Cover caption | "Shadow Tycoon"
Wen | Feng Ma Niu (WeChat public number: Feng Lun Feng Ma Niu)
2020 is destined to be a year of great color. First, the epidemic raged, and hundreds of millions of residents nestled in their homes, causing the largest quarantine in human history. Then Saudi Arabia and Russia fought, oil prices soared, and people who had been plagued by high oil prices for a long time finally found that "oil is cheaper than water" is not a dream. However, the people watching the fire from the other side did not have time to enjoy the benefits of low oil prices, and found that this fire had already burned to their own money bags, and the fire brigade hurried to release water to save the market, but ushered in the FOUR circuit breakers of the US stock market in ten days, making people shout "live for a long time".
In the face of this situation, there are few people who are qualified to say "live for a long time", but one of them must include Warren Buffett, the god of stocks. In 5 months, Buffett is approaching his 90th birthday, which may be the most thrilling prelude of his career. Over the past month, his stock portfolio has lost about $80 billion, down more than 32 percent. In this combination, in addition to Buffett's favorite Apple, Bank of America and Coca-Cola, there are a number of airline stocks, just a few days ago, some investment institutions predicted that this year's aviation industry performance is pessimistic, there will be a large number of airline failures.
On January 1 of this year, Buffett's best partner, Charlie Munger, who is just 96 years old, once said, "If you don't have the ability to withstand a 50% retracement, don't go into the stock market." The future is still unknown, but what has created these two wise old people, in addition to their patience to witness history for decades, there are many giants who have struggled all their lives and sunk down for them to borrow.
1
Warren Buffett was born on August 30, 1930, which wasn't a good day.
On October 24 of the previous year, the US stock market had traded a record-breaking 12.9 million shares, but this activity was just a footnote to the stock market crash and market panic. From this day on, in July 1932, the Dow Jones Industrial Index plummeted, from a high of 381.17 points to 41.22 points, just one foot away from returning to 40.94 points when it was first announced in 1896. During this period, the Dow has briefly rebounded several times, but it is only a "return to the light" stimulated by the "Smoot-Hawley Tariff Act" that cares for US domestic products.
In July 1932, the Dow finally stopped falling, but the horrors of the Great Depression were just beginning to emerge. This year, as many as 5,000 commercial banks in the United States closed down, and the unemployment rate was as high as 23.6%. At the entrance of the restaurant where the soup is free, it is lined up with people wearing coats, leather shoes and gentleman's hats. Waiting for hours for a bite to eat has become the only thing that can be determined in that uncertain era.
But that has little to do with Little Buffett. At this time, he did not have to worry about anything, and everything was solved by his father, Howard Buffett.
Howard was also one of the direct victims of the 1929 stock market crash. In 1925, Howard, the son of a grocery store owner, got married, and shortly after the marriage, he opened a small stockbroking company. It was the "roaring twenties", and the economic boom that lasted for many years made everyone hopeful for the future, and it was not enough for them to put all the money in the stock market, and it became a trend to find stockbrokers to borrow money and leverage to re-enter the market. Howard is such a broker who entered the industry when the stock market was hot, he helped people speculate in stocks, but also spent money to speculate in stocks, after the stock market crash, Howard hid at home, even dared not answer the phone, can only rely on relief funds to support the family.
Coincidentally, when the Howard family took refuge in the small agricultural town of Omaha, in addition to the Great Depression that swept the world, they also saw an overwhelming plague of locusts. Heaven, time, and geography are not occupied, and the only one who can fight is people. Howard has always been reluctant to give up the securities business, he pulled up friends, reopened a company, when people were afraid, everyone was reluctant to put money into the stock market, the company has been losing money, the biggest customer is the boss himself, even so, it has always insisted on business.
In 1938, Howard walked into the lobby of the New York Stock Exchange with Buffett Jr., where they were received by Goldman's investment manager. It was the end of a decade of the Great Depression, Roosevelt had been in office for five years, and in the midst of controversy, he had stopped the recession that was about to drag the United States into the abyss, and he had pushed for the establishment of extremely important organizations such as the Federal Deposit Insurance Corporation (FDIC) and the Securities and Exchange Commission (SEC). The loopholes in the securities market exposed by the Wall Street stock market crash in 1929 are being filled little by little by people with systems and mechanisms.
Americans in this period, like backpackers who fell into the water, threw away the bags they had worked hard for half a lifetime and finally came ashore, and for the rest of their lives, no one dared to look back except those who still had a thirst for underwater treasures.
2
Unlike Howard, who made a living and struggled to survive, some people could have stood on the shore cleanly, but they could not hold back a treasure hunting heart and took the initiative to go into the water.
Owen Fisher, in the mind of Joseph Schumpeter, "america's greatest economist of all time," was the man who, in the eyes of others, was the least deserving of the water. Born into a middle-class family, Fisher was intelligent from an early age, and after entering Yale University, he also joined the most famous club on campus, the Skeleton Society. At the age of 24, he received a Ph.D. in economics from Yale University with the first place in the university.
In 1907, Fisher completed Interest Rates, the foundational part of the monumental theory of interest. In the book, Fisher argues that "human impatience" argues that even though people already have a certain idea of time and an estimate of the future, they still tend to enjoy the present rather than think about the future. Fisher made an analogy that a person who wants to eat a candy now can buy 1 candy for 10 yuan, but after a year, 10 yuan can buy 10 candies, and is willing to give up 9 candies a year later in order to meet the present is a manifestation of "impatience".
In 1911, Fisher published The Purchasing Power of Money, proposing that the money supply × money turnover = commodity trading volume× the average price of commodities, arguing that the us dollar should not be pegged to gold, but to a basket of commodities, so as to achieve the goal of price stability, thus laying the foundation for monetarism. From the impatience of human nature to the fact that money can lead to prosperity and decay, Fisher has become a genius praised by the economic community, with countless fans.
Fisher's genius didn't stop there, in 1913 he invented the card indexing system and registered it as a patent. Entering the "roaring twenties," Fisher sold the patent for a fortune, becoming "the richest of the economists and the richest of the rich." At that time, Fisher and Keynes were friends, and the latter was still an unknown scholar.
Owen Fisher | Bystanders are clear, authorities are confused
In 1925, Fisher put all the money into the stock market and, like most common shareholders, borrowed money and leveraged it. By 1929, the stock in his hands was worth $10 million. On October 22, Fisher-Fisher triumphantly shouted out, "The stock price has been based on the eternal high ground!" The blessing of wealth and academic status infinitely magnifies the scope of influence of Fisher's words.
Two days later, however, the stock market crashed, and Fisher went from a multi-millionaire to a "millionaire." The operation of borrowing money and leveraging makes it impossible for Fisher to hold the stock in his hands for a long time. The creditor took the stock certificates that were like waste paper at the time, the mansion was also taken away, and it was Yale University that rented a room so that the economic master did not sleep on the street.
Overnight, Fisher lost his fortune and was notorious for that assertion. He then pioneered the theory of debt crunch, explaining the source of economic crises, arguing that crises were caused by credit bubbles, and giving a path to address deflation. Unfortunately, Keynesianism had already shined, and Fisher had become a "teacher" through and over again, so he had to concentrate on his studies and hide in the university.
Fisher died in 1947 at the age of 80. Obviously, geniuses are not good at things, and his rollercoaster-like wealth experience is nothing more than a few insignificant floor tiles for his academic achievements, but it is these bricks that have clouded his academic ideas for decades, until the outbreak of the subprime mortgage crisis in 2007. At this time, Fisher's exclamation that "the only reason for depression is prosperity" has already echoed countless times in reality.
3
For a long time, Owen Fisher's lament was more deafening than his academic achievements. Countless investors have been vigilant and trying to avoid the misfortunes of this stock market turmoil, which has evolved into two very different approaches.
The first is the "Growth Investment Act", pioneered by Philip Fisher.
Born in 1907, 40 years younger than Owen Fisher, philippe had the same surname, and until now everyone has been speculating whether these two men, who are excellent in their respective fields, are father and son. Whatever the answer, it is clear that Philip's success was built on the full learning of Owen Fisher's failures.
According to Philippe's philosophy, investment is not speculation, and he does not want to "waste his time on making many small sums of money", he only wants huge returns, even if it is a long wait. Philip's approach is a bit "lazy" compared to the frequent change of hands of short-term investors: he will spend a long time to observe the company, identify a few core stocks, hold them for a long time, and only a very small amount of money will be put on those "potential sub-core stocks".
According to Philip, he had a total of 14 stocks that "made a lot of money", of which the one with the least made the most had a 7x gain and the one with the most had a thousand times. And he holds these stocks for a long period of time, as short as 8 or 9 years, and as long as 30 years.
This "growth investment method" later became Buffett's treasure book. Buffett has said that 85% of his investments come from Graham and 15% from Philip Fisher.
In 1987, a reporter asked Philip what was the difference between him and Graham. Philip smiled slyly: "Graham advocates buying extremely cheap stocks so that you can avoid a big fall, but he himself said that this method is bad, everyone knows, so everyone will use this method to choose stocks." Although my approach is not the only criterion for success, I would like to say that the term "growth investing" was not spoken before my investment career began."
Philip Fisher is one of the few works
The second way to avoid shock losses is to create a "hedge fund", pioneered by Alfred Jones.
Born in 1900, Jones and Philip were contemporaries, but the experience was completely different. Jones loves to go up and down the sea. After graduating from Harvard university at the age of 23, Jones has been engaged in procurement, supplying irregular ships that travel the world. He then joined the U.S. Department of Foreign Affairs. Shortly after Hitler came to power, Jones became vice consul at the U.S. Embassy in Berlin, witnessing the beginning of a nation's madness. After his marriage, Jones resigned as a diplomat and became a journalist. During the Spanish Civil War, he and his wife traveled through the war zone to report on how Quakers would have come to civilian relief in the face of the raging war.
It wasn't until 1949, when Jones was nearly half a hundred years old, that he settled down to start a business. The experience of the first half of his life has made him particularly sensitive to risk. He chooses some bullish stocks, buys them with leverage, and avoids risk by shorting overvalued stocks. In this way, profit or not has little to do with market shocks, but depends on whether the manager chooses some suitable stocks to buy and sell. Jones' "hedge fund" also has a peculiar set of management methods: when a client gives him money to manage, he will take 20% of the profit as a management fee, but if he does not make money, he will not take anything.
After several years of outstanding performance, this set of "hedging risk" ideas has gradually become popular in the investment community. Buffett, Soros, Dalio and other rising stars have learned, and although no one has held him up like Graham, it is worth mentioning that Jones has never encountered the trouble of near bankruptcy like Graham.
After his career was on the right track, Jones gradually left the office and started a public welfare business, contacting volunteers to go to developing countries to do technical support, and work with the poorest people in the local area to solve problems. Jones's life was extremely low-key, and even the photos were difficult to find, but this "hedging" dedicated to narrowing the gap between rich and poor was the cause he struggled for to the end of his life.
4
There is a "six-dimensional space theory" in mathematics, which means that you can make contact with any stranger through up to 6 people. Buffett's unique investment philosophy is based on his decades of uninterrupted reading and thinking, and the role models of Howard Buffett who persevere to the end, academic geniuses such as Irving Fisher, and investment gods such as Philip Fisher and Alfred Jones are the source of his ideas. Someone jokingly said, "After these four circuit breakers, I have shared 80% of Buffett's life." It can be seen that in this era, even if we do not have to go through people, we can have a great connection with any person.
In reminiscing, Buffett once said affectionately, "I love 1929 because that's when everything started." Hopefully, on his birthday this year, he'll also say, "I love 2020 because it's the most exciting thrill of my life."
I don't know when the epidemic will end, nor do I know how the stock market will stop shaking. In the days to come, I hope that everyone will be smooth, healthy, and the investment will pay off. Experience is wealth, and I hope that all these shocks are nothing more than a false alarm when we experience a wave forward.
Source:
[1] Roger Rowenstein: Buffett's Biography – The Growth of an American Capitalist, CITIC Press
[2] Owen Fisher: Interest Theory, The Commercial Press
[3] Owen Fisher: Boom and Bust, The Commercial Press
[4] Philip Fisher: How to invest in growth, Forbes Chinese
[5] Allen Robert Loring ：Irving Fisher: A Biography，Wiley
[6] John Russell：Alfred W. Jones, 88 , Sociologist And Investment Fund Innovator，The New York Times
[7] Mallaby Sebastian：More Money Than God. City，Penguin Press
[8] Olivia B. Waxman：What Caused the Stock Market Crash of 1929 —And What We Still Get Wrong About It，Time
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Author | Mao Hongtao Editor-in-Chief| Wang Tao Editor|-in-Chief Chen Runjiang Consultant | Wang Shuqi