Li Lu lecture at Columbia (2006)
http://www.youtube.com/watch?v=lot9BnFgO3k&t=0m1s
I thought some of the folks on this board might be interested in this 2006 lecture from Li Lu, who manages much of Charlie Munger’s wealth, wrote the forward for Poor Charlie’s Almanack, and has even been mentioned as a possible future Berkshire portfolio manager. It was also Lu that brought the BYD idea to Munger.
What makes this lecture special, in my view, is that 1) Lu rarely speaks in public, and 2) In addition to the value investing “basics” (Viewing stocks as businesses, using Mr. Market to your advantage, demanding a “huge” Margin of Safety, and investing with a long time horizon) Lu actually provides great insight on some of the not-so-obvious things that impact investing success or failure. He even provides some decently detailed real life investments from his past.
Hard to believe, but this video only has 520 views!
Some of my notes are below:
• Lu was Inspired by a Buffett guest lecture when he was a student at Columbia.
• Came from China, had no money, no connections, and significant of student debt.
• Believes you must be a learning machine and build up an encyclopedia-like mental database of each industry.
• Lu believes that 95% of investors are either 1) not trying to be value investors, or 2) are trying to be value investors, but do not have the temperament/discipline to be real value investors. He thinks only about 5% of investors are truly disciplined value investors.
• He argues that independent thinking is unnatural. Groupthink is what helped humans survive for millions of years, and people who truly think independently are actually quite rare and probably have some sort of genetic mutation.
• Lu loves Value Line, regularly checks 52 week lows.
• When below book value, he becomes very interested in what the book value actually consists of.
• He says you have better odds of finding bargains among stocks that aren't widely covered.
• If your business is in a lawsuit, read every single page of the filing. You must act like a fanatic investigative journalist.
• CEOs leave clues about their true selves in annual reports, conference calls, interviews, etc. If you did deep enough into the commentary, the true nature of the CEO’s personality/temperament will reveal itself.
• Most ideas involved a few weeks of all-day-and-all-night due diligence before initial investment.
• Long term investing allows you to have huge amounts of unrealized capital gains, which means those deferred taxes can essentially be thought of as an interest- free government loan, leveraging your position 40%-50%.
• All about companies where moat is going to KEEP WIDENING!
• Lu thinks Bloomburg is a phenomenal business, the way it hooks people, and that they have insane pricing power.
I thought some of the folks on this board might be interested in this 2006 lecture from Li Lu, who manages much of Charlie Munger’s wealth, wrote the forward for Poor Charlie’s Almanack, and has even been mentioned as a possible future Berkshire portfolio manager. It was also Lu that brought the BYD idea to Munger.
What makes this lecture special, in my view, is that 1) Lu rarely speaks in public, and 2) In addition to the value investing “basics” (Viewing stocks as businesses, using Mr. Market to your advantage, demanding a “huge” Margin of Safety, and investing with a long time horizon) Lu actually provides great insight on some of the not-so-obvious things that impact investing success or failure. He even provides some decently detailed real life investments from his past.
Hard to believe, but this video only has 520 views!
Some of my notes are below:
• Lu was Inspired by a Buffett guest lecture when he was a student at Columbia.
• Came from China, had no money, no connections, and significant of student debt.
• Believes you must be a learning machine and build up an encyclopedia-like mental database of each industry.
• Lu believes that 95% of investors are either 1) not trying to be value investors, or 2) are trying to be value investors, but do not have the temperament/discipline to be real value investors. He thinks only about 5% of investors are truly disciplined value investors.
• He argues that independent thinking is unnatural. Groupthink is what helped humans survive for millions of years, and people who truly think independently are actually quite rare and probably have some sort of genetic mutation.
• Lu loves Value Line, regularly checks 52 week lows.
• When below book value, he becomes very interested in what the book value actually consists of.
• He says you have better odds of finding bargains among stocks that aren't widely covered.
• If your business is in a lawsuit, read every single page of the filing. You must act like a fanatic investigative journalist.
• CEOs leave clues about their true selves in annual reports, conference calls, interviews, etc. If you did deep enough into the commentary, the true nature of the CEO’s personality/temperament will reveal itself.
• Most ideas involved a few weeks of all-day-and-all-night due diligence before initial investment.
• Long term investing allows you to have huge amounts of unrealized capital gains, which means those deferred taxes can essentially be thought of as an interest- free government loan, leveraging your position 40%-50%.
• All about companies where moat is going to KEEP WIDENING!
• Lu thinks Bloomburg is a phenomenal business, the way it hooks people, and that they have insane pricing power.
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