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Friends of Time


As global visionary long-term value investors, we adhere to the value investment principles of Benjamin Graham, Warren Buffett, and Charlie Munger, committed to creating sustainable long-term compounding growth. In essence, value investing primarily follows four principles: 1) Buying stocks is equivalent to buying companies; 2) Mr. Market hypothesis; 3) Margin of safety; 4) Circle of competence. The first three principles are derived from Benjamin Graham, while the last principle of investing only within our circle of competence comes from Buffett.

In summary, our investment philosophy can be summarized as buying stocks that are equivalent to buying companies, focusing on the business, buying future discounted cash flows of the company. As Karl Marx put it, "Prices fluctuate around value. When buying stocks, you are paying the price, but what you are buying is the value." Therefore, from a longer-term perspective, the stock market can be viewed as a voting machine in the short term and a weighing machine in the long term. It is because we follow these investment principles that we firmly believe in the importance of being friends with time and volatility.

When evaluating whether a company is outstanding and worthy of long-term holding, we concentrate on the bottom-up fundamental analysis method and place emphasis on assessing whether the company possesses a sound business model, excellent corporate culture, and whether a reasonable or higher margin of safety is present for our buying price. Here, the business model serves as a guiding light, indicating how the company generates profits, whether it is efficient in profit generation, has good sustainability, a broad economic moat, strong profitability, and the ability to generate substantial cash flows. To use an analogy, the business model is like the horse, and the management team or corporate culture is the rider. First and foremost, we need to select a strong and exceptional horse, and then through the rider's careful cultivation, excellent results can be achieved in competitions or business operations.

Quoting from Buffett's letter to shareholders in 1984: "A good business is one that can generate a lot of cash, unless it has experienced enormous growth in sales." For investments, having an excellent business model is crucial. If we spend a long time holding onto a poor business model, the opportunity cost will be high, and returns will be affected in the long run. Therefore, for us, choosing companies with differentiation, an economic moat, a sound business model, and corporate culture, provides higher certainty in investment growth and relatively lower risks.


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