1. What are the important personality characteristics of Charles Munger's success? What can we learn to make ourselves live better and progress faster?
2. How to choose stocks according to Buffett and Munger's system? How does Charlie use the "multiple thinking mode" to conduct business analysis and evaluation?
In this article, I will give my thinking conclusion according to my superficial understanding.
I read this book twice before and found it at sixes and sevens. Looking at it for the third time, the discovery is determined by its logic. The main body of this book is Charlie's speeches in different places, with a total of 1 1 speeches (Chapter 4); Then, the editor added a rough biography of Charlie Munger and comments from Charlie's family, friends and partners (Chapter 1). Brief introduction of Charlie's investment law (chapter 2); Some of Charlie's speeches (chapter 3) and articles published by Charlie in various newspapers and magazines (chapter 5) are extracted sporadically. This leads to the same point of view and the same sentence appearing repeatedly in different places in the book, which leads to reading difficulties.
If you are just beginning to read this book, I suggest you start with the eleventh lecture in chapter four, then read other speeches in chapter four, and finally read other contents.
Question 1: What personality characteristics of Charles Munger are important to his success, and what can we learn to make us live better and make progress faster?
1, intelligent
I have to admit that Charlie really belongs to the kind with high IQ, which makes him learn things quickly and has a very good memory. He not only achieved great success in investment, but also personally designed the building donated to the university library. As ordinary people, we can't improve our IQ through hard work, but the good news is that Charlie took the lead in setting an example and helped us sum up practical models and useful psychological tendencies. We just need to study hard.
2. Curiosity, concentration and learning
I think this is the most important feature of Charlie and my biggest gain this month. Charlie is curious about the things around him, always asking why, and then thinking, studying, reading and pondering intently.
It can be seen that Charlie has entered a state of "flow". After reading this book for the first time, I learned that Charlie always carries a book with him, so that no matter whether the train is late or waiting for someone, I won't feel anxious and waste my time. But I just dabbled in reading and skipped what I didn't know, so I didn't get much, and I never had my own knowledge framework. In fact, Charlie has been reading a book, which is just an appearance. In fact, he is always thinking. Learning without thinking is useless, and dying without learning is dangerous. For a really good book, read it with questions and really study it, so it will be effective. Understand a famous book thoroughly and establish a knowledge framework, and then you can continue to expand and supplement things in the future. For example, this time I thought of Charlie's characteristics. Next time I read someone else's celebrity biography, I'll just skip some in the frame.
I think this spirit is not only needed for reading, but also for doing everything in all walks of life. For example, kazuo inamori, the chairman of Japanese Kyocera and the author of Living Law, studied how to make the products better again and again when he just took over the mess of Kyocera, and finally succeeded.
Step 3 be patient
If you study with curiosity at first, and finally give up because you can't stand loneliness, it is obviously impossible. Charlie is a patient man. He always keeps thinking until he finds the answer. As for me, for example, learning sketch, I have no patience to continue after learning it. What can I do in this way?
4. Willing to change your mind
Is the answer that has been found necessarily correct? If the situation is contrary to our existing thinking, how will we choose?
This is very important, isn't it?
5. Rationality
After reading Investing in Buffett and Poor Charlie, I became more rational. When people have emotions, their actions and decisions are often wrong. These emotions include not only anger, resentment, but even complaints, guilt and excitement. Rationality means that it is wise to look at and solve problems calmly and not be influenced by instinctive emotions. For example, when others are chasing stocks and real estate, they should see the risks; For example, when you see others making money, you don't blindly follow them because of the psychological tendency of jealousy, and you don't regret things outside your ability circle; For example, when life is not going well, don't complain blindly, but try to solve the problem. The book said that Charlie was almost blind at one time, which would bring great inconvenience to a person who loves books like life, but Charlie did not complain, but remained optimistic. He tried various reading methods and began to learn Braille. But then miraculously recovered.
6. Character: integrity and honesty
Charlie is Buffett's partner. I think this is not only because they are all smart, but also because they have the same character: integrity and honesty. Not to mention whether Charlie and Buffett would have achieved so much without these qualities, but I think even if they did, their achievements and ideas would be eclipsed. A person's personality charm is the best education.
Story 1
Lu Li, the author of the Chinese recommendation preface of this book, once asked Charlie to have breakfast at 7: 30. The author arrived on time and found Charlie already reading the newspaper there. The second time he arrived a quarter of an hour early, Charlie was still there. The third time, the author arrived an hour early and sat there at half past six. At 6: 45, Charlie came in with a stack of newspapers in his hand and didn't look up. Later, the author learned that Charlie always arrived early for appointments with others, and he didn't waste time when he arrived. He will take out the prepared newspaper and read it. So in future appointments, the author will arrive early and take a newspaper, and then they will not disturb each other and wait until after 7: 30 to have dinner and chat together. (I like this tacit understanding very much)
Story 2
Once on the plane, when Charlie was in the security check, when his huge body passed the security check, the security check kept ringing, so Charlie came out and went in again and again. When he passed the security check, his plane had already flown away. If it were me, I might fly into a rage. ) At this moment, Charlie quietly changed the next shift, took out a book and sat down to read it. When asked why he didn't take his own private jet, Charlie said that what he wanted to do in his life was to integrate into life, not to be isolated from the world. "As long as I have a book in my hand, I won't feel a waste of time." But if Charlie goes out with his family, he will take a private jet, because she says that his wife has taken care of so many children for him and paid a lot, so he must take good care of her.
Story 3
After reading this book, I often tell myself what kind of sample I am and what kind of sample I can make friends with. As Charlie said, the best way to get the same thing is to deserve it. Charlie's idol is Franklin. Wu Jun once said that his idol was Franklin in Changed. Franklin made a list of virtues for himself, such as "only say what is good for others and himself". I focus on practicing one every week. I want to practice by myself.
Summary: First of all, interest and curiosity (China's education stifles people's curiosity and internal motivation, but it is also possible that the more you learn, the more interested you are), which is the starting point; Then concentrate on studying, study hard and read, which is the process; Then, patience and perseverance will continue; After continuous study, I have the courage to correct my existing ideas; Rationally face all kinds of situations in life and make decisions; Finally, make friends honestly and help each other. Finally, move towards your own success.
From the beginning to success, whether it is fast or slow depends on intelligence and methods.
Question 2: How to choose stocks according to Buffett and Munger's system? How does Charlie use the "multiple thinking mode" to conduct business analysis and evaluation?
1, the essence of the stock market
And every time you buy a jockey club, you have to charge 17%. Therefore, it is difficult to make money. The same is true of the stock market, although the management cost is much lower. The market price of some poor companies is lower than their intrinsic value; But as you can see at a glance, the market price of a good company is several times its intrinsic value. How to start at this time?
2. How to win money-relatively speaking-instead of losing money?
Method one
What do smart people do at the racetrack? They don't bet many times. They usually sit tight. When they find that the price is wrong (for example, when the odds of a good horse are 1 compensation 100), they make a big bet, so they can make money.
What we have to do is to try to find companies in the stock market whose prices (the prices we buy now) are far lower than their intrinsic values (the prices we sell in the future), and these companies are good and have great room for growth. We haven't found much wisdom, but it is enough to find it several times in our life. If we are sure (which requires a lot of study), we will invest a lot of money. Most of the hundreds of billions of dollars accumulated by Buffett's Berkshire Hathaway company are brought by the ten best opportunities.
About conservative investment.
Our common investment method is "open egg" diversification, which is considered safer and less risky, but it also means that only moderate investment performance can be obtained. In fact, the real significance of conservative investment is that the probability of permanent loss is very small. Therefore, neither Charlie nor Buffett is in favor of diversification, thinking that it is not conservative investment. Their method is to look for investment opportunities (not many) with expected returns and less risk of permanent losses, and then try to bet.
Fluctuation is not a risk
If a stock stays for 30 years (compound interest will surprise the final value), what does it matter if it fluctuates a little?
Method 2
Benjamin Graham's method. First, consider how much the whole enterprise can sell to private owners; Then, multiply the score of the stock by the stock price. If the result is one-third or less of the total price, such a stock has a large margin of safety and is worth buying, even if it is a bad enterprise. Such small investors are suitable for using their own funds. Next, I want to watch Smart Investor.
Method 3
Buy quality enterprises. For example, buying their stocks when they are very young. For example, they like the managers of enterprises very much, and they take reasonable measures to make employees more active and intelligent.
Method 4
Surfing model.
(extra-linguistic) competence circle
What is your scope of competence?
3. How to identify a good enterprise? -Charlie's "multiple thinking model" for business analysis and evaluation.
(1), why do you want to use the "multiple thinking model" for investment analysis?
Everything in nature does not exist independently, and so do candidate investment companies. Its quality is affected by various systems, and the systems and models used to analyze it are also affected by various factors. If we only master the model of a subject and try to solve all problems with it, such as economics, then our thinking will be narrow, and some problems that cannot be solved with economics will also rely on the thinking of economics, which will eventually lead to wrong judgments. This is a stupid way to deal with this problem. As the following proverb says:
So Charlie has mastered the field related to the candidate company.
What is wisdom? I think wisdom is to see the essence of life, the truth of the world, make the right choice and deal with problems wisely. Because my life pursuit is to be a wise man, Charlie provided me with a concrete method. Although it seems a bit difficult, what's the hurry? "I don't care if he has endless truth and every inch of happiness." Sleeping every night is better than waking up in the morning. From this case to the other side, I am full of expectations. Charlie's insight into business is not easy to get.
(2) What does Charlie's detailed evaluation process include?
The first is to re-evaluate the company's financial report and their accounting work. He will adjust the figures of financial statements according to a series of factors, including actual free cash or "owner's cash", product inventory and other working capital assets, fixed assets, overvalued intangible assets such as brand reputation and liabilities in the balance sheet. These factors include:
Then, evaluate and understand the competitive advantage of the enterprise and the durability of this advantage from all aspects. Including:
In his long business career, Charlie realized that few enterprises can last forever. Therefore, he looks for enterprises with deep moats, which can ensure that enterprises will not be invaded and will not retain the power of "competitive destruction". For example, the Coca-Cola Company they invested in has a deep and wide "moat", and their long-term holding of shares in Coca-Cola has also brought them lasting and rich income.
Finally, calculate the true value of the whole enterprise, and consider the future dilution to determine the value of each share relative to the market price. The latter comparison is the goal of the whole process-comparing value (what you get) and price (what you pay). Charlie believes that "it is better to buy a great enterprise with a fair share price than to buy an ordinary enterprise with an ultra-low share price."
Through the overall consideration of the above three aspects, there will be an excellent candidate investment company in the end. Charlie won't buy stocks at once at this time, because good stocks must be bought at the right time. He will conduct a more detailed screening, that is, "check before pulling the trigger." The checklist items are as follows:
He will also consider the following factors:
It takes a lot of self-control and patience to carry out the above screening, and Charlie's excellent qualities such as intelligence, concentration, research, patience, willingness to change his mind and rationality have played a role. This screening method will make Charlie unable to act for a long time, but once he is identified, Charlie will make a big bet on the investment target and invest a lot of money. This is the value investment of Charlie and Buffett. They have invested in several enterprises, but it is said that most of the money they earn is in the top ten enterprises.
The next thing to do is to understand Benjamin Graham's investment methods first, and then analyze a company according to Charlie's list.
After watching the poor Charlie series, I learned not to invest for the first time. Then continue to study, expand your ability circle, and look forward to the day when you bet.