Q: What do you think about the size?
Mr. Gao: The handling of the size of the position has always been an advantage in the development process of Huirong Investment. We've come across investments that are diametrically opposed to our views on size.
Some** believe that the goal of an investment is to prevent an asset from causing excessive losses. They don't understand that if you can judge whether an idea is good or bad, then why can't you judge whether the idea is very good or ordinarily goodWhy can't very good ideas make up a larger percentage of a portfolio?
I also think that a portfolio can afford a single loss of more than 1 10 or 2 10 of total assets. Therefore, we are more inclined to judge whether a good investment target has become a great investment target through continuous research and ***, or judge that something is about to happen through a certain announcement of the company.
If you study a company long enough, you can immediately understand the meaning of the announcement, while others may think it's not going in the right direction or don't understand the implications.
We'll stay away from any form of insider trading, but we want to take advantage of the insights we've cultivated over time and the waiting time our long-term clients have given us. Over the years, most of our gains have come from investments that cost us money in the first place. We look for catalysts for profit: the company is going to complete a restructuring plan, a liquidation plan, or an M&A transaction is likely to be completed, or the company will buy back an asset in its portfolio or buy back a large part of the proceeds, etc.
These are the "catalysts" that we will be more confident in holding larger**. The hardest part of value investing without finding a "catalyst" is that you may hold a long-term unpopular **, and in 5 to 10 years or more you think you made the mistake of entering the market too early, and you start to doubt yourself.
My team and clients are also suspicious from time to time, so I don't know anyone other than Warren Buffett who can hold the underperforming ** for more than 10 years and everyone thinks it's okay because they firmly believe that it will get better in the end.
Every investor should also self-reflect on whether you are wrong if you hold one that lastsWould you have seen something clearly before entering the market, rather than after you started holding it at your best.
Another point of view of Huirong Intelligent Investment is that we know that we can't know everything, so we have to spend a lot of time learning the lessons of the investment process. We learn from successes and failures, as both can further tell you a deeper understanding of value investing.
You won't immediately understand these investment lessons, and it may take a long time to reflect on them. I remember seeing an interview with a **manager many years ago, and when asked about his best investment over the years, he said: I found and **a** at 5 yuan, and now it has risen to 50 yuan.
The motto of Huirong Zhitou is: there is no secret to getting rich, but few people are willing to get rich slowly.