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.
First, understand what kind of money you’re making. Wanting to make money from businesses—that’s investing. Wanting to make money from others—that’s speculation. To make money from businesses, you’ll study the company: What does the company do? Does it make money? Is it making real money? Can it make money easily? Can it keep making money? To make money from others, you’ll look at what others think of the company, whether others are buying or selling.
For 80% of amateur investors, studying and understanding companies is hard, so most people choose shortcuts—that is, studying others. I’m no exception. When I first started investing, I also looked at others. When others said it was good, I thought it was good. When others bought, I bought too. But over time, I found something wasn’t right: small gains, big losses. Ultimately, always looking at others in investing is speculation. Speculation is essentially a zero-sum game. Making money almost depends on luck, and luck, much of the time, has no certainty.
Second, know why you should first look at Buffett’s stuff in value investing. Investing makes money from companies. This is a matter of direction and must be right. But if the direction is right and the method is wrong, you still won’t make money. So you must learn. What should you learn? Over my 16 years of investing, I believe that to learn investing, you must first look at Buffett’s stuff, starting from Buffett’s letters to shareholders. Specifically, Buffett’s original English letters to shareholders from 1957 to 2024.
At this point you might ask: My education isn’t high, and I don’t understand English. What should I do? Did you know? We’re now in the AI era. Language is no longer a barrier to learning. Translation is a piece of cake for AI.
Once you truly understand the original, authentic stuff of Buffett’s value investing, you’ll have the correct ruler for investing in your hands. When others say something, you can measure it and have confidence in your heart. Without this ruler, if you start by figuring things out on your own, or by looking at others’ stuff, trust me, you’ll definitely take many detours. In investing, you must first look at Buffett’s stuff. Counting from when I started investing, it took me 14 years to understand this sentence. During that time, I paid at least six figures in tuition. If you understand this, you won’t have to take this detour, and you’ll save the tuition.
Knowing what kind of money you’re making—that’s the direction problem in investing. Knowing who to learn from—that’s the method problem in investing. Starting now, develop the habit of independent thinking in investing. Thoroughly understand these two questions, and your wallet will always stay in your own hands!