Author | Jia Weizhong
Source | Car selection network
On March 16, although the turnover of Shanghai and Shenzhen was close to 1.2 trillion yuan, and the three major A-share indexes rose across the board, the current round fell by more than 8% compared with after the Spring Festival. In this deep adjustment of A-shares, some investors have suffered heavy losses due to frequent operations.
Recently, Buffett released an annual open letter to shareholders, along with Berkshire Hathaway's fourth-quarter and full-year earnings. Berkshire not only achieved profitability last year, but also outperformed the S&P 500 index, what is the investment secret of Buffett?
"In 2021, Berkshire's net profit attributable to shareholders reached $89.795 billion, an increase of 111% compared to $42.521 billion in 2020," the financial report shows. At the same time, according to statistics, the increase in the S&P 500 index in 2021 is 28.7%, and Berkshire outperformed by 0.9 percentage points. And in the past five and ten years the company has lost to the S&P 500. But in the long run, between 1965 and 2021, Berkshire's compound annual growth rate per stock market value was 20.1%, almost double the 10.5% compound annual growth rate of the S&P 500 index.
In fact, investors want to know more about which businesses make Buffett money than how much money Buffett makes.
"Buffett re-emphasized in this year's letter four of Berkshire's most valuable assets, namely the property and casualty insurance business, Apple shares, Burlington Northern Railroad Santa Fe Railroad (BNSF), and Berkshire Hathaway Energy (BHE)," the media reported. The operations of these four businesses account for a significant portion of Berkshire's value. ”
Of the insurance business, Buffett wrote: "The insurance business is tailor-made for Berkshire, it never goes out of fashion, and business sales typically grow with economic growth and inflation." ”
Followed by Apple, Buffett said: "This is another type of position we have, although we hold only 5.55%, but last year Apple paid us a dividend of $785 million." Based on our stake in Apple, the profits reached a staggering $5.6 billion. ”
Next up is the Burlington Northern Railroad Santa Fe Railroad (BNSF), which Buffett believes is "still the number one artery of American commerce, and it is an indispensable asset for this country and Forberkshire." If BNSF were to move its products to trucks, U.S. carbon emissions would blow up. ”
The last giant is Berkshire Hathaway Energy (BHE), which Buffett said: "BHE made a record $4 billion in 2021. That's more than 30 times more than a profit of $122 million in 2000, when Berkshire bought BHE stock for the first time. Now, Berkshire holds a 91.1 percent stake in the company. ”
Overall, every year Buffett's letter to shareholders, translated into Chinese more than 10,000 words. Perhaps because gushen is older, his writing style is becoming more and more emotional, and the letter talks about many details. However, for individual investors, perhaps more people are willing to look at "dry goods", just like the information given by some Internet celebrity analysts, investors tonight will get the information in hand, tomorrow's opening "according to the prescription to grasp the medicine", the day after tomorrow the stock price rubbed up the "dry goods". But alas, Buffett did not contain it in his letter.
Buffett called the "Big Four" to bring him the biggest performance of the company, in addition to Apple, is insurance, transportation, energy these blue chips, and combing Buffett's top ten positions, we can find that he has not changed for many years, the real meaning of investment behind it is a "stable" word.
How to stabilize investment sentiment? Buffett's point is: "Understand what your investment is for." He told a story at the 2020 shareholders' meeting:
"You're investing in a farm now. Bought 6,000 acres of land. Next to you, there's another farm, and that farmer also has 6,000 acres of land. His land is exactly the same as yours. This neighbor is very weird, and comes to you every day and says to you, "I sold you my land for how much is an acre." I'm going to buy your land, how much is an acre. ”
Buffett said: "When you buy land, if you calculate how much grain the land can produce. Then keep in mind one point: you buy this land, looking at the income it can create in the future, do not need others to bid, do not let him lead your nose. ”
Buffett proposed: "Buying stocks is the same reason. The stock market really has such a neighbor, it gives you an offer every day, but you don't need to pay attention to him. Sometimes, his offer is high. Sometimes, his offer is low. When he asks for a high price, you can sell it to him if you want. When he asks for a low price, you can buy his land. The person who quoted never forced you, for fear of forcing yourself. ”
This story tells us that if we focus too much on short-term price fluctuations and let our emotions be affected by price fluctuations, then we will eventually be driven crazy.
Some experts pointed out: "For investors who repeatedly operate many times a year, Buffett's stable operation has reference significance." Whether it is stock investment or futures investment too frequent operation is a big taboo. ”
However, the reason why some individual investors will be led by the nose of stock commentators may be that the problem is that the main line cannot be found. During the two sessions of the National People's Congress this year, the government work report put forward measures such as "stabilizing employment, expanding consumption, and attracting foreign investment", all of which were carried out around the main line of "steady growth". The general tone of this year's "steady word and steady progress" is aimed at maintaining economic operation within a reasonable range, which is the basis for expanding employment and increasing income.
Therefore, whether it is Buffett's experience or this year's policy line, a "stable" word is highlighted, which has great reference significance for our individual investors. The above is a family statement, welcome to criticize.
(Image source: Internet)