Great article and insights, thank you! Question: what does that mean regarding etf‘s? I will never know all of these companies well enough to apply these principles. So, what is his view on that - anybody know?
I'm still working my way through a lot of Li Lu's interviews and speeches, but I don't recall off the top of my head him commenting on ETFs and indexes. If anyone else does, please chime in here. I do think several of these principles -- especially remaining calm during market fluctuations -- apply equally well to all investing strategies.
"Here at Kingswell, I prefer the more expansive (and Munger-approved) view that all intelligent investing is value investing. That it really boils down to getting back more in value than you pay out in capital — and should not be limited to the working capital calculations that once dominated the discipline."
I do feel like value investors have too often limited themselves to ratios like P/E, which often don't measure the most important generators of value in a tech-driven world, e.g.
- mindshare/time spent: before YouTube was acquired by Google, board member Roelof Botha (now partner at Sequoia) said he knew YouTube would be valuable because at all his other portfolio companies, the employees were watching YouTube.
- productivity: Nvidia GPUs were widely known to significantly boost productivity in sciences and of course with ChatGPT
Neither of these companies had a reasonable P/E, but they were (and still are) tremendously valuable.
Great article and insights, thank you! Question: what does that mean regarding etf‘s? I will never know all of these companies well enough to apply these principles. So, what is his view on that - anybody know?
I'm still working my way through a lot of Li Lu's interviews and speeches, but I don't recall off the top of my head him commenting on ETFs and indexes. If anyone else does, please chime in here. I do think several of these principles -- especially remaining calm during market fluctuations -- apply equally well to all investing strategies.
"Here at Kingswell, I prefer the more expansive (and Munger-approved) view that all intelligent investing is value investing. That it really boils down to getting back more in value than you pay out in capital — and should not be limited to the working capital calculations that once dominated the discipline."
I do feel like value investors have too often limited themselves to ratios like P/E, which often don't measure the most important generators of value in a tech-driven world, e.g.
- mindshare/time spent: before YouTube was acquired by Google, board member Roelof Botha (now partner at Sequoia) said he knew YouTube would be valuable because at all his other portfolio companies, the employees were watching YouTube.
- productivity: Nvidia GPUs were widely known to significantly boost productivity in sciences and of course with ChatGPT
Neither of these companies had a reasonable P/E, but they were (and still are) tremendously valuable.
It's ultimately:
The Buffett-Munger Profitability-Assets_Productivity In Fusion Investing For The Absolute Total Compound by PEROIC Valuation.
Why I didn't mention growth?
Growth is a result.
Profitability and Assets Productivity are the Drivers for Growth, the parent for Growth.