In the '90s, Buffett gave a lecture at the University of Notre Dame, and he showed the audience a 1969 Wall Street Journal advertisement, which was about the then auto giant "American Automobile Company" private placement (cash increase), underwritten by 37 investment banks that were both famous and large on Wall Street at that time. After a lot of speculation with different answers, Buffett announced the answer: "This is a Wall Street tombstone advertisement, although the automotive industry is still developing at a high speed, the capital financial market has expanded dramatically, and after so many years, 37 investment banks and American auto companies have all disappeared and gone bankrupt." ”
It is worth thinking about that the collapse of 37 investment banks and American auto companies is not a shrinking market, nor is the demand disappearing, on the contrary, the demand for automobiles in the United States has increased several times, and more emerging countries have begun to become rich, the strong demand for automobiles, and these investment banks are in the U.S. capital market, the market value has expanded by 50 times, the transaction volume has increased by 100 times, mergers and acquisitions, and listing financing are record-breaking days, in such a strong and active market, there will be 37 investment banks disappearing. Are these highly intelligent bankers too lazy, too hard at work, too eager to retire? Obviously this is not the core reason.
Buffett believes that if only one key reason can be used to analyze this event, then he believes that the core problem is that bankers are afraid of backward obsessive imitation thinking, when one investment bank makes a wrong decision, after investing, other investment banks are afraid of falling behind, have followed up and jumped into the mud pit, which is just like the fate of lemmings, when the army of lemmings rolls forward, there is a leading lemming jump into the cliff, and the rest of the tens of millions of lemmings will also follow without hesitation to jump down, this is the fate of indulging in imitation, in the financial field There are countless such cases, and the source of each large-scale financial crisis comes from the irrepressible blind imitation and follow-up of human beings.
How to avoid indulging in imitating the behavior of the same kind, how to escape the fate of the common demise of the masses, how to maintain the concept of independent thinking and maverick? Buffett suggests using a self-reflective approach, before making any decision, first clearly write down the only reason for doing this thing, if you can't write a core, the most critical reason, then it means that you have not thought clearly, it means that you may be conformist behavior, and continuous thinking, many times of reflection, will make you avoid the stereotype of obsessing with imitation.
There was once a riddle: what is light that people can't feel, but at the same time heavy that people can't get rid of? The answer is "habit". Self-criticism, self-reflection is to break the habit, break the most important way to imitate thinking, the financial circle and the investment circle are smart people, and smart people are characterized by excellent memory, strong analytical ability, strong subjective awareness, in the field of education has such a point of view, the smarter people the more difficult to educate. The habit of smart people is to usually think that others are stupid, they are smart, interesting is that after a long period of observation of the capital market, we will find that there are always smart people losing money, smart people make mistakes, and the only way to break the strange circle of indulgence in imitation is continuous and long-term self-criticism and self-reflection.
