vv組合年度簡報 2013

現在距離踏入2014年只餘兩天，今年截至這刻，組合的表現優於恆生指數15%以上，而相比起國企指數或有稍多於20%的正回報差距。誠言，這個年回報是欣喜的，不過可以預期，明年的回報或許沒有這麼好，因為長期做出年回報20%是屬於頂尖投資者的成績表，所以這組合爭取的參考年回報是15%，組合重點放在Risk Adjusted Return。今年組合年終的狀況如下:

十大持股 (比重分先後)

招商 / 濰柴 / 民行 / 復藥 / 新奧 / 潤燃 / 復星 / 比亞迪 / 平保 / 昆能

其他持股 (比重分先後)

中聯 / 上藥 / 惠理 / 蒙牛 / 電能 / 長建 / 雨潤 / 百麗 / 恒安 / 雷士

表現五強2013

復藥 / 新奧 / 潤燃 / 比亞迪 / 蒙牛

表現五弱2013

昆能 / 百麗 / 雷士 / 長建 /  民行

組合表現

今年組合優異表現之原因從上面可以看到，主要因五強的持股比重較高，而它們今年有著較大升幅，一般有高於50%。而反觀五弱，它們最差的只是錄得小於10%的跌幅。值得留意的是，這只是偶然的，在一般情況下，那一些持股能在年內跑出在事前是無從預計的，所以組合的一年實現回報也不是事前可以掌握的，參考價值一般。所以要看組合平均表現還是從長期(十年以上)角度看比較合理及中肯。

在這裏特別想談談招商和民行這對銀行孖寶，它們的合計比重佔組合最高，不過隨著其他成員的升幅，它們的比重持續下降。從這裏可看到，適度的分散投資是有其必要性的。自從2008世紀金融風暴後它們持逐表現不佳，今年仍如是，不過它們逐步已下跌至淨資產值水平，而年息大部份也有5%以上。可以說，如無大規模國內金融危機爆發，這些估值是嚴重被低估的。

我傾向相信國內金融改革是有序進行，始終高民間儲蓄率，財政穩健的政府及低消費槓桿仍然能寄望給予支撐。不過作為投資人，這些宏觀經濟因素都不是能夠真正掌握旳，更實際的做法似乎還是做好價值發掘及風險管理。

若要預計那一些成員能在2014年會有較好表現，這其實跟賭大細沒有多大分別，因為就算能對個別持股有100%信心認為被低估，但這是不能代表它一定能在一年內反映其價值的。短視的投資心態是不利於投資者的。不過若當是玩票性質也無妨，這裏的瞎猜可能是濰柴、中聯、雨潤。

周期及非週期配置

今年組合明顯的一個研究重點是怎樣管理好周期及非周期類的比例。截至今年底，組合適量加入了一些相應地較非周期性的成員, 這亦反映在組合的波動性減少上。非週期性股票總給人一種沉悶及低回報之感覺，一般被受冷落，但有趣的是，現實裏很多時其實熱門的股票長期回報可能更差。不過怎樣才是如假包換的非周期股，感覺其實不是那麼容易界定。這是重要的議題，還在研究中......

回報指標

以往指標一般定在年回報15%上，但漸漸覺得這有點不切實際，如上提及，這種指標是不具備預視性的，刻意追求常會令投資人分心。未來這個15%只會作參考性指標，不會刻意為之。心態上會更多放在過程及框架完善上，深信管理好過程及投資框架，好的結果自然伴隨，這樣做法在投資上合理性較高。

中國

一如既往，對於中國的長期前景仍然抱持正面態度。另外，中國始終是比較熟悉的市場，擁有一個市場的熟悉及敏銳度對投資者是一種優勢。雖然這裏未有足夠能力分析中國經濟，不過從基本面看，和其他政治穩定的國家一樣,中國人這麼多年來也極為渴望提升生活質素，而新的「決定」要點，就是把重點落在開放市場。

當市場及社會環境，政府政策都越來越倚向這方向，民管商業活動自然越加活躍，計而進入汰弱留強，百花齊放階段，最終把巨大的內需潛力釋放出來，這是值得期待的，當然期間道路不平坦是可以理解。固隨著時間推移，我不會低估被潛伏巳久而終被釋放的那股基本人性渴求的爆炸力。

投資環境

中港股市全年在PE低位運行，這刻恆指大約11.5倍,而國指大約9.5倍，都是處歷史較低位置，而今年大部份藍籌盈利也是有增長（四月全年業績後恒指國指估值相對更低），這反映投資情緒仍然是審慎的，一般擔心著中國經濟能否持續發展。雖然不能排除這個可能性，但是很多估值也巳經反映了這些擔憂。在這樣的低估值區間投資，安全系數或反而會是較高的。

投資原則

坊間有很多不同而又成功的投資法，但是沒有甚麼比建立起一個適合自己而有效的投資框架來得重要。在2014年，相信以下幾點仍然是vv投資框架的原則，它們提供了風險管理及盈利基礎。

- 組合管理 / 適度分散 / 企業分析 / 價值發掘 / 適時買賣 / 長期心態

HAPPY INVESTING!

vv.founder

..................................................................................................................................

2013組合最終回報

vv組合 = 23.2%

vv+組合 = 9.6%

綜合回報 = 19.2%

恆指收 23306，回報 = 2.9%
國指收 10816，回報 = -5.4%

Tennis Ball, Circle, 30000

這是一篇有意思的演講, 很喜歡講者巧妙地把他認為最重要的三個概念型像化,令人不易忘記. 這正是記憶法方法的很好示範.

不過當中有些想法就未必適合用於做投資了.

....................................................................

Drew Houston's Commencement address by Drew Houston '05, the CEO of Dropbox

'I stopped trying to make my life perfect, and instead tried to make it interesting.'

Below is the prepared text of the Commencement address by Drew Houston '05, the CEO of Dropbox, for MIT's 147th Commencement held June 7, 2013.

Thank you Chairman Reed, and congratulations to all of you in the class of 2013.

I'm so happy to be back at MIT, and it's an honor to be here with you today. I still wear my Brass Rat, and turning this ring around on graduation day is still one of the proudest moments of my life.

There are a lot of reasons why this is a special day, but the reason I'm so excited for all of you is that today is the first day of your life where you no longer need to check boxes.

For your first couple decades, success in life has meant jumping through one hoop after another: get these test scores, get into this college. Take these classes, get this degree. Get into this prestigious institution so you can get into the next prestigious institution. All of that ends today.

The hard thing about planning your life is you have no idea where you're going, but you want to get there as soon as possible. Maybe you'll start a company, or cure cancer, or write the great American novel. Or who knows? Maybe things will go horribly wrong. I had no idea.

Being up here in robes and speaking to all of you today wasn't exactly part of my plan seven years ago. In fact, I've never really had a grand plan — and what I realize now is that it's probably impossible to have one after graduation, if ever.

I've thought a lot about what's different about the life you're beginning today. I've thought about what I would do if I had to start all over again. What got you here was basically being smart and working hard. But nobody tells you that after today, the recipe for success changes. So what I want to do is give you a little cheat sheet, the one I would have loved to have had on my graduation day.

If you were to look at my cheat sheet, there wouldn't be a lot on it. There would be a tennis ball, a circle, and the number 30,000. I know this doesn't make any sense right now, but bear with me.

I started my first company in a Chili's when I was 21. My cofounder, Andrew Crick, and I had never done this before. We were wondering if you needed to wear a suit to City Hall, or if you needed to make a company seal for stamping important documents. It turns out you can just go online and fill out a form and be done in about two minutes. It was a little anti-climactic, but we were in business. Over onion strings we decided that our company was going to make a new kind of online course for the SAT. Most kids back then were still using these old-school 800-page books, and the other online prep courses weren't very good. We called it Accolade, an SAT vocab word meaning an award of distinction. Well, actually, we called it "The Accolade Group, LLC" which we thought sounded a lot more impressive.

I stopped at Staples on the way home to pick up some card stock. Clearly, the most important order of business was to Photoshop a logo and print out some business cards that said "Founder" on them. The next order of business was to hand them out at conferences, and tell girls "why yes, I do have a company." It was awesome.

But the best part was learning all kinds of new things. I lived in my fraternity house every summer, and up on the fifth floor there's a ladder that goes up to the roof. I had this green nylon folding chair that I'd drag up there along with armfuls of business books I bought off Amazon and I'd spend every weekend reading about marketing, sales, management and all these other things I knew nothing about. I wasn't planning to get my MBA on the roof of Phi Delta Theta, but that's what happened.

A couple years later, things started going downhill. I felt like I had to paddle harder and harder to make progress, and at some point I just snapped and couldn't deal with any more math questions about parallel lines or the train leaving Memphis at 3:45. I figured something was wrong with me. I felt guilty for being so unproductive. Starting a company had been my dream, and, well, maybe I didn't have what it takes after all.

So I took a little break. Of course, if you're in course 6, sometimes "taking a break" means writing a poker bot. For those of you who don't know what a poker bot is, what happens when you play poker online is first, you sit for hours and click buttons, and then you lose all your money. A poker bot means you can have your computer lose all your money for you.

But it was a fascinating challenge. I was possessed. I would think about it in the shower. I would think about it in the middle of the night. It was like a switch went on — suddenly I was a machine.

In the middle of all this, my mom and dad wanted all of us to come up to New Hampshire to spend a family weekend together. But I really wanted to keep working on my poker bot. So I pull up in my Accord and open the trunk, and next I'm dragging all my computer stuff and all these wires into our little cottage. The dining room table wasn't big enough so I started moving all the pots and pans off the stove to make room for all my monitors. This time it was my mom who thought something was wrong with me. She was convinced I was going to jail.

I was going to say work on what you love, but that's not really it. It's so easy to convince yourself that you love what you're doing — who wants to admit that they don't? When I think about it, the happiest and most successful people I know don't just love what they do, they're obsessed with solving an important problem, something that matters to them. They remind me of a dog chasing a tennis ball: their eyes go a little crazy, the leash snaps and they go bounding off, plowing through whatever gets in the way. I have some other friends who also work hard and get paid well in their jobs, but they complain as if they were shackled to a desk.

The problem is a lot of people don’t find their tennis ball right away. Don't get me wrong — I love a good standardized test as much as the next guy, but being king of SAT prep wasn’t going to be mine. What scares me is that both the poker bot and Dropbox started out as distractions. That little voice in my head was telling me where to go, and the whole time I was telling it to shut up so I could get back to work. Sometimes that little voice knows best.

It took me a while to get it, but the hardest-working people don't work hard because they're disciplined. They work hard because working on an exciting problem is fun. So after today, it's not about pushing yourself; it's about finding your tennis ball, the thing that pulls you. It might take a while, but until you find it, keep listening for that little voice.

Let's go back to the summer after my graduation, the summer you're about to have. One of my fraternity brothers, Adam Smith, and his friend Matt Brezina were starting a company and we decided it would be fun for all of us to work together out of one apartment.

It was the perfect summer — well, almost perfect. The air conditioner was broken so we were all coding in our boxers. Adam and Matt were working around the clock, but as time went on they kept getting pulled away by potential investors who would share their secrets and take them on helicopter rides. I was a little jealous — I had been working on my company for a couple years and Adam had only been at it for a couple months. Where were my helicopter rides?

Things only got worse. August rolled around and Adam gave me the bad news: they were moving out. Not only was my supply of Hot Pockets cut off, but they were off to Silicon Valley, where the real action was happening, and I wasn't.

Every now and then I'd give Adam a call and hear how things were going. Things were always pretty good. "We met with Vinod this afternoon," he would tell me. Vinod Khosla is the billionaire investor and cofounder of Sun Microsystems. Then Adam dropped the bomb. "He's going to give us five million dollars."

I was thrilled for him, but it was a shock for me. Here was my faithful beer pong partner and my little brother in the fraternity, two years younger than me. I was out of excuses. He was off to the Super Bowl and I wasn't even getting drafted. He had no idea at the time, but Adam had given me just the kick I needed. It was time for a change.

They say that you're the average of the 5 people you spend the most time with. Think about that for a minute: who would be in your circle of 5? I have some good news: MIT is one of the best places in the world to start building that circle. If I hadn't come here, I wouldn't have met Adam, I wouldn't have met my amazing cofounder, Arash, and there would be no Dropbox.

One thing I've learned is surrounding yourself with inspiring people is now just as important as being talented or working hard. Can you imagine if Michael Jordan hadn’t been in the NBA, if his circle of 5 had been a bunch of guys in Italy? Your circle pushes you to be better, just as Adam pushed me.

And now your circle will grow to include your coworkers and everyone around you. Where you live matters: there’s only one MIT. And there's only one Hollywood and only one Silicon Valley. This isn't a coincidence: for whatever you're doing, there's usually only one place where the top people go. You should go there. Don’t settle for anywhere else. Meeting my heroes and learning from them gave me a huge advantage. Your heroes are part of your circle too — follow them. If the real action is happening somewhere else, move.

The last trap you might fall into after school is "getting ready." Don't get me wrong: learning is your top priority, but now the fastest way to learn is by doing. If you have a dream, you can spend a lifetime studying and planning and getting ready for it. What you should be doing is getting started.

Honestly, I don't think I've ever been "ready." I remember the day our first investors said yes and asked us where to send the money. For a 24 year old, this is Christmas — and opening your present is hitting refresh over and over on bankofamerica.com and watching your company's checking account go from 60 dollars to 1.2 million dollars. At first I was ecstatic — that number has two commas in it! I took a screenshot — but then I was sick to my stomach. Someday these guys are going to want this back. What the hell have I gotten myself into?

You already know this feeling: at MIT we call it "drinking from the firehose." It’s about as fun as it sounds, and all of us have the internal bleeding to prove it. But we’ve also learned it's good for you. Today, one valve shuts off. Now you need to go out and find another firehose.

Dropbox has been mine. As you might expect, building this company has been the most exciting, interesting and fulfilling experience of my life. What I haven't really shared is that it's also been the most humiliating, frustrating and painful experience too, and I can't even count the number of things that have gone wrong.

Fortunately, it doesn't matter. No one has a 5.0 in real life. In fact, when you finish school, the whole notion of a GPA just goes away. When you're in school, every little mistake is a permanent crack in your windshield. But in the real world, if you're not swerving around and hitting the guard rails every now and then, you're not going fast enough. Your biggest risk isn't failing, it's getting too comfortable.

Bill Gates's first company made software for traffic lights. Steve Jobs's first company made plastic whistles that let you make free phone calls. Both failed, but it's hard to imagine they were too upset about it. That's my favorite thing that changes today. You no longer carry around a number indicating the sum of all your mistakes. From now on, failure doesn't matter: you only have to be right once.

I used to worry about all kinds of things, but I can remember the moment when I calmed down. I had just moved to San Francisco, and one night I couldn't sleep so I was on my laptop. I read something online that said "There are 30,000 days in your life." At first I didn't think much of it, but on a whim I tabbed over to the calculator. I type in 24 times 365 and — oh my God, I'm almost 9,000 days down. What the hell have I been doing?

(By the way: you guys are 8,000 days down.)

So that’s how 30,000 ended up on the cheat sheet. That night, I realized there are no warmups, no practice rounds, no reset buttons. Every day we're writing a few more words of a story. And when you die, it's not like "here lies Drew, he came in 174th place." So from then on, I stopped trying to make my life perfect, and instead tried to make it interesting. I wanted my story to be an adventure — and that's made all the difference.

My grandmother is here today, and next week we'll be celebrating her 95th birthday. We talk more on the phone now that I’ve moved out to California. But one thing that's stuck with me is she always ends our phone calls with one word: "Excelsior," which means "ever upward."

And today on your commencement, your first day of life in the real world, that's what I wish for you. Instead of trying to make your life perfect, give yourself the freedom to make it an adventure, and go ever upward. Thank you.

 

Source: http://web.mit.edu/newsoffice/2013/commencement-address-houston-0607.html

投資最重要的二、三事

對於價值投資者來說, 除了經常細讀巴菲特的投資哲學, 另一位著名投資家 Howard Mark 的投資哲學亦是極之值得細讀。他剛剛又發放了新的 Memo, 一如以往，他著重於分析市場投資環境及風險，在這方面他的把握及洞察能力是極強的, 而今次的 Memo 亦不例外。

另外, 其需然成名於投資不良資產 (Distressed asset), 這有別於一般的二級市場股票投資, 但其整體的投資理念是非常值得借鑑。尤其是在規避風險的層面上。下面收錄了那份 Memo 的 Highlight 供有興趣者參考 (可走入連結看全文)。

筆者認為, 如果想長期獲得優於平均的投資回報, 有效地掌握以下的二、三事是極其重要的 ：

1. 風險規避能力 - 這個需要投資者對投資環境及風險有良好的評估能力及擁有審慎的投資態度。這個範疇對長期投資成績起著關鍵作用, Howard Mark 是一個好的學習對象。

 

2. 分析投資標及估值能力 - 這個不用多說了。如果不能有效地掌握, 那麼投資成功率會較低。這領域巴菲特是固中强手, 非常值得學習。

 

3. 自身評估能力 - 認識自己是那類型人, 找出適合的投資方法. 這是非常重的, 但亦是常被忽略的一點, 不同的性格是需要找出相對適合的投資風格才行, 強行模仿一般是無效的。不過, 要做好這方面就要倚靠自己了。

HAPPY INVESTING!

...........................................................................................................................

For full article, visit the below link.

Archieves from -  http://www.oaktreecapital.com/memo.aspx?AspxAutoDetectCookieSupport=1

"In short, sometimes the credit window is open to anyone in search of capital (meaning dumb deals get done), and sometimes it slams shut (meaning even deserving companies can’t raise money). "

"In fact, one way they strive to win the opportunity to put money to work is by doing increasingly dangerous things."

"Today’s financial market conditions are easily summed up: There’s a global glut of liquidity, minimal interest in traditional investments, little apparent concern about risk, and skimpy prospective returns everywhere. Thus, as the price for accessing returns that are potentially adequate (but lower than those promised in the past), investors are readily accepting significant risk in the form of heightened leverage, untested derivatives and weak deal structures. "

"Now we’re seeing another upswing in risky behavior. It began surprisingly soon after the crisis (see Warning Flags, May 2010), spurred on by central bank policies that depressed the return on safe investments. It has gathered steam ever since, but not to anywhere near the same degree as in 2006-07."

"When people start to posit that fundamentals don’t matter and momentum will carry the day, it’s an omen we must heed.

"While the extent is nowhere as dramatic as in 2006-07 – and the psychology behind it isn’t close to being as bullish or risk-blind – I certainly sense a significant increase in the acceptance of risk. The bottom line is that when risk aversion declines and the pursuit of return gathers steam, issuers can do things in the capital markets that are impossible in more prudent times."

"I believe most strongly that the riskiest thing in the investment world is the belief that there’s no risk. "

"Nevertheless, many investors are accepting (or maybe pursuing) increased risk. The reason, of course, is that they feel they have to. "

"In short, it’s my belief that when investors take on added risks – whether because of increased optimism or because they’re coerced to do so (as now) – they often forget to apply the caution they should. That’s bad for them. But if we’re not cognizant of the implications, it can also be bad for the rest of us."

"Risk aversion isthe essential element in sane markets. "

"The result is a more dangerous world where asset prices are higher, prospective returns are lower, risk is elevated, the quality and safety of new issues deteriorates, and the premium for bearing risk is insufficient."

"It’s one of my first principles that we never know where we’re going – given the unreliability of macro forecasting – but we ought to know where we are. “Where we are” means what the temperature of the market is: Are investors risk-averse or risk-tolerant? Are they behaving cautiously or aggressively? And thus is the market a safe place or a risky one?"

"Certainly risk tolerance has been increasing of late; high returns on risky assets have encouraged more of the same; and the markets are becoming more heated. The bottom line varies from sector to sector, but I have no doubt that markets are riskier than at any other time since the depths of the crisis in late 2008 (for credit) or early 2009 (for equities), and they are becoming more so."

"Is This a Sell Signal? If Not, Then What? No, I don’t think it’s time to bail out of the markets. Prices and valuation parameters are higher than they were a few years ago, and riskier behavior is observed. But what matters is the degree, and I don’t think it has reached the danger zone yet...... A rise in risk tolerance is something that should get your attention and focus your concentration.......I think most asset classes are priced fully – in many cases on the high side of fair – but not at bubble-type highs."

"I repeat Warren’s injunction for the simple reason that you just can’t put it any better. When others are acting imprudently, making the world a riskier place, our caution level should rise in response."

"Over the last 2-3 years, my motto for Oaktree has been consistent: “move forward, but with caution."

正式搬家!

正式搬家! 下面拍下在Yahoo Blog 版面以作懷念. 唯一可惜的是不能留低很多網友以往的留言.

 

 

 

招行兩年表現回顧

兩年過去了, 招行昨日收報$15.36. 這兩年對招行來說發生的最大兩件事件有:

1. 田惠宇代替馬尉華成為招行行長.

 

2. 金融改革腳步加快.未來進入利率市場化時代後, 唯有回報率決定資金走向. 銀行利息收入勢必受打擊,唯有以量代質.那些經營靈活,非利息收入佔比高的銀行將會佔優.

相比兩年前,截至2013.10.4 , 招行收報$14.62. 今年中配股1:1.174 (配股價$11.68). 2012每股派息$0.79.

截至2013.10.4

實際股價(約) = $16.06

兩年總回報 = 62%

兩年YOY回報 = 27%

(回報不錯!)

截至2013.10.4 (P/E & P/B 未計攤溥效應)

Price - $14.62

P/B 約 1.17倍

P/E 約 5.5倍

(變化不大!)

需然回報可能不及好多其他股票, 但經過RISK-ADJUSTED的考慮後,兩年前買入招行的投資者應該滿意吧.

且看兩年後又怎麼樣.

 

 

....................................................................

(2011.10.4 BLOG) 

 

招商銀行現價對應2011的大概估值參考:

Price - $9.94

P/B - 1.1倍

P/E - 5.1倍

 

......而巴菲特在 1989年購入富國銀行時對應PE和PB分別是5.3倍和1.21倍，而1992年購入時對應PE和PB分別是15.3倍和1.41倍，1993年購入時對應PE和PB分別是10倍和1.54倍。

 

招商銀行的管理及營運在中國銀行業是數一數二,其面對的潛在客戶數目遠高於美國,而現階段國內消費信貸及財富管理還未成主流,金融增值服務潛力亦未充份體現.這些或許就是閉上眼也見到的黃金投資機會……至於短期會否繼續下跌,就真是天蹺得!

 

以此作為紀綠,且看看兩年後又是甚麼光景!
 

 

 (備註：本網誌是個人的投資想法，不構成任何投資建議。所有投資也涉及風險,請萬分小心為上.)

值得投資嗎？

如果你有個朋友的朋友，不熟的，但知他做生意好叻，以前攪過的生意都好成功，而聽聞為人都信得過，跟他合作過的人都賺到不錯的回報。

現在他諗住攪一盤新生意，問你有冇興趣夾份投資，你做小股東，出錢不出力。還有，他開出非常吸引的條件，那就是你只需拿出6%的資金, 就能獲得價值10%的股權。

你會投資嗎？

.................................................................................................................

香港電視

王維基

往續: 成功創立  1.香港城市電訊  2.香港寬頻

市值:約16億

資產: 現金+可變賣投資約23億 (不計將軍澳廠及巳完成劇集) + 成熟及有鬥心的制作團隊.

負債:只數百萬

 

註: 做不成電視還有很多其他範籌可供發展. 況且, 若決定不玩, 發還資金也不錯.


 

個人投資者的優勢

傳統智慧告訴我們，在投資領域裏要賺錢是一件困難事，因為從牌面看，我們需要面對的是那些有無限資源及絕頂智商的大户，它們有龐大資金左右市場。不過如果我們不去跟它們硬碰，去一些沒那麼擠迫及强手如雲的戰場，玩一些較長線，非零和的遊戲，情況可能會不一樣。

作為個人投資者，如果要同大户去玩不公平的短期對賭遊戲，論財力/心計/資源 各方面,試問優勢何在呢? 所以筆者建議不如考慮踏實地去進行企業研究，然後買入一些股票作股權投資可能更為妥當(如怕煩可考慮指數基金)。起碼在這個領域，相比起大部份專業的投資/基金投資經理，一般個人投資者幸運地享有著以下的優勢：

1.可選擇作長期投資部署，不需理會短期市場波幅，無需時刻因應市況出入市場，避免錯判時機。
2. 如沒心水，可選擇靜觀其變，甚麼事也不做，即不用强制性交易。
3. 不需向客户及公司交代，沒有季度“表現“壓力，也沒有Peer Pressure。需知道壓力是犯錯的根源。
4. 可以把遊戲單純化，看待股票如持有企業的一小部份(根本亦確是如此),看投資的角度會有所不同。
5. 可以在沒有規限下自由選股 (好多市面上基金是有選股限制如公司市值等)。
6. 可以在沒有規限下決定個股所持比重 (個股持倉比例限制在基金組合是常態)。

還不夠？實情是如果能善用以上這些優勢,並以極認真的態度及很穩健的方法進行, 若發揮得宜,在股市裏獲得滿意回報亦屬合理。所謂“ be a master of very few things rather than jack of all trade" 實為至理，說到底，大部份人如你我他也只不過是一般人而已。

至於這些簡單道理為何得不到廣泛宣揚及應用，只要稍明白金融業的運作自會了解......

"The stock market is a no-called-strike game. You don’t have to swing at everything–you can wait for your pitch. The problem when you’re a money manager is that your fans keep yelling, ‘Swing, you bum!" - Warren Buffett

JOEL GREENBLATT 談投資 (Graham & Doddsville 訪問摘要)

Joel Greenblatt 是著名美國投資者, 亦時投資書作家.

他的投資紀錄超卓. 以下是 Graham & Doddsville 訪問他的部份摘要, 從中可看出他的投資功力深厚, 對價值投資概念的領略透徹.

………………………………………………………………………………………….

Q:Harkening back to the first part of your investing career, you talked about passing on ideas. How many ideas did you pass on for every idea that you ended up acting upon?

Joel: It’s a tough one. I would say it obviously depends on how selective you are. If I looked at 40 or 50 ideas, and, while perhaps 12 or 13 of them would have worked out, if I end up only buying one, that’s okay. That’s fine as long as the one I choose works out. It doesn’t matter that I missed out on 11 or 12. Not losing money is a good way to ensure that your portfolio has a good risk/reward profile. One of the things I said in You Can Be a Stock Market Genius isif you don’t lose money, most of the alternatives are good.

Even if you don’t know what the upside is – if you just know there’s upside – you can create scenarios where you have an excellent risk/reward. Positions with limited downside are the types of positions that I have loaded up on in the past. Not the positions with the biggest payoff. I could buy a lot knowing that I wouldn’t lose much and that there were good possibilities that it was worth a lot more over time. At the very least, I knew that my downside was well-protected and so I could create an asymmetric risk/ reward by saying if I don’t lose much, there are not many alternatives other than to make money.

Something else that I’ve said in my class is that if you are trying to analyze an investment and there’s a lot of uncertainty regarding a company – whether it’s new technology or new competitors, or something else – or the industry in general is uncertain such that it’s very hard to predict what’s going to happen in the future, just skip that one and find one you can analyze. If you invest in six or eight things that you’ve analyzed closely, and if you’re pretty good at valuation and you have a long time horizon to see your target valuation eventually play out, then you’re going to do incredibly well even if you’re right on only four or five of the ideas. This is especially true if you include a margin of safety so that you’re not losing too much on the ones where you’re wrong.

What I said in the beginning is true: if you’re good at valuing businesses, the market will eventually agree with you. But that’s eventually. It could be in a couple weeks or a couple years, and that’s a big difference. The traditional definition of arbitrage always went something like this: buy gold in New York and sell it simultaneously in London, and you’ll make a dollar. But if I told you, “well, I guarantee you’ll make a dollar, but you could lose half of your money first, and it could take three years for you to make that dollar, and it’s going to bounce around randomly in the interim,” that’s not quite arbitrage in the traditional sense.

It’s certainly not riskless arbitrage, but it is a type of arbitrage – it’s a type of time arbitrage. That’s very hard for people to do. Throw in the fact that you don’t always get the valuation right. Yes, if you did good valuation work, the market will agree with you. I would submit that most people cannot value most companies well. If you’re very selective, however, you can value certain companies well. And that’s what I would think about doing.

Q: With respect to your risk management strategy, appropriately sizing positions has traditionally been one area of focus for you, correct?

Joel:Yes, people would say ‘how can you own only six or eight companies,’ because during a lot of my career, six or eight positions represented 80+% of my portfolio. People thought that was crazy because of the volatility and the Sharpe ratio or whatever you might want to look at, but the point is that I look at it differently. I look at stocks not as pieces of paper that bounce around. I look at them as ownership stakes in businesses.

One of the examples that Buffett gives is as follows: suppose you sold your business and you had $1 million. You walk into a town and you want to invest the money conservatively. You might look around and see that there are 50 businesses in the town but you want to try to pick ones that you think have a nice future that you could buy at a reason-able price. If you pick six or eight of them, most people would think that owning a stake in the barbershop, the hotel, and whatever other businesses you thought had nice repeat customers that would continue to grow over time as the town grew, was a pretty conservative way to go.

You’re not throwing all of your money into one business, you’re picking six or eight businesses that you researched carefully; have strong management and look like they have good franchises. That sounds fairly conservative to me. That’s how I look at owning a portfolio of stocks. Once again, they’re not pieces of paper that bounce around.

If you’re a long-term holder and you own a chain of stores in the Midwest and something bad happens to Greece, there may be some small impact, but you’re not going to sell your business for half of what you think it’s worth all of a sudden. If I’m a shareowner in businesses, I need to have a long -term perspective that things will work out roughly as I expect, otherwise I shouldn’t own them.

Q: Is there something in your background that made you predisposed to having a long-term mindset and a commitment to ensuring a margin of safety for each investment, or is this something which you developed over time?

Joel:This is a mindset I developed as early as an undergraduate student. As I mentioned earlier, I became interested in this business by reading Ben Graham. That’s what resonated with me, so what can I say? Margin of safety and how to think about Mr. Market are things that I thought about very early in my investing career.

Graham’s tenets seemed logical and simple – simple enough even for me to understand actually! So I started reading and thinking and experiencing. Some things you have to learn by doing them wrong, so I en-courage people to risk being wrong. You can’t be a good investor without investing.

As you gain experience you start to understand risk/ reward; you start under-standing what looks like a good opportunity and what doesn’t; you recognize when you have more knowledge than the market about a given issue and when you don’t. So it’s a matter of comparing situations to your history of opportunities. I’ve also said in class that one of the important things to look at is not just what’s available now but what you think might be available in the future, and that perspective comes with time.

Here’s the other thing – unfortunately you don’t learn from your successes all that much; you learn from the things you screwed up. You have to screw up a little bit to learn what not to do again and to remember it as well. But you have to combine this with the right thought process,which I think is the key. There are a lot of smart people out there. A lot of people have financial skills and most of them fail.

The difference between those who are successful and those who fail is perspective – the viewpoint of how they look at the market – which really just comes back to Ben Graham and keeping that long-term horizon and understanding how to filter out the noise. People are bombarded left, right, and center with information, even more so now; you can bury yourself as much as you want.

Therefore, you need a simple filter through which to look at the world. Those who have a baseline from which they can really contextualize everything they look at are the people who are successful. A lot of things are driven by emotion. When things get bouncy, as long as I continue to believe that my work was good, and my thought process was right, I have to ride it out. As easy as it sounds, it’s really hard to do.

Q: Any other parting words of wisdom for our readers?

Joel:If you want to get good at investing, read a lot and practice a lot. Even if it’s not a lot of money, it’s real money. Don’t fool yourself into thinking that this is all you need to do to lead a successful life. This is fun for me; it’s fascinating. There’s nothing wrong with this field but, as I said before, I don’t think there’s much social value in it.

You can probably say that about a lot of occupations that aren’t saving lives every day, so you don’t have to feel bad about it. But I would just encourage people pursuing an investing career who are ultimately successful in it, to figure out a way to give back. Many people reading this are Columbia MBAs and pretty much all of them are, or will be, successful in some field or another. If you can figure out a nice way to give back that’s meaningful for you, that’s even more fun than being successful in whatever you choose to do. Keep that in mind.

Source extract: http://www4.gsb.columbia.edu/filemgr?&file_id=7312109

 

 

李祿談投資 (2010哥倫比亞大學演講摘要)

從六四民運學生領袖到成功投資家，李祿的經歷都幾傳奇性。 這令我想起剛看完的電影“中國合伙人“， 中國改革開放這時代巨輪改寫了很多人的命運， 而這都是他們事前無法預料及想象得到。
看過李祿在哥倫比亞大學演講後，感覺他的投資功力果然深厚， 難怪芒格和巴菲特比願意給錢他投資。以下是那次演講摘要,有點長,但絕對值得一看 (筆者嘗試把一部份重點做了underline,希望有所幫助).

…………………………………………………………………………………………………………………………………

Bruce Greenwald: Warren Buffett says that when he retires, there are three people he would like to manage his money. First is Seth Klarman of the Baupost Group, who you will hear from later in the course. Next is Greg Alexander of the Sequoia Fund. Third is Li Lu. He happens to manage all of Charlie Munger’s money. I have a small investment with him and in four years it is up 400%.

[Applause]

Li Lu: Columbia is where my whole life in America started. I could barely speak the language. In Columbia it was where I had a new life. It was really in the Value Investing class where I got my career start. I was really worried about my student loan debt at the time and a friend told me about this class and said I need to see a lecture from Warren Buffett.

What I heard that night changed my life. He said three things:

1. A stock is not a piece of paper, it is a piece of ownership in a company.

2. You need a margin of safety so if you are wrong you don’t lose much.

3. In the market, most people are in it for the short term. It allows you a framework for dealing with the day to day volatility.

Those were three powerful concepts. I had never viewed the stock market like that. I viewed it negatively as a place made up of manipulators who were lining their own pockets. I embarked on an intensive two year study learning everything about Buffett.

Two years after that I bought my first stock. After I graduated I worked at an investment bank for a year and realized it was a mistake. I tried to start a fund but I didn’t have a track record. The first year I managed money I lost 19%.

Being a value investor means you look at the downside before looking at the upside. Before becoming an investor you need to look at how you can fail at this game. There are all sorts of ways you can fail. You need to examine who you are and see if you could be good at it. If you could ever find something you can do well that you really like — that will be your best investment. You will do better than competitors. If you can do it with intrinsic passion, that really over time will add enormous value to you.

Back to the game of investing. This concept of margin of safety is an essential concept to be a good investor. The future is unpredictable, you will always be dealt surprises, some positive most negative. You need to build in a level of safety so that whatever happens, you will not get crushed. If you can really successfully know what you are getting into, you can pretty much navigate.

Most people are troubled by what they don’t know. The world is divided by those who know and those who don’t know. If you really know — you will not pull triggers like Wall St. traders. If you are truly intellectually honest, you would not do anything.

This class teaches you to know what you are getting into, especially accepting what things you don’t know. The game of investment is really continuous learning. Everything affects an investment, it constantly changes. You are not investing in the past but the accumulative cash flow of the future. You have to want to find a certain set up where you can know something that most people don’t know. There are plenty of things I don’t know but they don’t factor into the purchase because I am using a huge margin of safety.

Buying a dollar at 50 cents. So if things turn against you, you will be okay. That is not easy. This business is brutally competitive. It is so impossible to know everything and know exactly what is going to happen to a business from now till the end that you really have to accept that what you don’t know.

Finding an edge really only comes from a right frame of mind and years of continuous study. But when you find those insights along the road of study, you need to have the guts and courage to back up the truck and ignore the opinions of everyone else. To be a better investor, you have to stand on your own. You just can’t copy other people’s insights. Sooner or later, the position turns against you. If you don’t have any insights into the business, when it goes from $100 to $50 you aren’t going to know if it will back to $100 or $200.

So this is really difficult, but on the other hand, the rewards are huge. Warren says that if you only come up with 10 good investments in your 40 year career, you will be extraordinarily rich. That’s really what it is. This shows how different value investing is than any other subject.

So how do you really understand and gain that great insight? Pick one business. Any business. And truly understand it. I tell my interns to work through this exercise – imagine a distant relative passes away and you find out that you have inherited 100% of a business they owned. What are you going to do about it? That is the mentality to take when looking at any business. I strongly encourage you to start and understand 1 business, inside out. That is better than any training possible. It does not have to be a great business, it could be any business.

You need to be able to get a feel for how you would do as a 100% owner. If you can do that, you will have a tremendous leg up against the competition. Most people don’t take that first concept correctly and it is quite sad. People view it as a piece of paper and just trade because it is easy to trade. But if it was a business you inherited, you would not be trading. You would really seek out knowledge on how it should be run, how it works. If you start with that, you will eventually know how much that business is worth.

When I started in the business in 1997, it was in the middle of the Asian Financial Crisis. A few years later there was the Internet bubble. A couple years ago was the Great Crash of 2007 – 2008. They are billed as once in a century disasters but happen every few years. Every time it goes against you, your net worth or value of your investments might go down 50%. This is really where that insight and temperament comes in.

In a sense, you have to have a certain confidence in your own judgement and not be swayed by other people’s views.It is not easy. But that is life. It is just a given. It happens to everyone. Berkshire had at least 3 times when the stock went down 50%. It happened to Carnegie. It happened to Rockefeller. It happens to everyone. If you really made a mistake, it would not stop at 50% but go to 0.

This happens to even mighty companies. Look at the top 50 companies in America every 10 years. By the time 20-40 years go by, 2/3rds of them will be gone. By the time it goes to 100 years, there might be only a couple left. It’s just the way it is. Look at what happened to the once mighty General Motors. So thats why I’m saying is, investing is a continuous learning process because your investments are constantly changing

So for those of you that have curiosity and the temperament, this game couldn’t be better. Capitalism rewards people who are talented at capital allocator. So if you have the aptitude and temperament, it is the great game. If you don’t have that then I urge you not to go and become a nuisance. That is really what Wall Street did, they don’t really create anything they just move money around.

Letting the financial industry get too big is bad for the economy, it is just as bad as getting addicted to casinos, drugs, and alcohol. None of them are really useful, they just transfer wealth. That is what I think happened on Wall Street over the last several decades. So avoid being harmful.

With that I am open to questions.

Q: Mohnish Pabrai recently spoke about his reluctance about investing in China due to the multiple accounting books / the possibility of fraud. How do you deal with this given your own investments in China?

Li Lu: Well, you know I think he is right. Every thing has an exception though. Just because a next door neighbor is a fraud doesn’t mean you are. That is one question to ask— whether you can trust the accounting and people running the business. That can have a huge impact on the business. I suggest you spend a lot of time looking at these factors, especially if you are investing for the long haul.

Q: Why did you decide to go into venture capital? How is that different than your other investing?

Li Lu: I always had this bent that I want to build a real business. I started a venture and it was really a lot of fun. Overall, it is a tougher game than simply investing in securities because you have to evolve to the day to day changes in operations and it is just not as easy to build great businesses. Every generation has a handful of great businesses that come from no where and come to dominate their fields.

It is much more rewarding as an investor to pick those. Also, you are more likely to find managers much more capable than yourself. Overall, I learned a lot. I learned a lot in how businesses succeed and how businesses fail. It really was a lot of fun. I probably carried it too far — I eventually ran one of the businesses and it was of course a mistake.

Q: I read that when you look at an industry, you look at the most miserable failures of that industry to see whether you will invest in it. Can you talk a bit about that?

Li Lu: It goes back to understanding the business. Once you have that understanding you can extend it to understanding an industry. A certain industry might have characteristics that make it different than others. In certain industries you might have better prospects than others. Find the best of the players in the industry and the worst players.

And see how they perform over time. And if the worst players perform reasonably well relative to the great players — that tells you something about the characteristics about the industry. That is not always the case but it is often the case. Certain industries are better than others.

So if you can understand a business inside out you can then eventually extend that to understanding an industry. If you can get that insight, it is enormously beneficial. If you can then concentrate that on a business with superior economics in an industry with superior economics with good management and you get them at the right price — the chances are that you can stay for a very long time.

Q: Did you have any specific example?

Li Lu: I have studied many over the years. As I have said, don’t copy other people’s insights because it doesn’t work. Automobiles are amazing. If you look at the early days it started with several players and concentrated with just a few players that became enormously profitable. Then they became miserable. You then see how the life cycle turns with new automakers in China and India. Everything has a reason.

If you want a good idea — look at General Motors from the early days, look every 5 years and see how the performance metrics change. The Graham and Dodd Center should collect all the data and perform some kind of commentary on it.

Bruce Greenwald:Do you want me to give you the answer to that? In the 1960s, their return on capital was 46%. In the 1970s their return on capital was 28%. In the 1980s it was 9% in the 1990s it was 6%. You want to guess how negative it is now?

Li Lu: So that is really fascinating. If you have that data, the amount of insight that would yield would be astonishing. So instead of just accepting the conventional wisdom that the auto business is bad — that is just not true. Or if you say well those guys just unbelievable money machines — that is not true either. So if you can really examine those statistics and understand it that will give you an advantage for analyzing new situations like in China and India. That is really what turns me on. Understanding this gives you a tremendous leg up.

Q: I wanted to ask you about BYD. I heard that you thought it was important for them to introduce a model to the US and wanted to know why you thought that.

Li Lu: That might be a better question to ask the BYD chairman than myself. Well, If you are just talking about electric vehicles, you know the key — the heart and soul of the electric vehicle age the heart is the battery. There is the battery, electric motor, and the electric control control panel. The electric motor has been there for 100 years, control system is software that can be improved over time.

The battery is really where you get the biggest appreciation and is what determines the value of the electric vehicle. 100 years before the Model-T was introduced, the competition between electric vehicles and gasoline was not nearly as optimistic. Up and till then, 1/3rd of cars being produced were electric. It wasn’t until Rockefeller got oil extracted easily enough that it worked. Henry Ford was able to make the internal combustion work even though it wasted 85% of the energy. He was able to build the engine and produce automobiles that were cheap enough for people to buy and it took off. That is where you find the real winners.

Now, years later, we know that the way that oil is burned contributes to global warming. If it continues, the planet might still be here but all the human beings might not. Human beings have only been on the planet for a tiny bit of the earth’s history. So there are all sorts of good reasons for electric cars. Battery development has advanced so much that it is now comparable to the price and performance of traditional cars. So now with the help of companies like BYD, the balance is about to tilt towards where performance and price are getting to the level that makes them a desirable alternative. It will be desirable everywhere. Eventually, if you have a car that does all that, it will be sold everywhere.

Q: What about BYD versus others in the industry?

Li Lu: The market will determine that.

Q: Yeah – but why BYD versus others?

Li Lu: Well because we also studied all those other guys. We will see when the winner emerges whether we are right or wrong.

Q: Right – but what did you look at to reach that view?

Li Lu: There are a lot of people who have worked over 100 years making great cars. The technology for building a traditional car has been refined enough to where it can be learned in a short period. The place we are still seeing a curve of continuous rapid improvement is with the batteries for cars.

Whoever is leading the charge will have a major advantage. There is really only one company that is a leader in battery manufacturing and automobile manufacturing. There is only one company. To put this together you need a Ford to put that together. So far those two elements need to be put together. It is not an easy process.

Q: So you went to BYD in 2005 and then you brought Berkshire as well. I saw that you sold a small amount of your BYD position at the end of last year. Was it just rebalancing? Can I just wanted to get your thoughts on that.

Li Lu: Actually I started my BYD position in 2002. I sold a small amount of shares because an investor of mine had an emergency redemption.

Q: We read your profile online. I had a question –do you have any problems when trying to invest in China?

Li Lu: Yeah I do have some difficulty. I did not really see a factory plant at BYD until the end of 2008. I really did not have a better understanding till then. That really causes you to question what it is before you make an investment. With investing, you have to work with imperfect information because you are buying a piece of the future. I did not really get a chance to get more information because the problem in Asia till much later but it did not stop me from making my investment decision.

So there is a point, where if you have enough margin of safety– that is why I kept coming back to the elementary concept of margin of safety– you can allow much more uncertainty and unknowns. So the answer of the question is does that stop you from making the investment? No.

Q: So I did some research on lithium ion batteries, and I saw that BYD has a manufacturing advantage with consumer batteries. But I saw that automobile batteries are much more complex. I did not think that the idea of a good consumer battery manufacturer + an automobile maker made much sense. So when Buffett looked at the stock maybe it was a better deal but today it is this dream of vehicles that is really priced in. It does not feel like a good value investor stock. So why would you own it today?

Li Lu: Well that is interesting. One of the most fascinating things about being an investor is that surprises are part of the game. When you get into situations like BYD, you see lots of good surprises. Chuanfu and his team have this fabulous culture, everything people thought they knew turned out to be a few years late. He got into battery manufacturing in that particular way because he really had no other option. He had no money, he only had $300,000 in venture capital funding before IPO and that was it.

He raised money in an IPO and Buffett gave him $200M, now they have 160,000 employees. $6-7B in revenues, $500M in net profit. It is amazing. So he has this ability to adapt in a competitive environment. He has demonstrated that ability again again and again. The way he does automation is far cheaper than anyone else and more reliable.

He continues to surprise me with his ingenuity, to figure out ways to do something better than everyone else. What he is currently doing is very different than what everyone else has done. At the end of the day, you might look at what he has done.

So how do you look at it as an investor with imperfect information? Well I suggest you look at what he has accomplished. 8 years ago I had no idea they would go into the automobile or laptop or cellphone battery business. So that demonstrates how he is. This investment is not easy to understand because it is changing so fast, at such a large scale. An almost unheard of speed. Their manufacturing capabilities will double soon.

This year they will hire 10,000 college graduates, 8 or 9 thousand engineers. The scale is almost unparalleled. So this is why the study of history, of all the great corporations will give you a good insight in seeing what will happen with BYD. I suggested that we start with GM and analyze its performance every 5 years for 100 years to understand at least one aspect of BYD’s business.

Q: One investor came in and said talking to management is a waste of time. They will say what you want them to say. Obviously it sounds like you don’t agree with that. What do you think? Will you pay a premium for a business with a moat?

Li Lu: There is no general rule. The key in investing is to know what you know and know what you don’t know. You can know about management teams without meeting with them. Every situation is slightly different. So I come back to the point that if you know enough on other things that there is enough margin of safety. Even if you meet with management, you may not learn something. Obviously, actions speak louder.

You want to see what they have done. Everything being equal, the more you know about management, the more honest and upfront they are, the more motive they have, the better the situation is and the deeper the discount. You have to analyze it all. The key to analyzing it is you have to ask: do I really know what I think I know, do I really know what I don’t know? If you can’t answer that question, chances are you are gambling.

Q: What kind of preparation do you do before meeting a management team?

Li Lu: I don’t really have a set method. Because I usually am just curious about the business and don’t know a lot. So you are prepared and not prepared. If you are really curious, you want to learn more and study it more. When working at a hedge fund or mutual fund, you are expected to learn a business in one week. You can’t truly understand everything about a business in one week.

It took me 10 years and I am still learning new things about BYD. It is a continuous learning process. You could spend a lifetime studying a business or industry, but in a few seconds I can tell you whether or not I like it. You want to build knowledge by continually learning. There is not set preparation.

Q: Recently, Jim Chanos gave us his thesis on the China Syndrome with there possibly being a bubble.

Li Lu: Well, it is too big of a question for me. I don’t know

Q: 20 years ago you said you challenged conventional wisdom in China. Out of curiosity, in terms of value investing what do you challenge in the conventional wisdom?

Li Lu: Well, the fundamental philosophy of value investing is very sound. Its basically the three things:

1. A stock is not a piece of paper, it is a piece of ownership in a company.

2. You need a margin of safety so if you are wrong you don’t lose much.

3. In the market, most people are in it for the short term. It allows you a framework for dealing with the day to day volatility.

That is really an intelligent approach. So therefore any intelligent investing is really value investing. There is a certain level of intellectual honesty. If you have all that insight going into analyzing businesses I don’t have any arguments with it.

Q: What is your point of view on long / short positions in value investing?

Li Lu: The most profitable kind of investing is long term investing. You want to allow the time that it might take because you don’t know when the market will catch on. If you can find a business with good management with good industry fundamentals blowing it forward, you have a good opportunity and you can save money on taxes.

A short cannot be a fundamentally long term position. In the long game, the upside is unlimited. Your downside is 100%. In shorting it is opposite. Shorting is also essentially borrowing, so you need money and time on your side. If time is not on your side, you can be right but lose all your money.

The best kind of short usually has some kind of fraud. In those situations, management is determined to keep the fraud. Look at Bernie Madoff, 20 years time. You cannot afford to borrow money for 20 years. So shorting is a short term game. When those positions go against you, there is huge leverage that can utterly crush you.

In theory, long / short is okay, but if you are trading all the time you need to be in tune with all the things moving the market. None of them might be fundamental to the actual business. So you spend all your time chasing noise than studying a long term situation. If you cannot concentrate on things in the long term, and spend all your time thinking about the short term, you will not be able to develop the kinds of insights necessary to identify great investments.

From time to time, you will lose some money on paper. But it is just part of the game. This is why I closed long / short. You know I went through three bubbles. The Asian Financial Crisis, the Internet Bubble, and this most recent financial crisis. The biggest mistake I made is not being able to pick up undervalued companies where I had a unique insight but was tied up with this whole long / short thing. The money I left on the table is still adding up. I am still paying for those mistakes.

Q: In a bull market environment, how do you re-evaluate your thesis?

Li Lu: I don’t ever want to profit from a bubble. Soros does that, that is just not my game. I don’t profess any ability to understand how long a crowd will buy into a bubble. I invest in things that appear to be compelling values that continues. So that is why this game is a continuous learning process – because everything affecting the investment is constantly changing. Including the price. Including the prospects and elements of business success. You really do want to never stop learning. This game looks to be easy but it is not easy.

Q: Given your focus on international investments, how do you think about diversifying your investments regionally?

Li Lu: First of all, I did not really specialize in international investments. I started off doing most of my investments in the US and Canada. In recent years, I just find better bargains outside of it. One of the great things about being an investor is you can look anywhere and find great pockets of opportunities. You cannot do that as a venture capitalist as I experienced myself. So you can look anywhere for opportunities.

I do not take a regional approach to diversification. I have views towards certain countries and currencies, but it is not the driving force for a potential investment. If you have your fundamental things right, if you happen to have macro economic factors behind you, you can run a great wave.

Q: How is your investment style different today than when you started the fund?

Li Lu: A lot of things have changed. One bonus about this profession is you get better over time. Most professions, as you get older, you get out of the game. Take the example of competitive sports. If you are a figure skater or gymnast, after your teenage years you are out of the game. With investing, if you are doing it the right way, you get better over time. Your knowledge accumulates exponentially. When I look back at everything I have done, I would have done it all slightly differently, but that is because I am better at it today.

So if you approach it in a fundamentally sound way, as you mature, you become better and better. That process and progression is like compounding money. In fact, you can compound knowledge faster than money. If you truly love this game, I would suggest that you don’t take short cuts. It might take longer but it is more rewarding.

Q: What is the difference between being a top political criminal in China versus a hedge fund manager today (referring to the ire directed at Wall Street)?

Li Lu: I don’t consider myself a criminal. I don’t think China considers me a criminal. What I think we are doing today with our investment in BYD in China is really helping China march towards a modern era of prosperity. BYD is providing a solution to both China and the US, to migrate from the past to a way that gets us out of the unsustainable carbon age that we live in. Global warming is a vital concern to every human being, so China is providing a great contribution to everybody with BYD.

America has had a great history of invention and here is a great company in China that is about to make a major contribution to human civilization with cheap electric vehicles and solar power.

Ultimately we will have to get our energy from the sun. Most of the energy, even fossil fuels (plants that die and then go into the ground), all originally come from the sun. So if you can figure out a way to take energy from the sun and power vehicles, while using batteries to store it, inexpensively — will really make renewable energy power everything.

The combination of those things holds the key to the future of industrial civilization that we are about to embark on. We didn’t set out with BYD with this in mind, it just happened that way. With great companies, it only looks logical in retrospect. Think about how Bill Gates started Microsoft. I don’t think he knew up front that he would take the entire market — at that time it did not exist. It is the same way with our investment in BYD. Ultimately, I think finding an inexpensive way to store energy that we harness from the sun will be a huge contribution for both China and the US, but more broadly our entire civilization.