Newsletter - June 3rd, 2023
Dear Reader,
Attached is our latest list of stocks generated from basic value screens (low p/e, ev/ebitda, debt/equity, etc.), which don’t meet our investment criteria - and our reasoning.
This may help you avoid a few ‘value traps’ or stocks that aren’t sufficiently attractive compared to the opportunities available today.
For reports of stock ideas that pass our quantitative and qualitative standards, join at the link below:
Li Lu's Talks
Li Lu
Li Lu is an elite investor - one of the very best. (He also manages Charlie Munger's private investments.)
He rarely talks in public, so it's worth listening to whatever you can get your hands on.
Peking University Talk (in Mandarin)
Listening to this lecture requires some effort because it's in subtitles and over 2 hours long - but it's so packed with insight, we strongly recommend a full listen. His philosophy of investing and life syncs with us personally.
Li goes over the origins and nature of the stock market. He gives a holistic picture of the market: the zero-sum nature of speculation, where value investors (<5% of market players) fit in, and how they can capture maximum market rewards. It's clear he has a robust understanding of his field - a master of investing.
What struck us were:
1) The owner's mindset: Li's anecdote of getting attached to his companies once he owned the stock was thought-provoking. As opposed to being an owner of securities, really adopting a business owner's mindset "changes the channel". When you consider it your baby, you care more about every aspect of your companies - you just become more curious.
At the same time, you don't want to get too emotional about stocks - a certain detachment (via diversification) may be necessary for some to get the best results.
2) The importance of playing the long game and having a strategy where you're fully invested in a diversified group of the best bargains at all times to get the best rewards.
Columbia University
Another good interview between Li and his former Columbia professor. Note this was a few years ago - before US-China geopolitical tensions worsened.
1:11:15 Weakest Link
Securities markets will strike you at your weakest spot - it's designed to catch you out. This could be ignorance of important facts, faulty reasoning, and bad thinking in general.
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