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hello. This is Kim Mi-kan from Myongji University, summarizing any book into just three points . Today, I’d like to talk a little about War Buffett. When it comes to stock investment and asset management, if you were to ask just one person from around the world to name, everyone would mention Warren Buffett.
First of all, it is because he is a person who deserves to be spoken to that way, considering his total assets . However, one of the surprising things for me is that War Buffett's books actually aren't anything particularly outstanding. So, where did people come to understand War Buffett ? I felt that we have only been able to encounter Warren Buffett's stories through brief mentions in books or on YouTube, so I turned on this video today because I really wanted to introduce his book, *Warren Buffett's Letters to Shareholders*.
I’m telling you this out of sheer determination, but it’s not an easy book to read. Since it is a book compiled from letters sent to shareholders, it is very difficult to grasp the context compared to a well-organized book . It is practically the same as reading the original text . Because we can understand War Buffett's thoughts when we read the original text and interpretively reconstruct it .
Also, since Buffett is sending a letter as the majority shareholder to the shareholders who are members of the company he is in, you could say it is a letter from an executive or owner to the shareholders . What can we learn through that? Oh, this is how you do management. You can assume that you might be able to learn something from this kind of story.
However, what are we interested in regarding Warren Buffett ? Uh, how do you invest in stocks? Isn't that our interest? So, on the other hand, you might think that just by looking at this shareholder letter, you won't be able to hear Warren Buffett's firsthand advice on how to invest in stocks effectively .
But all of this thinking is wrong . Today, as I introduce Wallon Buffett's book *The Line of Shareholders*, I am going to briefly summarize and discuss what we can learn from it. I think it would be good to take some time to examine together what principles and straightforward advice War Buffett gives regarding managing our lives, managing our assets, or investing in stocks .
So, I only know the name Warbuffett, but actually, I don't know him well. I would like to meet you all today in a provocative way with this title . We do work hard to earn money . However, there is a condition where money does well. Money is a condition for doing well. Actually, if I were to give you a slight spoiler, where do you sleep well?
The company does well. So, companies must manage well, create good products, and sell them effectively for money to thrive. We simply don't fully understand these conditions for money to be successful . And as a result, you are working hard to make money, but you might be ruining those conditions . This is an issue that Warbuffett frequently raises .
You can view this as a suggestion that, while we are always working hard, we should reflect on whether our direction is correct . If you look at our behavior, it means we invest even if it means taking out a loan . The point is that these days, it's not just Koreans who are like this, but people all over the world.
In a way, professional investors are incredibly grateful to those who invest even if it means taking out loans . Because experts can make money when they lose money . It is primarily an economic cycle formed by factors such as interest rates and exchange rates. Everyone relies on the outlook interpreted within this cycle.
This is the reality. Don't be surprised, Warberpeace. He is a prime example of someone who seems like he would be, but is not at all. Actually, regarding this, who do they call the Warren Buffett of Europe ? Is n't that Kostolany? It is typically evident even when looking at this book by Kostolany; as I just mentioned, they do not cling to things like interest rates, exchange rates, or short- and medium-term future forecasts .
The thing is, what they are clinging to is something else . Then, it would be natural to look for a rebound in stocks that have fallen significantly. We usually do that. However, the fact is that they don't do that. As a result, people end up taking out loans to invest recklessly. Then, they get fixated on things like interest rate and exchange rate forecasts.
As a result, you are missing the actual opportunity to accumulate money through compound interest. You might not fully understand it right now. I will emphasize this in the latter part. Then, the same errors in judgment are inevitable. This is a matter of social psychology among stock investors in this jungle-like environment of the stock market .
It means committing repeated errors even though you know you are wrong . I think the point you need to realize throughout this book is that when we hold cash and then buy stocks, we are ultimately making the mistake of exposing that cash to inflation . What we actually lose the most is time. This is now the core of Buffett .
I'm uploading a video with a simple graph. So, for long-term holders, the stock price is bound to rise like this due to the compounding of time . The rest, of course, have no choice but to go through this kind of attachment. If I say it like this, they will probably nod their heads . However, I am, of course, well aware that in the actual market for buying and selling stocks, it is not easy to follow my advice or that of Wallace Buffett .
That is why I am telling you to make sure you read Warren Buffett's book, rather than just listening to my video today . You have probably heard of the company called Hathaway. Of course, Buffett does not invest as an individual . He acquired Berkshire Hathaway in the 1950s, and from the 1960s onwards, as the de facto largest shareholder and a manager, he invested in global stock markets through this company.
He is someone who did not limit himself to stock investments but also engaged in corporate investments thereafter . So, you can actually learn the best about Warren Buffett's actual activities through this book . This is because this book is an edited version of the letters Muppett wrote to the shareholders of Shasowary .
Since it is the annual letter sent to those shareholders, the total volume must be enormous, right? Now, it is an American site, and although I don't actually know much about it, they made it public so that many people could read Buffett's thoughts. For example, there is Lawrence Cunninghammy, who is a professor at George Washington University—equivalent to a law school professor in our country—and is now retired and serving as a professor emeritus .
He is a legal expert who specializes in corporate mergers and similar matters. So, you can think of me as a law scholar who studied business administration . So, Professor Cunning tells Murphy that this needs to be shared with people . So, he was delegated the authority to edit and publish the book, and it has been a very long time since it was published.
It has been done on a cycle of about three or five years because Buffett keeps sending a letter every year. Since three letters are released, he kept including those three letters to publish duplicate editions, and that is how the current edition came to be. Since the edition we are looking at is the 2020 edition, it includes everything up to Warren Buffett's recent writings.
Professor Cunning edited the shareholder letters by dividing them into ten major themes. So, some contain writings from the 1960s, others from the 2010s, and it is a book created by editing letters from various periods on the same theme . You can view it like this. So, if you look at it positively, it is vividly alive .
So, since I translated it into academic language, I translated it into honorifics. So, since we have directly shared various stories with the shareholders, the content included in the annual shareholder letter actually covers similar areas of discussion, even if there are slight variations in emphasis, does n't it?
Since the book is organized by topic based on what needs to be emphasized, it does have the drawback that it is actually not easy to clearly grasp Buffett's thoughts on each subject when you read it. However, as I have said repeatedly, this is the live data of Muppits . You will feel this kind of feeling when you read it .
So, that is the strength of this book. Broadly speaking, it covers corporate governance issues, investment matters, stocks, and investment methods other than stocks. It also discusses mergers and acquisitions, valuation, accounting, and taxes when looking at corporate value, as well as the U.S. economy and history, culture, and the future.
We are compiling the content found within Buffett's writings into these ten main categories to create this book . So, let's leave it at that for now and take a look at Buffett's thoughts. Buffett is someone who is extremely wary of getting into debt. That is why I dislike the term leverage itself. I also did not view the prediction positively.
It means they don't even attempt to finish the game with their head . And so, I was in a position where I disregarded reports and things like that released by analysts. Ultimately, it is about looking at the company . Through this book, we can also learn why Buffett views companies. Ultimately, it is a long-term investment; he even waits for decades.
The reason he does this is because Shaw Hathaway is a company that holds its own corporate assets and invests them every year . So, since I am explaining where, for what reason, and how I invested, as I just mentioned, the letter must contain stories about why Buffett looked at the company, why he invested so heavily in it this year—due to its specific characteristics, and so on.
So, through that, regarding Murphy's point of view and the fact that long-term investing is actually being practiced, would n't there be times when shareholders want to sell their shares and make a profit immediately when the stock price skyrockets? Then, you would put things like the reasons why Buffett isn't selling it right now into the shareholder book.
I am telling you that we can read Buffett's thoughts in this way . So, in the end, this book is not about investment techniques at all. However, this is the optimal source for reading about Buffett's economic views and principles of judgment . If you think like this, you won't be able to hear it . In the end, after reading this book, I found that ideas completely opposite to our general thinking appear throughout, just as I mentioned earlier .
To break it down into a few points and get straight to the point, first are profitability and survival. This is actually the point where we face the biggest dilemma when investing. I am telling you this because there are many cases where we take out loans to increase our rate of return . It is about taking leverage to earn more, and Buffett's message is very simple.
First of all, the message is to survive. So, for the shareholders, our priority is survival—that is, risk management. Because we prioritized this aspect, we handled this part in that way . The things that are being done keep coming up repeatedly. Therefore, to earn more, you must never create the possibility of bankruptcy, and if you are eliminated by that bankruptcy, there is no next step.
What you do now is the core of the legal perspective. The prediction I mentioned earlier is also a direct hit. Now, regarding predictions and principles, investing well ultimately depends on trends in interest rates, exchange rates, and stock prices, does n't it? Now, when it comes to predicting these things, instead of focusing on the ability to make sharp analyses and predict them to finish, it is important to create an investment structure that allows you to survive continuously even if you are wrong.
Now, this is included as a core message in Buffett's shareholder books . A story about low prices and good companies. In reality, when we invest in stocks, do n't we naturally tend to look more closely at those that are currently undervalued and slightly weaker? Then, if he runs away, you can make 15 times the money instead of 1.5 times .
Regarding this misconception, while such phenomena have actually been occurring in Korea recently, they are merely very short-term exceptional occurrences. So, based on that premise, what Buffett says is that buying cheap stocks and making money from a rebound is a very dangerous way of thinking because the opposite exists .
So, the point is that instead of looking at the stock price, you need to look at the company—more specifically, the current business it is conducting. It emphasizes that a low stock price is not necessarily a good thing; rather, the most important thing is to examine whether the value of the business being pursued is currently being reasonably assessed.
I think you will understand this quickly. The next part is interesting. It is waiting. Ultimately, isn't the history of Meoksher essentially one company attracting investment for 58 years ? Well, such sentiments are appearing in my recent writings . He says that he actually made about 12 ridiculous decisions .
One of the representative examples is that EJ Berkshire was originally a company involved in the textile industry . So, closing down the dog business and gradually growing it into an investment company is included as one of the really good decisions in number 12. If we calculate the total, it amounts to about once every five years, and ultimately, they managed risks and survived .
We can read that they hold a philosophy of making money through the overall upward phase of the global economy. Doing nothing is also ultimately an investment ability. This is what Warren Buffett is saying . Next is the section on crisis and long-term growth. Ultimately, because crises are scary, they rush in hard in the short term.
At such times, the desire to make money through short-term investments to avoid that anxiety operates on one hand, but a crisis inevitably comes to everyone. But the point is that the crisis will definitely pass. In a way, it may seem obvious, but ultimately, we are emphasizing that we must invest in productivity and the long-term growth of good companies.
To make a comparison, while we emphasized leverage in terms of returns, Buffett emphasized survival. If you emphasize predictions regarding market outlooks, Buffett is someone who emphasizes principles. If you emphasize low prices in stock selection, Buffett is someone who emphasizes the reasonable price of good companies.
Regarding trading frequency, we are prone to frequent trading, but Buffett speaks of a philosophy of waiting and what is called the horizon of time. While we are swept away by short-term anxiety, Buffett invests with faith in long-term growth . I think we can summarize it like this. Once you hear it, it sounds like very common sense, doesn't it?
That is how it will sound to you. However, I would like you to take some time to reflect on the surprising fact that no one follows this while listening to my video today. Realistically speaking, I think it could be interpreted that the most fundamental thing is the most unconventional . I think this book is worth reading whether you invest in stocks or not .
I believe this is a book that is definitely worth reading, no matter where we are right now, whether for our lives or for our business, management, or strategy . The focus of reading this book might vary slightly depending on our position . Uh, first of all, if you are already investing, I think it would be very good to use this as an opportunity to question your investment habits.
If you are hesitating to invest, I think it would be a good opportunity to review your principles before choosing a stock . If you are not doing so at all yet, I suggest you consider this as a very important topic for establishing your economic perspective on money and the economy . We know his name very well, but I suspect that we might surprisingly not know much about his thinking.
I hope that what I have to say today will be of some help to you in understanding Walloon Buffett a little more systematically . Wallon's Book of Shareholders is a boring book, but once you start reading it, it is incredibly fun and useful. I do n't think you will hear me even if you think that way .
Yes, I will visit you again next time with another good book . Goodbye everyone until next time .
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