Too many ideas but always too thin a wallet. When you invest, do you always feel you have too little money? Actually, the biggest advantage of individual investors is having little money! Precisely because you have little money, you should concentrate your investments. That sounds awkward, but just look at Buffett’s investment journey over these decades and you’ll understand that having too much money can sometimes be a burden. Concentrated investing means putting your money into a few good businesses. These good businesses don’t need excessive capital expenditure, and they continuously generate cash flow every year, growing year after year. Buffett’s early investments were like this—See’s Candies, Coca-Cola. These good companies created large amounts of cash for Berkshire every year. The greatest use of this cash was that Buffett could use it to acquire even better businesses. ...

If you always ask others about investing, you can’t invest well. If you easily hand your wallet to others, and you’re not responsible for your wallet, why should money make money for you? To make money steadily and consistently in investing, the most important thing is independence. You must learn to think independently. In investing, what others think doesn’t matter. What matters is what you think. So before acting, you must understand two things. ...

Have you ever had this experience? A few years ago, you clearly invested in a good company, but after holding it for less than a month and it rose 10%, you sold. The reason you sell after making a little money is not that you lack confidence in the company, but that at the moment you bought, you never intended to hold long term. So how can investing achieve long-term holding? Simple. You need to do the following three things. ...

After buying, you always want to sell. Why? Because your understanding of investment certainty isn’t enough. Outstanding students are mostly “three-good” students. Investing is no exception. Outstanding companies also have three standards. In Buffett’s view, these three standards are good company, good management, and good price. Is this company really a good company? Is this company’s management really excellent? Is this company’s stock price really high? If you hold a good company with a good corporate culture and core competitive advantages, you’ll naturally be able to hold on. From the perspective of the company and management, how can you increase investment certainty? I’ll share two methods: ...

If you could use only one financial metric for investing, which would you choose? You might use gross margin, P/E ratio, or net profit growth rate. These metrics aren’t bad, but none of them goes straight to the underlying logic of investing: How much capital did I put in, and how much can I earn? If Buffett were to choose, the metric would definitely be return on equity. In Buffett’s letters to shareholders, he repeatedly mentions return on equity. Translated, it means return on equity capital. In China, people often use ROE(return on net assets), but it’s the same idea: the money earned each year divided by your capital. For example, if you invest 100 yuan in a company and it earns 20 yuan in a year, the return on equity is 20%. ...

Is value investing really hard? If you think it’s hard, you probably haven’t understood the three cornerstones of value investing. These three cornerstones are precisely the basic investment principles of value investing. They are business thinking, margin of safety, and Mr. Market. Once you truly understand and apply these three investment principles to make money, you’ll feel that value investing is not hard at all. Essentially, these three investment principles are just common sense in doing business. ...

Why do 90% of people find investing hard? Because very few people are willing to get rich slowly. Because they lack money, they want to make quick money. Because they want to make quick money, they want shortcuts. Because they want shortcuts, they ask everywhere for tips. “Don’t give me a bunch of principles—just give me the ticker code.” But the key problem is: Knowing the what but not the why. Even if you get lucky and buy a good company, as soon as the stock price fluctuates a little, 99% of you won’t be able to hold on. That’s the hardest part of investing. ...

Is your investing order reversed? When buying, you’re casual and random. After buying, you always feel uneasy, obsessing all day: Did I buy wrong? Did I buy too expensive? Should I sell? A new idea every day, tormenting yourself every day. Why? Because you don’t know that true investing means doing enough homework when buying, and after buying, doing whatever you want! The end of investing is not fidgeting, but zoning out! ...

90% of people get the first step of investing wrong. Most of us start investing like this: We see the market rising every day, hear that relatives and friends have made a lot of money investing, so we immediately open an account, immediately buy, afraid of missing a great opportunity to get rich. But only when we find ourselves standing on a high hill, feeling the cold northwest wind, do we realize that it’s cold at the top. I’m no exception—I went through the same thing back then. Looking back now, I was too young then. Now I understand that to invest well, you must first understand these 3 things. ...

Do you think the only way to make money in investing is for stock prices to rise? If so, then in Charlie Munger’s view, you are very likely the man with the hammer. Munger said: To the man with a hammer, everything looks like a nail. You always think your investment method is best, yet you just don’t make money. The reason is simple: You invest for price differences, and you’ve been holding this unprofitable hammer all along. ...