Buffett said: "No one can make money outside of their own cognitive range. ”
Many people use the following fact to confirm this sentence: Buffett was not used in the field when the Internet company was just rising, and missed this outlet, because he was not familiar with the Internet industry, and the Internet was outside his "cognitive range". After Buffett "made up for it" and included Internet companies in his "cognitive range", he bought Apple in a big way and made a lot of money.
But I think of another thing about Buffett and Munger: Buffett repeatedly stressed at the annual shareholder meeting in Omaha, where Berkshire Hathaway, who has countless investors pilgrimage every year, "Never look down on the United States." He also repeatedly warned ordinary investors that the simplest and best (most suitable for ordinary people who lack professional standards) investment is to buy U.S. stock ETFs on a low price, and if the time is extended to 10 or 20 years, the annualized return of U.S. stock ETFs can exceed most professional investors. His partner, Munger, bought a very large number of U.S.-listed Chinese stocks. The performance of the stocks in the past two years is obvious to everyone. China-wide Interconnection, now known as "China-Cai Interconnection", the fall is fierce enough to make the most bullish bulls burst out of the market, and Munger, in front of the market, can only cut meat and concede defeat.
Of course, Buffett has also bought a lot of shares in PetroChina and BYD, but these shares are not a big head in his overall position, not to mention, he made money on PetroChina and left the market immediately, leaving a lot of retail investors who followed his fame often, but they were too late to run away. His price of entry into BYD is also much lower than that of ordinary investors.
Buffett is a master of investment gurus, and so is Munger, both of whom are very good at observing a company and good at reading complex and difficult financial statements, so why is there such a big difference between the two? In the author's opinion, this is a more basic "cognition" than the selection field (or the track that stock critics like to say the most, such as the new energy track and the big consumption track).
Munger began to build a large-scale position in Alibaba in 2021, at that time, Alibaba, has fallen a lot, the cost-effective advantage has been highlighted, and the report is still beautiful, in general, it can be a very good company. For Munger, this is a great opportunity to buy quality assets at a low price (the essence of stock investment is nothing more than buying a good company at a cheap price, but this is enough to defeat 99% of investors). So, he struck. To be honest, Munger's judgment is not a problem, if only from the perspective of the market, Ali can indeed be worth 300-400 billion US dollars, ali at that time is indeed oversold.
If Ali is an American company like Amazon, then with his market share and development speed, it is not difficult to return to the original stock price (Ali's current static price-to-earnings ratio on the Hong Kong Stock Exchange is only 10 times, compared with Amazon's valuation of 53 times, even if it cannot be compared with Amazon, Ali's current price-earnings ratio is not the standard that an Internet company should have, more like the valuation level of a traditional enterprise, for example, the valuation of the banking industry in mature markets is generally 5-10 times). But the problem is that it's not just the market itself that's at stake.
Here, I would like to quote another very famous quote from Buffett: "I am greedy when others panic, and I am afraid when others are greedy." "Munger did buy when others were panicking, why didn't it achieve the expected results? Quite simply, Buffett's so-called "panic buy" must be built on the ability of this company and the market as a whole to bounce back. To take a very simple example, the Russian ruble has plummeted, but apart from those who can only use rubles, what brainy speculator will buy rubles at this time? The reason for not buying is that Russia's economy has just begun to fall under strong sanctions from Europe and the United States, and it is likely to collapse. In this case, buying when others are panicking will only become a ridiculed wrongdoer and a receiver.
Buffett is able to say the phrase "never look down on the United States" because he fully "recognizes" that the United States has a highly mature market system, an independent legal environment, and a mechanism that constantly stimulates innovation and attracts the best talent from around the world. This is also completely consistent with musk's core logic that "I can only achieve all the current achievements in the United States." In Buffett's view, the success of the United States is due to successful American companies, and these successful and great companies can only be born in the American environment. This is actually the underlying cognition behind the stock god Buffett (and some investors or entrepreneurs who are as bullish as he is in the United States) who have made a lot of money for decades. Imagine if Buffett had been born in Venezuela or any other country, or if he had insisted on the underlying perception of "never look down on Venezuela," would he have become the world's most successful investment guru in nearly a century, even with the same sharp investment vision and the same shrewd mind? The answer is clearly no.
Of course, we are only using Buffett as an example, not to say that the success and failure of life are only linked to the money earned, nor do we want to discuss any investment topics. But just to say that a person's fate is often not determined by IQ, emotional intelligence or various quotients, but by the level of cognition of this person.
So what exactly is "cognition"? In the author's view, cognition is the sum of each person's understanding of the world in which he or she lives (acquiring knowledge about the world, which is an internal process of "absorption") and analysis (the "views" and "opinions" of the world that arise in turn after acquiring knowledge, which is an external process of "release"). The level of cognition may be related to the following points: first of all, there is a more open mind that is not limited to some kind of blind emotion (such as narrow national zy, unwarranted arrogance, and arrogant inferiority complex, etc.), in which to look at and compare the knowledge obtained about different parts of the world as fairly as possible (no one can be completely objective and impartial), and at the same time have the ability to independently obtain the truth (or the one closest to the truth in all possibilities) and make independent judgments. This does not require a high IQ, only the most basic logical ability and the ability to obtain knowledge (real information).
The influence of cognition on the fate of life may also be translated to some extent into the following well-known saying: choice is more important than effort. Cognition, is to tell you what kind of choice to make at the key node, if the choice is wrong, it is undoubtedly the opposite, the smarter the brain, the greater the effort, then in the wrong direction will move forward faster, the farther, and finally can only be the harder, the smarter, the more failure. And if the choice is correct, it may bring greater gains than 10, 20 years or even half a lifetime of hard work. There are often such examples, there are many people who have worked hard all their lives but can only barely support their families, of course, we have great respect for ordinary people who work hard, but we also have to point out that if their cognition is enough to allow them to make better choices at key nodes, then they are likely to harvest a better life.
Just like a car parked at an open intersection, it is driving forward, left, right, or U-turn, all of which have little to do with the car's performance (IQ, EQ, etc.) and only with the choice of the driver who drives the car. At this time, he/she should think about where she wants to go, then take out the map, find the nearest and most convenient road to her desired destination from it, and set off. But life is much more complicated than driving, in most cases, there is no map and navigation, it is more necessary to work hard to improve their cognitive level: if there is no map, and want to go to the place they want to go, the best way is to start the car, as far as possible in the vicinity of the relatively high terrain, go up and look down (improve their cognition), condescending as far as possible to see the intricate road conditions, and then get on the road is not too late.
Of course, he/she must first know where he/she wants to go and what he/she wants in life, which is also determined by his/her level of cognition.