Learn to invest with Buffett

Chapter 100

No.16 Chapter 5 Stay away from the market to beat the market

Only by staying away from the market can you see the market clearly.

--Warren Buffett
For many years, Buffett lived away from the hustle and bustle of Wall Street in Omaha, a small city in Nebraska in the middle of the United States.Buffett's usual communication tools are two telephones, which can be used to contact different brokers when necessary.

While Buffett's investing empire has grown, he says his investment strategy has changed little over the years.Buffett says he spends most of his day thinking and reading.Meetings are never on Buffett's schedule.He's great at saying no and knowing what he likes.Whatever he did, it turned out to be too good to be true.Everyday, he likes to sit in the office, read and think.There are definitely things he prefers to do, but certainly not many.He lives year-round in peaceful Omaha, where he was born.He's grown up with a group of people, so he enjoys spending time with them.He loves his work very much, and when talking about his work with others, his attitude is very humble and peaceful.He feels very lucky that he was born at the right time to receive such high recognition for his talents.In another era, his skills might not have come in handy.

Buffett is used to spending most of the day in his office.There are no computers in the office, nor are there stock tickers or other stock data terminals.The TV was tuned to CNBC, which was broadcasting financial news, but the sound was turned off.While he sometimes carries his phone on the road, he never uses it in the office.There is no calculator on his desk, and he does most of his calculations in his head.Most of his investment decisions, he says, don't rely on hard numbers.In a small cabinet behind his desk were two black telephones with direct connections to his Wall Street broker.

Buffett can quickly make investment decisions, eliminating routine decision-making meetings and procedures for consultants to offer advice and suggestions, and he does not require his managers to report to him frequently.The most typical example is that Buffett received a fax from a company he had never heard of in his Omaha office this summer.The sender was a consultant to a recreational vehicle manufacturer in Indiana.This person suggested that Buffett spend $8 million to acquire the company.The circumstances listed in the letter satisfied Buffett: the company has a high market share and almost no debt.

The next day, Buffett made an offer for the company and proposed that the company's founder, Peter Liegl, continue to run it.Buffett signed off on the deal in a 20-minute meeting a week later.He told Liger at the end of the meeting not to expect a second chance at his ear in a year.

Buffett himself has extraordinary creativity, noble character, quick reflexes, and a sense of humor that everyone loves.Over the years, dozens of business managers who have worked with him have followed Buffett except for retirement or death of illness.

In Berkshire's 1995 annual report, Buffett said: "Berkshire acquired 1995 new employees through business acquisitions in 11000, but our headquarters staff only increased from 11 to 12 people. There's no need to be crazy."

By 1998, he was indeed a bit crazy. There were 12.8 people in the headquarters. The company's annual report for this year stated: "The staff at the headquarters has expanded from 12 to 12.8 people (we hired a new accountant, and he works every week. Four days). By 2000, there were 13.8 people in the headquarters. In the 2000 Berkshire annual report, Buffett wrote: "This small team has created many miracles. In 2000, it handled all the details related to 8 business acquisitions, prepared a large number of tax returns (our tax return was 4896 pages thick), and successfully held an annual meeting of shareholders with 25000 tickets , and accurately deliver the check to the 3660 charities designated by shareholders. "

Buffett reads in his office, makes phone calls, keeps in touch with his managers, friends and brokers, and usually answers the deluge of letters with short, witty text messages.He loves letters very much and reads every letter carefully.Sometimes he even took the letters himself before his assistants had time to pass them on to him.When Buffett was away, his administrative assistant called him every night to update him with new correspondence for the day.

When there are no visitors, Buffett is buried in his work and often eats at his desk. Buffett has always had his favorite hamburger, French fries and Coca-Cola for lunch, plus a small amount of steak and double braised pork.A great deal of work in companies is done in offices.

In describing Berkshire's corporate acquisition strategy, Buffett once told shareholders: "The acquisition strategy is very scientific. We just sit in the office and wait for the call. Occasionally someone makes the wrong call."

Once, before Buffett gave a speech to students at the University of Nebraska, he was asked, "Do you need security here?" Check that attendees are not carrying softballs (atom bombs)."

Warren Buffett always has a dartboard in his office, which he says is his stock picker: "It doesn't work, and I'm going to give it to Bill Gates to have a dartboard so we can make He was second."

For Buffett, the price fluctuations of the stock market are just the game of "Mr. Market", and what it can provide is satisfying revenge when "Mr. Market" is depressed.He also did often buy large quantities of stocks in companies he knew well when their stock prices fell sharply.But Buffett believes that even if the securities market is closed for several years after he buys a certain stock, his investment will not be affected. Therefore, he does not care or care about the usual fluctuations in stock prices at all.The so-called time is outside the market, Buffett is far away from the market, and he has thus defeated the market.

Investment motto:

The trend of the market is only the reflection of investors on the expected development trend of the market, and no one can control the changes of the market.Many investors in the market will obviously feel a strong "shock" when there is a small change in the market, which restricts their investment behavior and loses their investment direction.Therefore, investors need to form a unique judgment method and rational thinking.Only by staying away from the market can you see the market clearly and look at investment with a clear mind. Therefore, it is a wise choice to buy good stocks and stay away from the stock market.

(End of this chapter)