses, the balance sheet has shrunk dramatically. They are also creditors in Hong Kong, five months after the crisis, they began pulling from the Hong Kong market.
Hong Kong stock market crash in the autumn of 1997, to 1998 reach the bottom of the summer, when the Hang Seng Index has fallen by two-thirds of the higher points. The real estate prices fell by half in the year, when the tech bubble in 2000 after experiencing a brief recovery, but also continued to fall until SARS period in 2003 before bottoming out, the cumulative drop of 75%.
bubble has brought great pain. whole generation of people grew up in a bear market, a bleak future in their eyes. in their own thinking stereotypes to mature age, the experience of the asset prices continue to shrink. This makes their life not dare risk a big risk. This is why now all the craze in Hong Kong property market remains very modest, the price is only about 1997 half the level before the crisis.
market reversal is very slow. developers have secretly at a discount. only centralized location in the financial industry, real estate prices was a marked increase. This is actually a global liquidity bubble part, because the foam makes the hedge funds and private equity investment fund rapid growth. These funds invest in the people earn their first dollar, have to charge 2% management fee, this income to housing prices in neighborhoods where they live soared.
story
similar story in China may be some of China's major cities. soaring stock market and the Hong Kong market a decade ago, surprisingly similar. cities continue to spread the investment in a stock riches myth. which is one of the most talked about stocks is Moutai. A typical version of the legend: a retired all his savings to buy a Maotai stock, now a billionaire. Maotai high stock valuation is speechless, its business volume but also because the stock market boom and rising stock market to expand mm increased the wealth effect on demand for 50 Year Old Maotai.
but I was a little confused, how many of the Maitai 50 Year Old ? Are they in the say this: first, Maotai is China's famous brand; Second, Chinese people like Maotai; Third, with economic development and wealth, people spending more and more Maotai. Therefore, according to the principles of Buffett should be long-term holders of stock.
However, the story is missing the value of Buffett's investment in the two important elements, one is the valuation, and the other is the profit model of sustainability. Buffett's fundamental principle is at the right price to buy a good company. But when a good company's stock trading at 100 times earnings, this is usually a bad investment. good companies and good stocks can not draw parallels.
on Maotai demand in doubt. Maotai a large demand from the hospitality officials. When a commodity phase after by government officials, their prices will soar, because the merchants would buy it at all costs. However, Maotai is high degree of alcohol. globally, taking into account health reasons, a high degree of wine consumption has declined for 20 consecutive years. China will face this trend. to the doctor warned officials not to drink Maotai time, and then look at the price of Maotai it. Although Maotai have a good brand, its value still depends on the company's future ability to constantly adjust itself to adapt to market changes in tastes. It's future is not like most investors thought it would be safe now.
money can change a person. I note that the new upstart class have some unique places. They develop two new tea drinking habits Buddhist peace talks.
of the former, I do not mean ordinary tea, and talk about wine like the French do talk about tea. This is not nothing wrong, but it does bring to market the real effects of aged Pu'er tea prices skyrocketing. you may not put a tea prices and the stock market contact together. but you will see that when the stock market bubble burst, prices will go in tea.
Buddhism is another hot topic. the rich spiritual needs does not have any disadvantages, but it caused statues and other goods the price rise. When you see so many people have a rare Buddhist articles, I inevitably think: Where are all these things before it?
Buffett law in addition to tea and difficult to effectively
Buddha, talking about Buffett is the most fashionable. in the rich past, people would not mind wealth comes from inheritance or the lottery. But after getting rich, people want others to believe that their rich because his special ability. Naturally, those in the stock market Gold in Amoy to put their own stories of people like Warren Buffett, as depicted.
some people do because of intelligence and wealth, but most people just happened to luck mm into the market at the right time. But I am not sure, someone like Warren Buffett have done. China's stock market has not matured to allow Buffett's rules to function effectively.
First, let us look at investment performance. in the split share structure reform, The Shanghai Composite Index reached 2005, about 800 to 900 points at the bottom. Since then, the index has risen 350%. this performance, in part because the first day of listing of new shares to be included in index calculation. Last year in the second half The Government has changed this approach. In addition, due to newly issued shares in the index of large state-owned enterprises account for a large weight, the current index is not greater comparability of two years ago. So, you may not be up in the hands of the stock 350% so much, I estimate the level of return is about 200%.
tripled if the market rises, many high-risk stocks may rise even more. For example, penny stocks (small cap stocks) are usually in a bull market greater increase, while decreases were greater in a bear market. This stock is called high-b value stocks.
b coefficient is a stock relative to the relative volatility of the market. mature markets of the b coefficient of penny stocks about about 1.5, that is, their volatility is larger than one-third of the market. My rough estimate of the result is that China's b value of penny stocks more than 2. so the market rose 2 times, they will rise 5 times.
many Chinese investors like to boast about their rate of return. because they often hold penny stocks, if they return since 2005 of more than 500%, they outperform the market. If you hold a higher risk of stock, their earnings may be even higher. Therefore, high yield investment performance does not mean good. relative to the market as a whole to obtain higher returns, relative to the overall market will bear greater risks.
and b value is a value corresponding to. a good stock selection rather than by increasing the level of risk posed by more than the market average returns. For example, if two steel stock valuation levels in the same transaction, the smart investors will choose the one that better quality. In time, the stock will perform better than the trend. This is a. lot of excess returns of hedge funds claim to be a creator, and thus charge higher management fees ( For example, 2%, while the average level of 0.5%) and profit-sharing (investment income 20%).
facts and this is far from. Recent research shows that good performance of hedge funds rather than a, mainly b effect. For example, many hedge fund investments are concentrated in the hot commodities, penny stocks, or emerging markets, these sectors performed strongly at the macro trend, which all belong to a class b. However, it was that fund managers have chosen the right industry , so that their performance not only from luck. this debate will continue, but in any case, their performance with little to choose good company, but this is a nature.
Chinese investors Buffett to borrow to explain their success, I think it is too early. Buffett's approach is to choose a good company and cheap or reasonable price in the bid. This method is usually resistant to the rapid rise in those hot stock, hot stocks, by definition, because of high valuations. For example, Buffett's approach is not very helpful in high-tech industry. Apple's Steve Jobs in five years ago after the acquisition, its shares rose 10 times. This solely because of his ability to create remarkable new products. Buffett's approach ignores this aspect. This is why Buffett missed the 20th century, the technology stock boom of the 90s.
elected by the stock Buffett generally more stable prices, not faster. Instead, investors obsessed with hot stock. It recommended a stock target price given there is usually several times a year increase, it is hard to be a Buffett-style goal.
whether China's stock often good and bad texture, Qi Zhang Qi down.'s stock market is always changing constantly, Buffett's approach rarely comes into play. Merchants Bank and China Vanke is the ability to continue to generate returns for shareholders of the rare examples. occupy the market by state-owned enterprises more profitable government policy. In the long run, the risk that the government protect the industry is very high. private enterprises usually rely on a founding , and if for some reason this person left, the company will soon be in trouble. These features make the Buffett approach to China's market is difficult to apply. This is why so many investors like Warren Buffett talking about the same time, short-term operation is carried out.
Buffett's approach is to achieve a. It only requires a large number of listed companies in mature markets. U.S. stock market listed companies have nearly ten thousand. never experienced depression (ie, negative GDP growth of more than 5%). On the contrary, the U.S. economy almost every decade in the 19th century to experience a recession. At that time, even Warren Buffett, it is difficult to succeed. great stability to the economy Buffett the opportunity to play a role in law. In this sense, he is made a fortune.
short, I doubt Buffett's hot right now is just a product of the bull market. When the bubble burst, it will not be How many people mention him. When the Shanghai A shares more than 2500 points, the Chinese stock market into a bubble state. bubble has its natural life, which is driven by human psychology. a stock market bubble for three years is possible, and to allow more than 60 times price-earnings ratio, which is 4 times the normal valuation levels.
bubble burst Chinese investors often linked with the government intervention that the government does not interfere as long as the bubble can last forever. This is wrong The. bubble burst on their own. the United States in 1929, is the case in Japan in 1989. Hong Kong's crash was caused by external interference, the technology bubble of excess capacity due to rupture in 2000. You never know what will break the bubble , but they always break.
Xiaonian: Why did China not Warren Buffett?
Original:
According to The net worth of the world's richest man, Bill long occupied this position. Gates fell to third, the second win for the Mexican telecom tycoon, Li Ka-shing the richest Chinese ranked eleventh.
the world's richest 10 people, Indians 4, 2 Americans, Mexico, Russia, Sweden and Germany each have one seat. In more than 10 billion USD out of the family property in 1125, China has 42, while 22 more than last year , but can not be compared to 469 in the United States, is also lower than India's 53. continental championship ranked the richest man in the Forbes 125, followed by India's Mittal, the richest man Bill Gates ranked fourth. visible super- Regal generation and economic development in a certain degree of relationship, but not the decisive factor. the United States as the standard for comparison may be not appropriate, more meaningful question is creating rich, of course not the goal of economic development, rich community is certainly more of a good thing. in the voluntary trading market economy, enterprises must create value for society in order to sell products and services, sales income from entrepreneurship profit and the accumulation of personal wealth. Buffet 620 million from his share of value creation for shareholders, the shareholders vote the way monetary recognition of his contribution. Similarly, Microsoft's software has greatly improved the use of computers efficiency, Gates is only 58 billion U.S. dollars created by Microsoft, a small part of the social value.
recognize the economic and social development, personal role in promoting the risk for those who dare to give full recognition and adequate financial compensation, only way to stimulate imagination and creativity of individuals, while maintaining their potential to play a fundamental way of social vitality. any society are few pioneers, followed by many people, the public how to treat minorities and how to institutionalize incentives pioneer pioneer to a large extent, determine the path of social development.
philosophy of traditional Chinese society is meet the majority of virtue, discrimination and repression as the pioneer of a few, so conservative and backward and ignorant with our two thousand years. in the Chinese context, the a class, businessmen in the bottom, the highest tip of the pyramid is a former imperial officials.
Max. Weber pointed out that the Confucian ideology of contempt for the mainstream business and profit, the modern capitalist mode of production can not be produced in traditional Chinese society (Spirit God designated occupation, that the performance of professional obligations, the acquisition of wealth is not only morally desirable, and that believers must be hands-on. Protestant man, confidently make money.
Although many descendants of Weber's research disputes such as the Italian Catholic history have occurred, mm, though not sufficient condition for acceptance, changes in social attitudes is the development of modern economy and a necessary condition for generation. In other words, the new spiritual and ethical may not lead to a new economic form, and the old sense of the environment is impossible to support new production way. from traditional society to modern society in transition, must be stripped and abandoned the traditional concept, but only this is not enough, other aspects have to keep up, especially technology and institutional innovation.
Weber discussed awareness of the impact on the economy, Britain is not alone card, from the Netherlands, the birthplace of modern capitalism, to the late-Switzerland, Germany and the United States, the Protestant countries of the world developed market economy constitute the main body. China's reform and opening up, also the Orient case, if not then Comrade Xiaoping advocated see, they laid the economic basis of the most important long-term prosperity.
Although the original sin the lofty mission entrusted; and from members of the state-owned power company calls for a higher price, but could not see the anger feelings. the same to fulfill their responsibilities for their own interest groups represented by words, why different social responses? could be interpreted as scholars, farmers , industrial and commercial resurgence of the subconscious? or the transformation of society is called a double standard?
CPPCC National Committee members are not philanthropists, they can not and should of agriculture, industry representatives. In the framework of the rule of law, agricultural, industrial and commercial all speak their own words, their fight for the interests of the Group, through fair and transparent game, adjust the interests of the agreements reached. for each of the CPPCC and the NPC the interests of the game provides a good platform for further improvement is to increase agricultural, industrial and commercial places, reduce the is not independent of the interests of the subject, special (or Mirta)? answer not a crop species like the desert, as chosen by the soil and climate caused by, there is no significant relationship with the seed. produce Buffett soil the property rights system, respect for and protection of private property rights, any person who shall not be violated under any name other property, whether property owner is rich or low-income, and regardless of infringement or a guide and support the public good on behalf of vulnerable groups.
Buffett and Bill Gates need to be a social awareness of climate , which recognize and respect the value creators, recognition and respect for the resulting accumulated wealth. the formation of such a social consciousness to have a rational basis, do not ask you much less wealth Bibafeite and Gates, but ask if the Without them, it will be less your wealth? you are willing to live without them are flat in the world? still have them, your life will be better for society? eat and fish can not have both, all the world is not flat Buffett and Gates may have, if the average distribution of income, Pakistan, cover the generation that lost the incentive of adventure and innovation. The most fundamental problem is that what you want in the end, is ;, or The heart and desire, the protection of private property rights will be more powerful, the creator of the value of the higher social status, Buffett and Gates will continue to emerge, not only to bring more new products, new technologies , the new models and new thinking, but also to both of them as an example, donated property, contribute to the community. After all, more wealth, 100 billion, of their material life has no real influence, and represent the value of life further. wealth generated great happiness, than repay the community, which is rich should be rational.
(2008 年 03 月 15 Japanese Economic Observer)
Golden Rock: Why not have China's stock market Warren Buffett? < br> Original:
why the Chinese stock market will not have Warren Buffett?
This article first appeared in the to six thousand, investors sing a song: do not sell dead! from the main stock index from 6000 to 3000, people are quietly singing: do not sell going to die! Many people interpret Buffett's value investing to buy not sell, that is, the long-term holders of stock Buffett made money believers, this interpretation is open to question Buffett.
in the interpretation of Buffett's investment model, make each person to imagine a first financier's image: what brand of clothes to wear? open car? live? What desk? out will bring what? and what kind of person where to eat? and so on. when I come back Description Buffett details of life: where he lived the equivalent of the outskirts of Guiyang, China town, the house was in 1958, spent $ 58,000 to buy, and often wore jeans in the Kentucky Fried Chicken dinner, no computer on the desk, almost do not carry mobile phones, certainly not texting. once a year and the charity auction lunch with Buffett, with 62 million dollars last year, winning the Chinese Duan Yongping, and after dinner for Duan Yongping shock: He on the luxury Mercedes-Benz, the Vampire Slayer especially on a truck! now compare this vision of the financier Warren Buffett and you are a class of people? In fact, Buffett has long been to China, and it is Bill. Gates together, when Like people around like groupies Gates, only one person accompany reticent Buffett, he is later to create When the caddy, the investment wealth is the dream of his youth, his fiancee to marry him talk about the sentence: business model, insurance companies collected premiums to resolve a long-term source of funds, and do not pay interest, as well as premium income, which is cheaper than bank financing tools. the acquisition of Berkshire. Hathaway company, Pakistan Buffett themselves, can have sufficient funds for long-term investment. Berkshire is a reinsurance company, the New York Stock Exchange, Buffett's insurance with the company books derived float two investment business, a stock investment, and second, equity investment, so people can use three numbers to evaluate the growth performance of Berkshire Hathaway, one of Berkshire's market capitalization growth, and second, equity investment income, return on equity investment in third. Unfortunately is to compare these three figures, the average annual return on stock investment is the lowest.
in the 1965-2006 years, the performance of Berkshire stock is the average 21.40%, compared the performance of the S & P 500 Index only 10.40%. Berkshire shareholders dividend in 65 years is $ 4 per share, or $ 4 for 75 years, 85 years jump to $ 52, 95 175 U.S. dollars per share in 2006 up to 3,625 dollars. visible Berkshire Most investment income is realized in the years 1995-2006, and during that time, Berkshire's main business expanded to a number of areas from insurance, equity investment have entered the harvest season. familiar with Berkshire's business people know, Buffett's main decision-making 10 years of equity investment, mergers and acquisitions, integration of sales, and even people familiar with Buffett's investment in oil is the concept of decision-making equity investments, Buffett said, I do not know China, did not understand the oil, but I know the oil. So, Buffett's investment in the oil just a way of investing in oil, a more mobile way. We then Buffett letter to shareholders in 2006 to be circumstantial, Berkshire's investment income in the 1965-2006 average annual growth rate of 17.9%, of which 1995-2006 was 31.7%, which projected ,1965-1995 years, the average annual growth rate of investment income only 12.8% in this period, Berkshire's investment income is mainly from equity investments, equity and equity investment income trading occurred mostly after 1995.
compared these figures, saying that Buffett is a Successful equity investors are more appropriate. Berkshire's main business is insurance, the main risk is to invest, with the support of the insurance float two types of stocks and equity investments of Berkshire's business model, so a more accurate said that Buffett is an investment in the business enterprise. Buffett's business model is illegal in China, with Berkshire's standard business model compared to Warren Buffett should be in China or the China Life China Ping An, But the China Insurance Regulatory Commission approved the insurance companies have not yet invested in non-listed private equity, do not allow the full premium for investing in stocks, so how can China's stock market has Buffett's Berkshire model? course Buffett's investment philosophy and Berkshire's business model is totally different, in my view, effective in the Chinese stock market is stock selection with Buffett's investment philosophy, investment by Soros mode operation (because Soros is macro stock market investors). This raises another question: What is Warren Buffett's investment philosophy?
huge profits with stock investment story to prove that he is ; actually very funny, because Buffett was not the pursuit of huge profits in stocks; with China's economic growth and asset revaluation to support the dead do not sell the opportunities, the three word not follow the Wall Street analysts. K is the ECG chart, Buffett began buying the oil in batches when the investment bank was downgraded several times in the oil, so when there is a well-known analyst said Buffett ; silly. secrets of success: the first vote, the second input, the third or the input!
fact, not only the Chinese stock market will not have Warren Buffett, the U.S. stock market has not Warren Buffett, because Buffett always peace of mind an outsider with common sense and knowledge of spectators, watching the pit of greed and fear. so he here to say