Listen Ten Standards for Investment Author: 阿格塔米尔 First, only buy undervalued stocks The key to investment success is not found in cheap, high-growth or even world-class business stock, but rather to discover and invest in stocks that are undervalued. Simply to avoid the stock price soaring and non-competitive enterprises, investors have been conducive to undesirable. Distorting effects of traditional thinking in general and various non-rational prejudice are the main reason causing the stock is undervalued. In short, if something is obvious, it is likely that other people have been found. Second, dig Edison &quot;to +1% 99% inspiration&quot; rule in the investment and the creation of inventions apply. Any serious investor must be aware of a company and its related industries in all the basic information, and only this as a starting point. Most investors and brokers are keen to study the income statement, but I learned from balance sheet to obtain information. Financial statements, management reports are often more telling than that. I am engaged in investment in these years, I encountered a successful investor is not one who likes the company, industry and country for investigation. Third, do not believe that the wisdom of the market This is not only because most market participants know that some things can not be true. Market price does not accurately reflect the information is not accurate to reflect more complete and exaggerated information. The formation of human evolution a psychological feeling to go with the crowd is right, but it depends on you following the Bulls and the Bears run or run along with other animals. Followed the bull and bear run, even if you feel good more often than not wrong, if you do not make the choice that others feel very uncomfortable, chances are you making than those who consider themselves safe, without risk of people a better chance of success . Fourth, the crisis into, back when hot Here once again clear that there are between imagination and reality gap. Times of crisis often bring the best investment opportunities. In contrast, the risk appears to be in the best state is the greatest. Were easy to make mistakes, it is easy to understand (but will soon forget) those hot stocks neighbors and friends always make more money, but never had his blessing. Stock will fall in the beginning of the crisis, but it will rebound over time around. 5, suspected to have been proven successful Stock is overvalued and the company lost market share and profitability is a major cause of other investors and competitors will soon see the success has been achieved. Even if the tactics of world-class companies to rival great trouble, no matter how good the company is immune from competition. Re-emphasize that the success has been proven to predict success in the future the idea is wrong. 6, looking for the next generation of world-class enterprise Choice is to develop world-class enterprise in the long run will give you the greatest rate of return. Once fully approved, these companies are no longer cheap. The key is not simply to find a strong business, but before other people understand what is recognized as a world class company should be necessary. The best of the world-class companies set standards is that they not only survive in global competition, and prosperity. Not to participate in global competition, companies are destined to self-destructive. 7, insights derived from the unusual way The most effective way to seek truth is to listen to criticism, attacks and negative comments. In predicting a company&#39;s development prospects, I like to collect its rivals and customers the company&#39;s management views and opinions. Sudden widespread concern that investors often reflect the result of excessive. Most resources are neglected or steer clear of the facts or trends before investors have great value. 8, 9 Investigation of standard business We can not predict the next crisis will erupt anytime, but fortunately that is easy to see and avoid the investment mainstream. Need to do (along with a lone spirit) to the very call to action against the investment enthusiasm of others, we are keen to sell the stock, we are keen to give up the industrial sector or market. Trends in their own escape from the market one way out is not to focus only on evaluation criteria (such as price-earnings ratio or GDP). I like to use the indicators are: ● price / cash earnings ● Price / property net output ● net debt / net assets ● Cash flow ● Return on equity trend ● operating margin trend 9, record the reasons for your investment decisions We are &quot;winners&quot; remember than &quot;losers&quot; more clearly, it is not surprising. Over the years, I have found come back to visit in the past made the investment report is valuable. Analysis ultimately proved correct those causes, even more important is that the wrong reasons. People instinctively do not make the same mistake, this psychological phenomenon called &quot;hindsight.&quot; But this really is the only way mistakes. Only when investors from time to time review their mistakes, learn from our mistakes, they have better investment opportunities in the industry to survive. Of course, if we learn from the mistakes of others could not be better, but very few people can do, especially lone investors. 10, looking for unusual association Few things look like they can find unusual association is valuable, especially those in emerging markets often overlooked link between the companies. Peruvian exports to China as a top ten exporters of vegetables; Taiwan&#39;s most high-tech enterprises in China and other transactions. The rise of emerging markets has also brought new contacts in this series. Among these are increasingly important but often neglected South-South linkages. Investors should see one of the investment opportunities and take action. ? ? -------------------------------------------------- -------------------------------------------- Listen to the value of investment ? Seth Klarman Background: Factions in the value of investments, in addition to Buffett and the letter to shareholders, investors, the market&#39;s most respected and most closely watched figure in the market point of view, Seth Klarman (塞斯卡拉曼, see text at the end Author) an orientation out of them. As a classic textbook Margin of Safety (safety margin) of the author, Seth is not only long-term investment performance ahead of rivals, but always in the most crucial time, full of wisdom (wise) comments help investors to improve investment skills (craft). This fine translation is divided into two parts, investment philosophy with the article you have selected in February this year, the latest report released by Seth Klarman, the article not only analyze the market situation at that time the biggest challenges facing investors, but also explained why he thought the market volatility (or uncertainty) is valuable. Actual operation of the latter part of the article for you Excerpt Seth talks by the end of March the contents of a longer, during which he not only details the current investment strategy and how to value investment and margin of safety in accordance with the idea of stock picking, it is a rare presentation of its team culture, and 20 years of investment experience. ? Investment Philosophy articles ? Enigmatic Mr. Market (Mr. Market) Notation: Mr. Market value of investment from a pioneer, said Benjamin Graham. &quot;Common stocks have one important investment characteristic and one important speculative characteristic. Their investment value and average market price tend to increase irregularly but persistently over the decades, as their net worth builds up through the reinvestment of undistributed earnings. However, most of the time common stocks are subject to irrational and excessive price fluctuations in both directions, as the consequence of the ingrained tendency of most people to speculate or gamble &quot;. Commonly referred to as the stock has two properties, one for investment, one for speculation. Investment value, that is, stock prices will always increase over time rather than regular, because these companies do not reinvest profits in dividends, is bound to increase their net worth. However, in most of the time inside, the stock price shocks to the two directions of non rational, understanding of this point Ye Hao, speculation or gambling is a lot of people indelible (in-depth bone marrow) in nature. ? Current market conditions, investors thought no less than the turbulent fluctuations of the market. Investors are &quot;long-term&quot; in the shorter and shorter, exaggerated point about, many investors have a daily close to the time limit for a transaction. Can say, wait and see who in addition to the market, and the rest of the people on into two categories: investors (long term) and traders (daily). The real bear long-term investment often means &quot;short&quot; of the huge losses. Old adage &quot;no pain, no gain&quot; in the stock market should be changed to &quot;no short-term sacrifice, no long-term gain.&quot; For investors in terms of market panic selling in the past, to restore confidence and stability in that their hard work brings life. For investors, the biggest challenge is neither a &quot;stumble endlessly,&quot; the stock price, nor is it a roller coaster day, the shock, but in the macro-economic downturn, the fundamentals of the company is facing unprecedented difficulties. We have been adhering to the over-reaction (down) = investment opportunities in investment philosophy. In addition to fundamental changes in stock price caused by the normal response, the excessive reaction of the reasons might include: a growth stock performance lower than expected growth, debt was downgraded, the company was removed from the index components, as margin calls were forced to sell etc. (the latter part of this chapter will give a detail of actual combat operations). Of course, undeniable that almost all species now on the market are deeply rate down, really hard to distinguish what is a reasonable response, which is over-reaction. Current macroeconomic, price, credit and equity prices there is a vicious circle between. With the real estate market (residential and commercial) of the sharp fall in global stock market value has shrunk sharply, both individual investors or institutional investors have suffered huge losses. Followed, the new project was shelved, the consumption plan was disrupted. Deterioration of the economy and rising unemployment to decline in sales no end in sight, it is overcapacity in various industries. Downward pressure on prices was increasing, the company&#39;s profitability and cash flow decline. We need to face reality: consumer spending may not be cyclical, but long-term to decline; consumer habits may be permanent; &quot;missing&quot; part of the demand may never be brought back. Dilemma for the Government, on the one hand sharp reduction in revenue, on the other hand for the launch consumer pays the bill (coupon), that one day this vicious circle be broken, so it is always the economy or stock prices rebound, but the reality At the same time taught us that even then the cycle will be broken sound, whether economic or stock prices always drop. If you do in 2008 is a value investment, then investors will again caution against wave after wave of sell-off really surprised them even more surprising was the company&#39;s deteriorating fundamentals, falling stock prices have made &quot; rationality. &quot; Many investors were forced out early, late settlement, the income approach rather than happy to learn the value of investors took over. Buffett&#39;s famous phrase widespread - only when the tide goes out, before we know who is swimming naked, I think the incomplete pairs. What I am not playing word games, but when the tide goes out, almost all of the portfolio will decline, degree. Some investors get out in time, hold out; while those who invest in construction companies, banks, &quot;toxic&quot; sub-prime products, investors may never have a chance to stand up; some investors early Sharu, some ridicule they committed errors, but the facts will eventually prove that they are right. So I think this saying should be changed only when the tide has flocking back, you can figure out exactly who is swimming naked. Two senior investment value and Dodd Graham told us that the madness of financial markets itself as a trading decisions to determine their only rivals, but not as an investment to judge the trajectory to follow. Sometimes the market will give you the hands of the premium variety, but sometimes allowed to discount. If the hopes Mr. Market give you tips (advice), that the market is full of wisdom, you are destined to fail. Conversely, if you find from the market opportunities, make full use of market psychology of extreme reaction, you will be a great chance of success (especially in the long run). If only the stock as a symbol (ticker tape), will inevitably be led astray; and if the stock as part of the business interests of the (fractional interest), you can ensure that no deviation from the correct track. Maintain the necessary clear understanding of the market in turmoil is particularly important. ? Concerned about the process, not results In the current market conditions, fund managers can only control your own investment philosophy and investment process. Long-term investment success depends largely on the mastery of the investment process. French bank chief strategist James Montier, after watching the Beijing Olympic Games great feeling that &quot;athletes in the games before the starting gun, we need to do is to move essentials go over in my mind, not results.&quot; Investment they not so? But the actual operation, undermines the investment process are too numerous, and if a fund manager is always thinking about our customers to think of the money he&#39;s 交易 or worry about the Touzi Zhe may be redeemed, even be harmful to company&#39;s fate, Well, from the perspective of the investment process has failed. If the fund manager&#39;s investment has become very &quot;short term&quot;, or a target of the company&#39;s value (stock price if any) maximum, then the investment process is compromised. Investment itself is not an easy task, successful investing is more need of honesty, innovation, integrity. ? Say a few words for the uncertainty Successful investment is most needed and decisive or determined. Because long-term contrarian investment often means. When other investors hesitant, you have to use their fear and panic, spotted a good investment targets (bargain), that can act. Of course, success also requires flexibility and open investment ideas. Since you can never determine the success or failure of the economy, market fluctuations, you can never be reached on whether an investment is expected to have full grasp. If the face of these uncertainties has always vowed, from the disaster are only one step away. Successful investors should always take a humble and accept the fact that: even if its hard again, it could be wrong. Robert Rubin has said in his book, many people are sure of all things, and he seemed born to have any uncertainty about everything. Indeed, each perspective to vary. Everything after deliberation, did not hesitate in front of the bull market will always earn less; and when the bear came, never on anything, &quot;turning&quot; people, is bound to lose a mess. In the investment field, &quot;OK&quot; can be very flexible. If the conclusion of an investment problems, &quot;OK&quot; will make investors lose the opportunity to remedy. Investors should own the &quot;OK&quot; things with other people&#39;s views on this matter to &quot;balance&quot;, because other investors view the event effects on stock prices tend to be more than its true value is more important. If your check has been completely reflected in the stock price, that is, you have no differences with other investors, then your judgments have been worthless. ?&quot;Uncertain&quot; psychologically more difficult to bear, because the &quot;OK&quot; can make us more confident, and self-confidence has made us more determined. Uncertainty is the beginning of doubt, uncertainty can prompt us to be more diligent in order to remove doubt as much as possible, from this point of view, uncertainty is valuable momentum factor. ? Actual combat operations articles (Quoted and translated Seth recent speech content) As the first lesson is always a deep impression, the fund manager with personality has much to intervene in the market environment, Seth looks back into the line to catch up with the stock market in 1982, when interest rates are high, the stock market has been depressed for 18 years (when not on Wall Street Business School graduates preferred). Then join this year&#39;s fund managers will inevitably be pessimistic atmosphere of the shadow of the impact of the market, they may be the most impressive stock price can be &quot;cheap.&quot; Market coincides with the bull and bear market, investment fund managers on the character (pessimistic / optimistic) are somewhat affected. Seth consider themselves then the funds in a small learning content than the content in business school are used. Value investing in today&#39;s volatile markets more efficient, it is concerned about the return of education before people should be concerned about the risks first. Because the risk to help investors understand how much may have to bear the losses, the impact of people&#39;s minds is much larger than any other factor. Once such a fear of the spread will cause investors thought would lead to &quot;short circuit&quot;, especially when your portfolio has fallen 40%. Pioneer of value investing Warren Buffett and Graham are started from small-scale funds, according to the value of investment theory, found to be mis-pricing (mispriced) species, and then derive profits. In fact, Graham stressed that the liquidation value of the test method (net cash flow per share price if less than two-thirds can be bought. Because this stock has the equivalent of less than the clearing price. You do not need to liquidate a real home companies, but even this bankruptcy, you will not suffer losses, they represent have become very good De investment targets) not only the 20,30 BC Shi Yong Zai Graham, Jing Li that a slump, we also found many this species. Of course we should not blindly believe the cold to the data and formulas, can by detailed research, will find that some appear to have been very &quot;cheap&quot; variety is already not cheap. For example, you see the inventory and accounts receivable are very bad, and even environmental protection and other companies facing litigation and compensation. So to sum up, we not only follow the value investing, while respected in-depth fundamental research and detailed field research. ? The three pillars of our investment ideas 1, the risk of first concern, then is the return. Risk is not the same as BETA, BETA values are academic issues, no sense of investment, market volatility does not mean the other, but sometimes mean investment opportunities. We differ with Wall Street is that, on concern the risk of value investing method takes into account the loss in different scenarios, so get a price range, while the Wall Street investment through a method to get a price, it is natural computation, is the return. 2, the pursuit of absolute returns, ignore relative performance, find their own advantage, to the greatest degree of play. Now the fund industry&#39;s &quot;sorrow&quot; is too concerned about the relative performance, we gaze at the index, looking at peers, as long as the losses than others even if successful. On the relative performance was over-concerned about making organizations not want too backward, do not want too &quot;coming to the fore,&quot; to be the best strategy was moderate. But the wealthy class of customers should be concerned about absolute returns. 3, we only admired from bottom to top. Because top-down too hard, anyone can always Tazhun macroeconomic rhythm. And even if the macroeconomic projections are accurate, and to the industry and the company is another matter. So we have been bottom-up approach is taken, opponents in the circumstances of each variety to do the sensitivity analysis, or &quot;stress test.&quot; ? Successful operation of the Fund for so many years of experience we have what? First of all, greater flexibility in product design, to join. If you can only invest in real estate stocks, it should also be invested REIT, real estate companies and so on convertible bonds. The more weapons the greater the chance of winning. Second, our greatest strength lies in fund of funds into long-term (our customers only the wealthy class and institutional clients, not funds of funds, sovereign funds, pensions, mutual funds, etc.). This fund managers when making decisions, do not have to worry about whether they caused the redemption, which is critical to ensure long-term investment success factors (imagine, even if the fund manager to invest their own time limit set for three years but within 6 months face redemption pressure, even if the fund can not do anything no matter how good, so when the selected types of customers, to good). The third major advantage is to maintain good relations with partners, and ensure that we ranked first or second of their big clients, so they have large transactions such as, first thought is that we, rather than after the dozens of customers. And that these partners must also share our value investment philosophy, as this will ensure the efficient transaction process, a high success rate. ? On team building We emphasize that institutional memory (the memory of the team or agencies), key members of the team have been working for many years, but there will be new entrants, so we are also subtle changes in DNA, if a system of new members to disagree, we do not will tell them that &quot;has always been the tradition,&quot; we would say, &quot;This is our best way to arrive at practice, if you have a new proposal, also welcome your 来.&quot; additional and different opponents, We are not pre-allocated between the fund manager&#39;s investment share of fixed but a flexible allocation approach to achieve the best allocation of resources. Every three weeks or four weeks, everyone will meet together, we challenged each other&#39;s point of view. Pay, in addition to personal performance, we stress that we share weal and woe. ? What we do best investment strategy can be summed up by the market mispricing mining species. Caused a substantial discount any securities products are usually a number of reasons, holders forced to sell, and few people take disk, causing a serious imbalance of supply and demand, prices plummeted. The reason may be forced to sell the company&#39;s credit rating was reduced because (the Fund Articles of Association can not be investment grade below a certain level of species), probably due to adjustment of index constituent stocks, index funds have to sell and so on. Of course, the holder may also experience unknown to where to sell, For us, this is &quot;gratis&quot; (Of course, such opportunities rarely) but it also tells us who want to know from the hands of the ensuing cargo, if it is wise for investors than we sell, we will think again. After all, no gratuitous hate / love. Another cause substantial price discount may be due to the parent company divest subsidiaries, business may need to adjust, it might be &quot;too Zichou mother&quot; (subsidiary of debt? Management bad? ROE low?). In short in these events, we must try to figure out the reason behind, which could mean the parent (free) or subsidiary (rebirth), or even both, the opportunity to share the day&#39;s response may not explain the problem, because we usually think of selling (especially fund investors, as the company model changes, usually select out, which caused a scene in front of our analysis, that is a serious imbalance of supply and demand). But with the long-term effects of the show is often the best opportunity to value investors. For instance, we now hold a biopharmaceutical company, the original company, since many scientific research, so performance is not very prominent, but the company&#39;s royalties on the drug alone can divert 30% annual return. Then the company separated, the parent company to keep large amounts of cash accounts, responsible for new drug development, poor performance; the subsidiary is get all royalties, subsidiary, although a very modest pharmaceutical company, but this background, we believe that It is little risk. In summary, first of all we believe that the current stock price plummeted, not investors, after careful analysis concluded that the company fundamentals, but because of sell-off that is too large, and then set the paucity of funds, caused a serious imbalance of supply and demand results. Secondly, our favorite is the catalyst for a variety of market events, which makes us the best investment opportunities. Our fund early in 2008 the proportion was 35% in cash, not because of top-down and thorough understanding, but according to our margin of safety does not find the investment products, our current ratio of 20% in cash, to buy new varieties We continue to sell because the market is still a lot of dead instruments (investment instruments have been ineffective, or would cause us to disadvantage investment vehicle), hands to grasp the initiative will be higher in cash. We do not share the view now is the end of the world, we are still in very active trading. Speculators were eliminated, the next period of time, competitors will be reduced gradually. We did not determine the macro-economic point of view, every transaction we do sensitivity analysis, in different economic conditions, to select those even if the serious economic recession, but still safe investment. ? Q &amp; A ? Why this recession, the performance of value stocks to growth stocks inferior? First of all we value stocks or growth stocks is not the same as with the academic distinction, I do not think that is the value of the low PE stocks, the second, before this bubble burst, many of the so-called value stocks are in accordance with the LBO model, but now prove a model can not support the valuation. The most important thing, after the financial sector has accounted for 40% of S &amp; P, meaning that the entire economy and market are largely leveraged, so that these financial stocks (value stocks) of the adjustment had a great influence So was the concept of net worth investors confused, the value of the investment itself is not a problem. ? How to treat the relationship between risk and return? Prior to the investment risk is through sensitivity analysis, expected to amount or extent of losses, such as if housing prices from 2009 to 2011 and then every year, down 20%, if the negative growth in GDP every year, if the assumption in this recession still get returns, then the subject of such investment is safe. Another point we are different and academia, who think that the bigger the risk the higher the return, and we the contrary, we believe that less risk, higher return. Such as a stock down to 6 from 17, and from 6 down to 3, then the greatest risk of decline is 3, but obviously much bigger upside. ? How to kill the error within the Fund? Our culture has played a significant role. If you find that has made the wrong investment decisions, senior not yelling, because then the problem can only be suppressed, the future will be more serious outbreak. There is a fund two years ago, has seen goes wrong the whole company had a problem, but no such business Wenhua, Taijiazhineng things to go home with the family this Jian Ren Jiang, Ran Hou seeing Zhao company has gone further down the wrong track far. ? How to make a sell decision? First, we set the share price will not exceed our estimates of the reasonable range, if the limit has been reached in the vicinity, but after re-evaluation, maintain the original judge, then no matter how great the increase in the future there, we will start to sell. ? Twenty six years experience of most Different from other industries, we maximize the benefits only if the customer, we will maximize the benefits, it must always think of customers and their interests first. Staff Motivation, the company has more than 30 employees have the Secretary of the stock. Speaking for myself, I think the reputation (prestige or reputation) is that each of us based on the fundamental, industry popular that argument, called the Wall Street Journal Home Test. Means that any one thing you do, do you think if the board the Wall Street Journal&#39;s home page, will not shame you and your family, if so, do not do it. ? About the author: Seth. Karaman is Baupost fund president, a profound study on the value of investment, once Graham, &quot;Security Analysis Reading Guide&quot; the main author of the book. Representative there, &quot;margin of safety&quot;, because out of stock, sold at Ebay and Amazon on the 2000 and 1200 U.S. dollars. Karaman investment entry is in the common shares (Mutual Shares) the company started, but well-known growth stock investment guru Price (Michael Price) is the boss at that time, it inherits its value investing school of style, known as the Young Buffett.