Duan Yongping: If you don't understand a business, it's best not to invest. In the A-share market, I only bought Moutai. There is a possibility that Apple could triple in the future, but it's just not cheap right now. Another way to make money is through it

Duan Yongping, Source: Screenshot from Xueqiu Video On the evening of November 11, Xueqiu's video account first exposed an in-depth conversation between Chairman Fang Sanwen and renowned investor Duan Yongping that took place in October. The two engaged in deep discussions on topics such as investment philosophy, business management, educational concepts, AI development, and several well-known company cases. Based on the interview minutes disclosed by Xueqiu, the Investment Workbook has organized the core viewpoints shared by Duan Yongping as follows: People often only focus on what we have done, but in reality, the reason we are who we are today is largely due to the things we choose not to do. Because we are clear about what is not suitable for us, we do not engage in those activities; by not doing them, we naturally make fewer mistakes, and the probability of doing the right things increases. Buffett's margin of safety does not refer to cheap prices, but rather how deeply one understands the company; a cheap price may become even cheaper. For those in the investment business, I can teach you a way to make money: just buy the S&P 500 index; in the long run, it will always make money. Previously, I was influenced by a friend to invest in the oil and gas index, and at that time, I invested nearly 100 million dollars, losing over 10 million. If you realize you are wrong, you should correct it immediately, so I sold everything. However, I still have a bit of an attachment to oil, as I feel it is indeed difficult to grasp. Later, when I saw Buffett buying Occidental Petroleum, I thought this was actually a very interesting way to invest in oil—equivalent to keeping the oil fields underground, unaffected by time depreciation. So I bought a little, thinking that in twenty years, the oil price will definitely not be at the current level. I do not know much about oil, so my position is very light. But if you go all in, that is your own decision; it has nothing to do with me, my position is very small. "Copying homework" is lagging. It’s fine to copy Buffett’s homework since his holdings are transparent. But how do you copy mine? I do not disclose my holdings, so you have no idea how much I bought or what my position is. It is indeed very difficult to invest without understanding the company; if you don’t understand, it’s best not to touch it. I am very conservative; in the A-share market, I only bought Moutai. (AI) will be very dangerous for stock traders because you cannot outperform Liang Wenfeng, so you will become the chives. Those who want to make money by looking at charts and lines are definitely chives. But AI cannot harvest me because I do not move; I just hold Moutai. In fact, very few people truly understand the phrase "buy a company." The only real buyer of a company is the company itself—it ultimately buys itself back through profits. It is very difficult to make money in stock trading; most retail investors lose money whether in a bull market or a bear market, with a ratio of about 80%, so don’t think you are the exception—unless you know what you are doing It's harder now because quantitative funds are getting stronger and AI is also becoming more powerful. When you buy stocks, they often drop, and when you sell, they rise. But if you really know how to invest, you don't need any advice. You just need to buy the companies you believe in and hold onto them, then compare with your own opportunity cost. I often mention Moutai because I think it's a relatively easy-to-understand company. Of course, many people say young people don't drink Moutai anymore, but those who drink Moutai now can still live for a long time. Moreover, just because young people don't drink now, will they not drink in the future? Drinking is indeed harmful to health, but it has emotional value, so there will always be people who drink. In recent years, it's not just a Moutai issue; most stocks are falling. I'm not promoting Moutai, but I think for most people, Moutai might be a choice worth considering. If you are not confident about what you are selling and don't know if anyone wants it, it's hard to persist. If you firmly believe that no one will drink alcohol anymore, then of course you shouldn't buy it. But for those who don't drink, it's also hard to truly understand this. Duan Yongping also mentioned in the conversation that he has encountered many stocks; he has also bought Shenhua. It's not that I bought it; I still have it now, but the proportion is not large. Moutai, I have a relatively large proportion. I usually tell everyone that I only have three stocks: Apple, Tencent, and Moutai, something like that. Duan Yongping is a well-known entrepreneur and investor. He is praised as "China's Buffett" for his philosophy of holding quality companies for the long term and his outstanding investment performance. His investment in NetEase is particularly classic, achieving a remarkable 20-fold increase within six months. Due to his relatively few public statements in recent years, combined with the information-dense and important viewpoints in this exchange, it has attracted widespread attention. The investment homework representative (WeChat ID: touzizuoyeben) has selected and organized some highlights from the complete dialogue published on Xueqiu to share with everyone. If you truly understand "buying stocks is buying companies," you won't be staring at the market every day Fang Sanwen: Understanding the concept of "buying stocks is buying companies" is easy, but understanding a specific company is not easy? Duan Yongping: In fact, understanding this concept itself is not easy; truly understanding this sentence is very difficult. I see that among the friends on Xueqiu, if 1% of them truly understand this sentence, that would be remarkable, and even fewer can actually do it. However, those who haven't fully understood it can sometimes still make money. Fang Sanwen: They may not necessarily not understand; perhaps their way of understanding is just different. Duan Yongping: That's exactly what I mean. When you truly understand, you won't be influenced by the market. If you are still staring at the market every day, paying attention to dynamics, reviewing past trends... even some influencers, I see them talking about how the market will behave all day long, that actually means they haven't understood. When have I ever talked about the market? When have I ever said on Xueqiu, "It will rise today" or "It will fall tomorrow"? But not understanding doesn't mean you can't make money. Here's a way to make money: buy the S&P 500 index; it can make money in the long run Investing is quite interesting—if you buy a stock with your eyes closed and hold it, among a hundred people, about fifty can make money, and those fifty can come out and talk But if you want him to repeat this success, it's not that easy. However, if you are someone who does investment business, I can teach everyone a way to make money: just buy the S&P 500 index, which will always make money in the long run. But that doesn't mean you understand it. However, if you can really stick to doing this, it actually shows that you understand a little bit. Although I bought NetEase with cash fully invested and it increased 20 times in 6 months, I didn't really understand it, otherwise I wouldn't have sold it. Fang Sanwen: Understanding a company is indeed very difficult. So how do you determine that you understand a company? For example, taking NetEase as an example, how did you determine that you understood it at that time? Duan Yongping: I come from a gaming background, and I talked to their game team. I felt they were a group of people who truly love games and are very serious about their work, which is the first point. Secondly, I think their business model makes a lot of sense, and at that time, their cash was even higher than their market value. I invested in it like a venture capitalist. Moreover, there was an opportunity at that time; the stock price had fallen so low that the market was panic-stricken, thinking they were going to go bankrupt, but I believed they had a high probability of making money. Just right, I had some cash on hand, so I fully invested in NetEase, and it increased twenty times in six months. Do you think I understood it? If I really understood it, I should have bought the entire NetEase. So what "understanding" really is, I can't say clearly. But I roughly judged that they could make money and felt that the investment risk was not too high. Why could I hold it for so long and make so much money without selling? Because that money is not much to me, so I could look at it more rationally. If my entire fortune was just that much, I might not have been able to hold on and would have sold. Maintaining rationality is actually very difficult. Fang Sanwen: It sounds like your judgment about NetEase includes two parts: one is your judgment about the gaming business itself, believing it can make money? Duan Yongping: Of course, I come from a gaming background, and I understand games very well. Fang Sanwen: The second is your judgment about its pricing, for example, the stock price was very low, even below net cash. This is actually what Buffett refers to as "margin of safety," right? Duan Yongping: Buffett's margin of safety does not refer to this. In my understanding, margin of safety refers to how deep your understanding of the company is, not how cheap the price is; cheap things can become cheaper. At that time, I just felt they had a chance to make money, but I didn't know how much they could earn. If I had known I could earn this much, even if I bought later, I would have bought more and wouldn't have sold. Actually, I sold later, which shows that I didn't fully understand it. Fang Sanwen: According to what you said, "understanding" and "not understanding" seem to be in a gray area, without a very clear standard? Duan Yongping: I don't know either. But people who ask others everywhere definitely don't understand. Do those who don't ask understand? You could say this is a gray area. At least I made more than a hundred times; do you say I understand or not? I sold, and there must be my reasons and logic. Moreover, I didn't earn less because I had other very good investment targets. The reason we become who we are is largely because of the things we choose not to do. Duan Yongping: In fact, the probability of making mistakes is similar for everyone; the key is whether you will continue to make mistakes and whether you have your own "do not do" list. The reason we have made fewer mistakes than others over the past thirty years is precisely because of this. As I mentioned in a post on Xueqiu: People often focus on what we have done, but in reality, a large part of why we are who we are today is because of the things we chose not to do. Because we are clear about what is not suitable for us, we do not do it; by not doing it, we naturally make fewer mistakes, and the probability of doing the right things increases. It's just this slight difference, but over thirty years, it makes a world of difference. Apple could potentially triple in the future, but it's not cheap now Fang Sanwen: What do you think about Apple at this price? Duan Yongping: It's not cheap. Fang Sanwen: So, from an investment return perspective, we shouldn't have too high expectations? Duan Yongping: Yes. It also depends on the opportunity cost for the investor. If someone is just putting money in the bank for a little interest, it might be better to buy Apple. But if you have other ways to earn a dozen points, then it might not be necessary to buy Apple. As for whether Apple has future development, I actually don't know. Of course, it has always been strong and has a large user base. AI ultimately needs to land, doesn't it still have to go through mobile phones? It's possible for Apple to double, triple, or even quadruple in the future, but I'm not sure. It's not that it can't, it's just that it's not cheap now. Bought General Electric in 2008, sold later because of this Fang Sanwen: You bought General Electric in 2008, but later changed your view on it. Was this change mainly due to considerations of business model or corporate culture? Duan Yongping: I used to think the problem was with corporate culture; in fact, I never really understood the business model, but at that time, I agreed with their corporate culture. They once emphasized, "The times change, but the only thing that remains unchanged is integrity," and they valued integrity very much. But later, when I looked at their official website, I found that this sentence was gone. From the moment I couldn't find that sentence, I decided to sell. I felt they no longer emphasized this point, and coupled with the fact that I really couldn't understand their business model, they had bought and sold too many companies. Initially, I was influenced by Jack Welch and thought this company was amazing, but later I found that there really isn't anyone who is amazing. Fang Sanwen: Does that mean you also "de-mystified" Jack Welch? Duan Yongping: Not really; I don't truly understand him. But fortunately, I sold it. When I sold, its market value was over $400 billion, and now it might not even be that much. Just think about it, if I had swapped it for Apple, how big the difference would be. I probably held it for two or three years, or three or four years, not too long. Fang Sanwen: But that transaction still made money, right? Duan Yongping: Sometimes making mistakes can also make money, but I think that was a mistake. If I were to go back to today, I wouldn't buy it again. Fang Sanwen: Even if you made money, you still don't deny that it was a mistake? Duan Yongping: Of course it was a mistake because it did not meet the principles I later established: it must satisfy both the corporate culture and the business model filters. Holding Occidental Petroleum, but just a small position, you "all in," has nothing to do with me Fang Sanwen: You still hold Occidental Petroleum, right? You say this is copying Buffett's homework? Duan Yongping: Yes, but there are some historical reasons behind it. Previously, I was influenced by a friend to buy an oil and gas index. At that time, he told me that the oil and gas index had dropped too absurdly, and oil prices could not stay this low for a long time. I asked him how much correlation there was between this index and oil prices, and he said 99%. I thought that was great, so I bought it with the intention of holding it long-term. But later I asked him what kind of correlation he meant. He said it was "99% every day." As soon as I heard that, I understood that if it was 99% every day, then the difference was significant. Such products have a very high time decay and are not suitable for long-term holding, so I sold it. At that time, I invested almost 100 million dollars and lost more than 10 million. If you see something wrong, you should correct it immediately, so I sold everything, ultimately losing a little over 10 million, just over 10 million. But I still have a bit of an attachment to oil, thinking that oil is indeed hard to grasp. Later, when I saw Buffett buying Occidental Petroleum, I thought this was actually a very interesting way to invest in oil—equivalent to keeping the oil fields underground, unaffected by time decay. So I bought a little, thinking I might hold it for twenty years; I believe that twenty years from now, oil prices will definitely not be at the current level. I don't know much about oil, so my position is very light. But many people on Xueqiu saw what I said and took it seriously. If you go all in, that's your own decision; it has nothing to do with me, my position is very small. Fang Sanwen: Many users also know their understanding of specific companies is limited, but they trust certain people who really understand the companies, calling this method "copying homework." Do you think "copying homework" is a sustainable investment method? Duan Yongping: It's difficult. Because "copying homework" is lagging. Copying Buffett's homework is fine; his holdings are transparent. But how do you copy mine? I don't disclose my holdings, so you have no idea how much I bought or how heavy my position is. I might buy a certain stock just to force myself to pay more attention; if you see "A-Duan bought it," and you go all in, then your all-in position is wrong, right? So I think this is very difficult. If you don't understand the company, it is indeed hard to invest; if you don't understand, it's best not to touch it. I am very conservative; in the A-share market, I only bought Moutai. AI is very dangerous for stock traders because you can't outperform Liang Wenfeng Fang Sanwen: What impact might AI have on the investment industry? Duan Yongping: It will be very dangerous for stock traders because you can't outperform Liang Wenfeng, so you will become chives. Those who want to make money by looking at charts and lines are definitely chives. But AI can't harvest me because I don't move; I bought Moutai and just hold it. In fact, very few people truly understand the phrase "buy a company." The only real buyer of a company is the company itself—it ultimately buys itself back through profits Although there are many derivative forms in between, as long as the company continues to make money, when it has piled up money to its neck, it has to return the money to you through dividends or buybacks. Moutai also has this problem; it ultimately has to pay dividends. You can use the dividends to buy more or it can buy back its own shares. I think Moutai should have started buying back shares long ago; it has finally started to buy back a little now, as it has too much money and doesn't know where to spend it, so it might as well buy its own stock while it's cheap. Fang Sanwen: Do you mean that AI has a significant impact on stock trading but not much on investing? Duan Yongping: It has no impact on investing; it won't affect my decision-making. If you rely on chart reading and technical analysis for day trading, it is likely to be harder to make money than before. Many quantitative funds operate at extremely high speeds, executed by computers with human intervention, and you are less likely to beat them. Therefore, small retail investors trying to make money through short-term trading will likely find it very difficult to succeed in the long run. Retail investors lose money in both bull and bear markets, with a ratio of 80% Fang Sanwen: What advice do you have for ordinary people's investments? Duan Yongping: I have no advice. Investment is investment; it has nothing to do with who you are. If you don't invest properly, you might as well not invest at all. If you really don't understand investing, don't touch it. Making money in stock trading is difficult; most retail investors lose money in both bull and bear markets, with a ratio of about 80%, so don't think you are the exception—unless you know what you are doing. It is even harder now because quantitative funds are getting stronger and AI is becoming more powerful. In stock trading, it often happens that as soon as you buy, the price drops, and as soon as you sell, the price rises. But if you really know how to invest, you don't need any advice. You just need to buy the companies you believe are good and hold onto them, while also comparing your opportunity cost. For most people, Moutai may be worth considering That's why I always mention Moutai; I think it is a relatively easy-to-understand company. Of course, many people say that young people no longer drink Moutai, but those who drink Moutai now can still live for a long time. Moreover, will young people not drink it in the future? Drinking alcohol is indeed harmful to health, but it has emotional value, so there will always be people who drink. Fang Sanwen: So your advice is that making money in stock trading is difficult? Duan Yongping: I think it is difficult. Fang Sanwen: But investing can still be done. Duan Yongping: The premise of investing is that you must understand the business. You either need to understand it or see something reasonable that you believe makes sense. For example, I told a friend who loves drinking Moutai: "Why don't you buy some Moutai?" He indeed bought it, but later he didn't make any money. I asked him: "What did your friends who didn't buy Moutai buy?" He said: "Now that you mention it, I feel much better; they lost even more than I did." I said: "Isn't that right? Moutai will eventually come back; even if it doesn't, you still have dividends, just a bit longer to wait." But if you invest in a business you don't understand, the result will be disastrous. In recent years, it's not just a problem with Moutai; most stocks have been falling. I'm not promoting Moutai; I just think that for most people, Moutai may be a choice worth considering. Of course, other seemingly good companies, like Wuliangye, which has a lower price-to-earnings ratio, can also be considered, but I have no say in that because I haven't studied them in detail I have never touched Wuliangye and don't know what that liquor tastes like. I don't drink baijiu myself, except for a little Moutai; I find other liquors too strong. But if you like drinking Wuliangye, you will believe that many people like it, so why not buy it? Just like I enjoy playing games, which is why I make games. Even if the gaming market is tough, I know there will always be people playing. This is very important. If you are not confident about what you are selling and don't know if anyone wants it, it is hard to persist. If you firmly believe that no one will drink anymore, then of course you shouldn't buy it. But those who don't drink are also unlikely to truly understand this point. The above dialogue content is sourced from a Xueqiu interview, organized and edited by Investment Workbook. For more insights from industry leaders, please follow↓↓↓ Risk warning and disclaimer The market has risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investing based on this is at your own risk