저자: DanielTornvall/영상주제인물LiLu · 외국인
요약 보기
한 줄 결론: 영상은 Li Lu의 가치투자 철학과 중국 경제 분석을 소개하며, 대상 자산에 대한 명시적 1~3개월 가격 방향 예측은 없고 장기적 관점만 제시된다. [가치투자 원칙] 주식은 사업의 일부 지분이며, 시장은 나를 지배하는 존재가 아니라 나를 섬기는 도구로 봐야 한다. 투자는 불확실한 미래를 예측하는 일이므로 안전마진이 필요하다. [능력의 범위(Circle of Competence)] 자신이 아는 영역과 그 한계를 명확히 아는 것이 중요하며, 지식을 꾸준히 넓혀 자본을 장기적으로 키워야 한다. [시장의 비합리성] 소수 기술기업에 시장이 과도하게 쏠린 현상(시총/GDP 비중 2~4%에서 엔비디아 포함 약 15%)을 지적하며, 한 AI 기업이 낮은 성공 가능성에도 2조 달러 가치 평가로 대규모 투자 유치를 시도하는 사례를 비합리성의 예로 들었다. 비합리성은 기회를 만든다고 보았다. [시장 장기 수익률] S&P500은 2000~2010년 사이 사실상 0%, 최근 16년 연 14~15% 수준을 보였고, 26년 평균은 한 자릿수 중후반 수준이라고 설명했다. 단기 극단은 있지만 장기적으로는 균형으로 수렴한다는 입장이다. [중국 경제] 중등소득국 함정 극복을 위해 중국은 '중국제조 2025' 등으로 반도체 등 병목 기술의 자급을 추진했다. 반면 부동산 가격 약 40% 하락으로 중산층 가계 자산이 60~70% 감소했고, 이로 인해 내수가 둔화되고 저축률이 급등했다. 이 과정이 제조 고도화 비용으로 작용했다는 분석이다. 중국 시장은 주가가 오랫동안 정체되었지만 우량 기업이 저평가되어 있어 장기적으로 기회가 있을 수 있다는 견해다. [미중 관계] 두 나라 정상이 8개월간 4차례 만나는 이유는 전략적 안정성 유지에 있으며, 이는 상호의존 속 평화적 경쟁을 의미한다고 해석했다. [정치 리스크] 국가별 정치 체제와 역사를 깊이 공부하여 능력 범위를 정치 영역까지 넓혀야 한다고 조언했다. [단기 성과 추구 경계] 매년·매분기 좋은 수치를 보고하려는 욕구는 투기자가 되는 길이며, 가치투자자는 시장을 도구로 삼아야 하고 지수 투자가 더 나은 선택일 수 있다고 강조했다. [리스크 관리] 가치투자의 핵심은 하방 보호이며, 잘 아는 분야에만 투자하고 단순한 것부터 점진적으로 복잡한 것으로 이해를 넓혀야 한다. [종합] 영상은 특정 종목이나 자산의 단기 방향을 언급하지 않으며, 중국 시장과 기술주 과열에 대한 장기적 시각만 제시한다. 진행자는 본 영상이 투자 조언이 아니라 교육·오락 목적이라고 명시했다.
다듬은 글
Hello, welcome to another video. Today we'll take a look at some interesting highlights from Li Lu's speech at Columbia Business School's 36th Annual Graham and Dodd Event. It was a very good hour and a half interview, so I'll highlight for you about six to eight key thoughts from this conversation.
The first thought is an exposition of Ben Graham's views, which were very profound in their time and remain so today , if you think about it; He teaches them very, very well. Let's see what he says. Sure, the discipline of value investing originated at Columbia University, but some of its core principles have become truly timeless .
So, if I had to highlight the main principles of the value investing discipline, in my opinion there are six. Three of them come directly from Ben Graham, after whom today's event is named. It is a discipline based on three main ideas. First : a stock is a share of ownership, not just a piece of paper that you trade.
So buying shares is essentially the same as buying a business. Second, the market exists to serve you, not to tell you what to do—a profoundly profound realization if you are at the center of market activity. And thirdly: investing is predicting the future, which is inherently unpredictable. Therefore, you always need a safety margin that will help protect against a fall and at the same time ensure better profits.
These three things he points out are extremely profound, and unless you spend enough time reflecting on them, you will not grasp their depth and true wisdom. So, first of all, when you buy a stock, you are buying a piece of the business. This is a very insightful and really different perspective, because we all spend a lot of time studying news cycles or other things about our stocks.
And often our brains start to think like a speculator, because in his works " Financial Analysis" and "The Intelligent Investor," Ben Graham always contrasts us with speculators or intelligent investors — this is a completely different approach. A speculator perceives the market as a guide. He does not perceive the market as a tool that should serve him, which Graham also draws attention to.
The market exists to serve you, not to rule you. And what does that mean? This means that the market exists for you, not to rule you. This is a completely different approach to looking at the market. Going back to the first point: when you buy shares, you buy a share of the business. If you think about it that way, just thinking about this thing, it will calm you down a lot .
So, if you imagine that you own a piece of the business that you own shares of, you will see it differently than just a piece of paper flying back and forth, as some people say. And you know, psychologically it's a completely different game. This means you can use the market to buy or sell a share of this great business.
He is always here to serve you, not to tell you what is right and what is wrong. You have to have your own independent thinking about these things. Otherwise, you will be in the hands of the market. It will influence you. He will guide you. This is the main thesis about perceiving the market as a tool that serves you, not controls you.
I often say on this channel that becoming an independent thinker is what will make you the best investor . And that's what it all comes down to, because you have to have your own views and your own vision of these things. Okay, next idea . I think Warren, in practicing this, added another discipline, which I call the "circle of competence." This means that over time, each of us has a predisposition towards certain interests, and over time, you develop a particular expertise by trying to study it deeper and improve.
The most important thing about the concept of a circle of competence is to know its limits, because most of us tend to think we know a little more than we actually do. Yes. So understanding boundaries is just as important as understanding what lies within them. This thing about the scope of competence—it's so complicated.
He touches on this several times, and there's so much wisdom in it, you know, in this circle of competence. You must constantly ask yourself " why". Why? Why? Why? Do I know this? Why do I know this? And as he said, knowing the boundaries of your circle of competence is almost as important as what lies within that circle.
And what does that mean? This means you need to understand what makes what you buy and consider to be within your scope of expertise successful. Because if you don't know the boundaries of what you're basing your decision on within the scope of your expertise, you don't know and don't have enough confidence in where this investment is headed.
So staying within your circle of competence is extremely difficult, and for me it's a lifelong journey: expanding your circle of competence, staying within it , finding more and more of its boundaries so that you can actually grow your capital over the long term. The next tip is from Li Lu, he talks about market irrationality, which is very, very interesting.
You know, I have a very vague question for you: the market seems to be driven by a very small number of companies that are really pushing the technological boundaries . The world seems to depend on these companies pushing this technological frontier , and as a result, valuations are completely distorted because of this.
There's a chart that I show my students, which is the market capitalization of the company with the largest market value, normalized to GDP. Traditionally, this number has been in the range of 2 to 4% . Now it is about 15% together with Nvidia. What do you think about such a market? A market that becomes overly dependent on these few companies with very high betas relative to them.
How do we build portfolios to protect ourselves from the upheavals in this technology industry? The market always does strange things. Yes. We've been going through this since the beginning, and it's likely to continue to do so . You shouldn't depend on what the market decides to do at any given time .
This is truly one of the most important realizations and achievements of Ben Graham himself. So right now , if you look at the assumptions from a recent article I read: there's a company that calls itself a research lab, but it's burning tens of billions and promising to keep burning hundreds of billions of dollars, promising transformative technology, but at the same time it only has a 10% chance of actually beating everyone else.
And they wrote about it in perspective and invited everyone to invest at least a hundred billion at an estimate of two trillion. There is a certain contradiction or irony here, because this is a very vivid illustration of how irrational the market is becoming , and it cannot be true at the same time.
So, this is where they are now, and it also shows that the situation is not rational or sustainable. After all, you know, this can't last forever. This is a very profound thought , if you think about it. You know, he talks about Dario from Anthropic and how he points to a 10% chance that we'll all die.
And at the same time, he is asking investors for a new round of financing at a company valuation of two trillion dollars. And, as he says, both of these statements cannot be true at the same time. But people still go there and invest a lot of money because the market is becoming too irrational . And, as you know, as long as the market remains irrational, there will be opportunities.
The next important thought is about the concept of a market that doesn't give up. This is also the nature of the market, if you look at it through the centuries. He really does behave strangely for long periods of time. Take, for example, the S&P index from 2010. Over the past 16 years, it has shown an average of 14-15% per year .
And for the previous 10 years, from 2000 to 2010, it was exactly zero. In fact, for 10 years the indicator was slightly negative. So, if you take the average over the last 26 years, you get roughly a high single-digit percentage . And this is approximately the correct indicator in the long term. If we consider that GDP grew by 2% during this period, and inflation was at 2-3%, then on average we get about 4-5% nominal growth.
Public companies are showing slightly better results, especially those selected for the top 500 list, which are slightly ahead of the market. So it turns out, as they say, a high single-digit percentage . And that was exactly the long-term average. So this should serve as a fundamental basis for understanding what we get and how the market comes to equilibrium over the long term.
But sometimes there are periods, sometimes quite long, when the market goes to extremes. The example we just gave seems completely absurd to many. That's how it is. This happens throughout history. So, I think if we had really strengthened society in the sense that some kind of superstition was simply not allowed or accepted by society, it wouldn't have come to this.
And if it really stays in the realm of the familiar, it will be like everything else. This has its costs and benefits. Therefore, financial discipline and capital market discipline will eventually be applied. And the path to this lies through numerous ups and downs and cycles of boom and bust. And that's normal too.
From this perspective, the resulting branching at any given time does not create a huge amount of new capital. So if you're mostly drawn to the top, that basically means you've also separated yourself from a bunch of great companies that are trading at very low prices. And this applies equally to our country, China, or any other place.
And China is probably more extreme, as some Chinese participants are well aware. But over time, you know, the weight of the market will still really dictate long-term returns for investors. In the end, you still get what you deserve. There are no free lunches, even if for a while, or even for a long time, it seems like there are; in the long run, this will still be balanced by natural market rationalization.
That's why it's been around for several hundred years. Ahem. This is also a very, very, very profound thought. He's talking about how it can seem like there are a lot of free lunches when you have a bull market or different sectors are doing really well and you start comparing your results over a quarter, two, three or multiple years, or whatever .
You might think there are a lot of free lunches around, but he points out in a broader perspective that there is no such thing as a free lunch . And it goes back to what Charlie Munger says: you have to deserve what you want. This means that you have to really work to be worthy of what you strive for.
It 's not enough to just want something to get it. You have to deserve what you want, and that's what he's talking about. And in detail, to me, that means you have to do your due diligence. You have to take your time. You have to be critical of yourself. You must increase your knowledge. You have to study.
You must expand your circle of competence. You have to get better every year and work hard, because there is no such thing as free cheese. Another piece of wisdom about why it's so hard to stay rational. So, I would say that this bifurcation offers those with rational minds better opportunities than at other times, in a sense, if you really stay rational, which again is very difficult.
It's not that simple. You can be easily swept away. And then, especially when you have a big technological wave, the boundaries of your imagination expand significantly. So the speculative side of the market becomes much more active, the imagination becomes wilder, and so the forces, as well as the exaggerations, also tend to become more extreme .
But they do create, I would say, better long-term opportunities for rational thought than ever before. We touched on this a little bit earlier in this same video, I would say, but it's also very interesting right now, in the AI capital spending boom that we're seeing. You know, especially, as he says, in these technological revolutions, your imagination runs pretty wild in the midst of all this, and of course you're influenced, but it's a job to actually remain rational, to actually use the market as a servant and not as a director of your feelings and thought processes and things of that nature.
So, this is very, very important wisdom. The next part is an overview of China's economy over the past 10 years. It's very, very well laid out, and yes, listen to it. And I wanted to ask you about that. You know what you think about the Chinese market these days with the problems in the economy related to the real estate crash and the banking crisis.
This is very reminiscent of some of the things we've seen elsewhere, but I wanted to hear from you a little bit about how you see investing in China these days. Yes. Okay, so you also mentioned the Chinese market, and if you look at the last 10 years, they also had a stagnation or essentially a 10-year period of time.
And what has happened in these 10 years is fascinating. You know, 10 years ago the Chinese government had to make a decision, you know, now they've reached a certain level of middle income. The question is , how do we break out of it? And so many countries have reached that level and then gotten stuck there .
So much so that there's a term to describe it—the middle-income trap. Many, many countries reach this level and remain there after 40, 50 years. China is, of course, a large economy, so the question arises: what is really holding middle-income countries back from breaking through this ceiling? You know, they are engaged in production, industrialization, switching to low- or medium-tech goods, but they can't reach a higher level.
So, they need to make a decision. Do we really want to break through, and is there anything we can do to speed up this process or ensure that it happens? After all, naturally, many countries have failed, stopped developing, and have remained in place for 40, 50 years. Some countries even longer. Therefore, they began a conscious process of transitioning the economy from low- and medium-tech production to medium- and high-tech .
Instead of a five-year plan, they now have a 10-year plan, "Made in China 2025," in which they listed about 10 major goals aimed at transforming Chinese industry. As soon as this process began, the Trump administration came to power and started a trade war, which only strengthened their view: not only might the natural path fail to break through this ceiling, but other countries might also intentionally keep them below it .
And then the Trump administration was replaced by the Biden administration, which not only maintained trade tariffs but also added new technological restrictions. So five years after the start of the 10-year plan, by 2021, the Chinese government has doubled its efforts in this direction. In essence, they decided not only to move to a higher level of production, but also to achieve technological self-sufficiency, especially where there are “ bottlenecks”: semiconductors, aircraft engines, software, etc.
They have a long list of problems, so they launched another five years of accelerated development. But when you try to achieve such "impossible" goals that other countries have failed to achieve, it does not come without serious and heavy costs. In fact, this is the model for the development of the Chinese economy: at each stage they set themselves grandiose goals, accompanied by large social expenditures, and you just mentioned real estate.
Over the past 5 years, in fact, one of the main costs of achieving this goal has been the state of the budget of a typical middle- class Chinese family. Their family fortune. By 2021, real estate prices had peaked. The typical middle- class Chinese family has 70% of their wealth invested in their own home.
But this home has approximately 50 % of the credit load in the form of a mortgage. And then, over the next 5 years and up until today, real estate prices have fallen by about 40% on average across the country. So they saw their family capital overall decrease by an average of 60-70%. And when that happens, what do you do?
You do three things. You consume less, save more, and pay off debt as much as possible. And that's exactly what a typical middle-class Chinese family has been doing for the last 5 years. Therefore, domestic demand grew slower and slower, to today's almost zero level. And the savings rate has increased and today stands at about 120% of GDP, which is probably the highest savings rate in the world.
165 trillion yuan. Additionally, people have gone through 2-3 years where prices either didn't increase or decreased slightly, somewhere in that range. Therefore, they have some confidence issues when looking to the future. This is one level of the economy. But if you look at another level of the economy, at the tasks of the Chinese government over the last 10-15 years, you will see a completely different picture.
Chinese manufacturing has finally broken out of the low and mid-range segments and firmly entered the mid and high-end. Every goal of the Made in China 2025 program has been achieved. Over the past 5 years, tremendous progress has also been made in addressing bottleneck issues . Here, for example, are semiconductors.
It turned out that the US-led technology sanctions were a godsend for the Chinese semiconductor industry, as they gave it the most valuable thing in a market economy—demand. Ask any entrepreneur what is most important, and they will answer: order book. If you have the income, you can really get this whole mechanism going.
With greater revenue comes profit, investment in R&D, quality improvements, and thus even greater revenue. And this really happened: in terms of mature technological nodes, China has achieved almost complete self-sufficiency in both equipment production and chip manufacturing. And in terms of advanced and modern technological processes, you are getting closer to self-sufficiency, just missing a few key components, but if you continue on this path, it will be a natural outcome.
And this is just one aspect. And, of course, one of the key capabilities of generative AI is to create intelligence at scale on demand. One of the biggest applications is generating code that solves the biggest problems of some of these, uh, actually, " bottlenecks." First of all, the lack of operating system level code.
So from PCs to servers to Nvidia's semiconductor ecosystem—all of this is now being gradually replaced by AI. Thus, it becomes a powerful tool for equalizing opportunities. In industry by industry, you have seen that over the past 10 years, significant progress has been made in the transition of the main production contours from low- to medium-tech , and then from medium- to high-tech.
In some areas, such as new energy, electric vehicles, storage devices, batteries, etc. It goes on and on, with the equipment, they just dominate. They become world leaders. And where difficulties arose, the situation has also begun to change, and the gap is narrowing. At the same time, this places a heavy burden on other industries.
Real estate, for example, right now we're probably seeing a drop in annual new sales of about 70%, and that 10 trillion is exactly the amount spent on manufacturing modernization and technological efficiency. So, that's about 10 trillion yuan a year. If you look at the discrepancy, it clearly falls on 2021.
This was the development model. If you look at the last 50 years of China's development. At any given time, I think about every 10 years, a new set of goals and objectives emerges, and this comes with significant costs. And sometime in the next 10 years, this goal may turn into a spending item. In the early stages of industrial growth, the environment, air pollution, rivers—all of these became “costs,” and in the next two decades they became “goals.” So new environmentally friendly technologies were developed.
So, pollutants were costs. Then, during urbanization, real estate developers were the target, building China as we know it, providing housing and strengthening the well-being of the middle class. And then, in the last 5-10 years, they turned into expenses. And so, you start to suffer quite a bit, but overall you see the country progressing over that period of time.
That's why you can really compress development that took, say, several hundred years into 40 years. But at any point in time, as an investor, as an entrepreneur, I'm sure all these people from China would really strongly identify themselves. You always want to know if you are the target or if you are the price.
Being the price of a state goal is no fun at all. I'm sure all of you know this really intimately or have friends who were very closely involved in this process. But that's how it actually developed. So, overall, if you were to make an assessment, you could say that out of all these changes, you actually got a country that has now emerged with the size and population to finally embark on a full path of modernization.
But because of that, you know, this two-tier economy and the general loss of confidence, and the financial market was completely stagnant for 10 years . Yes, he did n't move anywhere. And meanwhile you have some of the most outstanding companies that are competitive in the world, trading at very low prices.
And again, you see a bifurcation, like here. So, but as a rational investor, looking at the bigger picture, you can look at it from a different angle. So I have to say that in today's market you will probably find better opportunities than at any other time. So this is actually Yes, what you want to talk about We've seen other very knowledgeable people talking about this, where actually the Chinese state is sacrificing consumer cash, you know, as he talks about household wealth falling and falling and falling for the last 10 years.
And there's a very interesting correlation that he talks about there: the same amount by which wealth decreased , by which real estate prices fell, was invested in this high-tech production. And that's been a theme for years, where they've actually been riding on the backs of Chinese consumers, who he said have been spending less and saving more, which has led to them having the highest savings rate of any country in the world relative to GDP.
And they are the second largest country in the world in terms of GDP. In addition, this is a huge capital. And as he says there, it also comes down to consumer confidence. But it is also very, very interesting that China has accomplished everything it planned within the framework of the China 2025 program.
They really managed to get out of the middle-income trap by reaching the level of high-tech production. And one day, cost will likely become the primary goal. That's roughly what he's talking about. And for me, it comes down to diving even deeper into politics and understanding the discussions better to really catch the trend.
But at the same time, I think it might be a waste of time, and maybe not. Eventually , this may become part of your skillset, but I think it would be even more valuable to expand your skillset to business cases and all business situations. But it's so beautifully put by someone who, at least, gives the impression , knows the situation and explained it extremely aptly.
Okay, the next interesting point is also a very clear argument for creating a global market economy. And I want to ask you one last question, okay, really quickly. You founded Himalaya Capital in 1997. I arrived at the University of Chicago around the same time as a young associate professor . And the world, at least for me—I don't know what it looked like for you then, we weren't acquainted yet—was very different, or it looked completely different to us than it does now.
It was an open, transnational world where we, you know, could travel, could do so many things. He had, I don't even know how to put it, a certain generosity of spirit that seems to be a bit lacking today. He looks completely different to me now. So I want to ask you how you see the future and whether you are incorporating any of those ideas into your approach to investing.
Yes. That's a great question, Tana. And the world has indeed changed over the last 30 years, there is no doubt about it. And the world order, or global issues about how the world actually governs itself and functions, change very slowly. You know, it takes decades , sometimes centuries, for such an order to truly form and transform.
And the current world order was actually founded through two major world wars that brought the entire world to the brink of collapse. And then from this emerged the American world order, which through the Cold War and its end became unified, and is now transforming again into something that has yet to manifest itself as a result.
But beneath this, there is another order that has been steadily forming over the past few hundred years, namely, the economic order. Economic order truly takes shape when more and more countries and peoples come together in common agreements and do business with each other. They form a common market.
This common market was finally formed about 30 years ago with the collapse of the Soviet Union and the end of the Cold War, when almost all countries and peoples began to join the single market economy. What is interesting about this economic order is that once a common market is formed, it is very difficult for any individual country to voluntarily leave it.
Because the market brings efficiency, creates a flywheel of continuous improvement in the areas of technology, productivity, division of labor, resource trade, etc. So any country that leaves it for a long time will suffer huge losses. And ultimately, once it is formed, it is very difficult to destroy.
It has been around for much, much longer. If you look at the trade wars and frictions over the last hundred years, no matter what obstacles or barriers you put up, people will find a way to trade through third countries, guided by the same principles of comparative advantage . Take, for example, trade between the US and China.
Of course, it has decreased, but if you look at the total trade volume between the US and China, including Mexico and ASEAN, they completely compensate for each other. Essentially, trade between the US and China remains at the same level. It simply passes through third countries. And this is about as true for most other markets.
So the political order is that the US , which led the world for 80 years and shouldered most of the costs of ensuring that this common market functioned as it saw fit, has begun to realize that the costs and benefits are probably somewhat disproportionate. They have begun to voluntarily relinquish some of these responsibilities, although not very successfully so far.
And this led to the emergence of a vacuum. And of course, the biggest change in the political system has been the rise of China over the last 30-40 years; It has become a huge economic entity with a full range of production, technologies, self-sufficiency, and the single largest market, which is also open and has unified regulation.
This is a huge change for both the political and economic order that we are now witnessing. These are indeed the changes we are observing. At the same time, you know, our interdependence, as I said, on one market has only increased, not decreased, over this period of time. And I'll give you one example.
For example, in generative AI, the only thing everyone needed was chips, semiconductor chips. Where are these chips made? Where are they located? If you think about all the countries that produce semiconductor chips, there's one thing that all of these places have in common: they're all producing the chips that are needed for this technological wave that the entire country seems to be betting on, and that's that in all of these countries and among all of the people who produce these chips, they use chopsticks.
Think about it. Without exception. And, of course, all the people who run semiconductor companies in this country also use chopsticks. From Jensen to Lisa, to Lisa, to anyone. Hock, all of them. So there is significant interdependence, as you can see. If you're really betting on these new technologies, as we are now as a country and as companies, then regardless of the prospects or the dangers, you might have to be kind to those who use chopsticks.
And so a very broad view of creating this global economy . Everything is becoming more global and we are becoming more interdependent, but he ends his monologue with a joke that is not really a joke , because every country that makes the semiconductors that we are so dependent on uses chopsticks. He talks about them all being Asian, or Southeast Asian, or Chinese, or whatever, but they all come from that region of the world.
So, the fact that the tariffs on these chips were mentioned earlier is a real godsend for the companies that develop all these high-tech chips; They will become better and more self-sufficient in this area, which is very good given the fear that China could be sidelined, as they are likely to become the dominant player.
also indicates here what you think And now that's changing . This did not happen by chance. We could delve into the reasons, but the point is that there is a reason why the presidents of the United States and China feel an urgent need to meet four times in eight months . Okay, two meetings , another two—really the most important achievement of each meeting is the agreement on the next one.
Yes. And it comes down to the term strategic stability. In other words, stability is of strategic importance . This highlighted the understanding of the single global market and the price of voluntary withdrawal from it, as well as interdependence maintained peacefully. And of course, everyone in the meantime is fearlessly competing, believing that time is on their side, you know.
China— to complete the achievement of semiconductor self-sufficiency and so on, and the United States— hoping for a breakthrough in artificial intelligence, which promises a lot, and other countries have their own calculations, but it all comes down to the fact that peaceful stability is of paramount importance to everyone and is strategic.
importance. Also a really good way to think about it, because when you think about these meetings, you always want to see some progress, but the progress and the positivity in these meetings is what he's pointing to here. Why do you think they occur so often? This is because of the strategic stability that these countries must maintain and the interdependence they have on each other.
And the only successful thing that comes out of these meetings is an agreement on the next meeting. So , you know, it's very good for stability and working to not create crises. Next point: the Chinese approach to AI, is the Chinese market a goal or a cost, and how do you insure political risks? Of course, they are all connected.
Um, okay, if you're describing the Silicon Valley approach to AI, then the fundamental question is what else can this technology do? This is the main thing, which is why they are still called laboratories. Like research laboratories. I want to see what else he can do. How far can we push the boundaries of this?
That's why it's also called the frontier. Chinese AI companies, I would say, are fundamentally interested in these issues as well. But in addition, and more importantly, they ask, "What can this technology do for my customers? Both for my consumers and for my enterprise customers." There is a completely different approach here, which can be seen through different metrics to understand how different the result will be.
China's stock market—is it a goal or a cost? Okay, at different times the emphasis is placed differently. But when you think about the underlying balance sheet of individual families, as well as of an entire nation, when real estate as a share of assets starts to decline significantly. By the way , it cannot fall forever, because it has real value.
What, in this case, constitutes the wealth of the nation, the well-being of people and families? Now, in answering this question, one has to admit that at some point, whether today or another time, it has to happen. And therefore it is the only asset that grows with the economy. In fact, it grows because of the economy, and it is also the real reason why the economy grows.
So, they are all actually in the same flywheel. My conclusion from this last point is that it speaks to a reduction in family well-being of 70% or so. But when you see this country moving forward over the past 10 years and the financial markets not growing with it, you are dealing with a fundamental cost.
You have intrinsic value that grows with the economy. This is the flywheel he's talking about. As for me, I interpret it this way: you have the people, the willpower, and the ability to create real value. You know, wealth in the world is your purchasing power now and in the future. And if you compare China's purchasing power now with what it was 10 years ago, it is much higher.
And within this purchasing power lies much more that is rooted in the country and its economy. And this is my conclusion from his theses on this particular issue. Now about political risk: it lies in understanding the goals at any given time, knowing history, and studying all achievements. This applies to both China and the US.
This is a whole series of different questions. Our entire world is still organized to some extent on the basis of sovereign states, and this is the reality in which we live. So we have to apply all these considerations to every country where you operate. So, study the political system as best you can and try to understand the entire country as deeply as possible .
So dig deeper and make sure your circle of competence expands to also encompass the political aspect of your field. There are two golden tips left. Everyone wants to take the best of both worlds. In fact, they want everything. Like, I want to operate on a win- win basis, but I also want to report on good performance every year, or better yet, every quarter, every month, or even every day or every hour.
Pretty soon you will become a speculator. So it is impossible to combine both worlds. You either believe the market exists to teach you or to serve you. You can only choose one of the two. Those who want to mix it all up are better off investing in indices, as this is the average of all market participants.
Four types of market players averaged in the index—you're better off choosing that. Do you know who you are: a value investor or a speculator? That's what he's talking about. What is your path down this ladder? Oh yes, I want to report good numbers every year, every quarter, every month, every week, every day—and eventually you become a speculator who wants results right now, and that's not the path of a value investor.
A value investor uses the market as a servant, not as a teacher, okay? Very, very deep wisdom. And the last piece of advice is very, very, very apt. Where do you see a margin of safety, and what have I learned over the past 10 years that still remains relevant? Well, I think one of the defining characteristics that sets a value investor apart from others is a huge focus on downside protection .
Um , investing is obviously predicting the future, which is inherently unpredictable. Therefore, it is worth investing only in what you really know. And your knowledge may actually be limited. Everyone started with very limited knowledge. That's how I started when I was in my 20s. I didn't know much.
So I choose what I'm really sure of. So the balance sheet, as Ben Graham taught, really works because it's easier to understand . And then I gradually moved from something simple to something less simple, and then to something more complex. This is a natural development within the scope of competence.
So, regarding the scope of competence, it is important to truly understand its boundaries. Another thing is to consciously gradually expand it over time. And I always say: "Listen, if you can increase your knowledge steadily, over time you will be able to increase your capital." So, that really brings us back to your question.
Uh, to what I've actually learned in 10 years. Every 10 years I learn so much new things that I am almost forced to become different. And that's the main value : you know, stay within your competence, expand it, and if you can increase your knowledge, you can increase your capital. This is the truth , my friends.
So, that's all for this video. I hope it was useful for you . Do you have any questions or thoughts of your own? Write them below in the comments. Remember, this is not financial advice, but for educational and entertainment purposes only. Have a nice day.
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