In yesterday's article, I recalled some fragments of my past investment experience and the investment approach formed by these fragments.

This investment approach is actually very similar to venture capital.

In this approach, both our thinking and our operations are against the wind in style:

The scenarios we face are all brand new and unprecedented;

The things we need to understand go against "common sense" and "conventional wisdom";

The assets we want to buy have not been verified for a long enough time and cannot be measured by traditional revenue models.

I have had these insights before, but in the past six months, when I read books related to Buffett's investment, I felt even more strongly.

When I was writing the article yesterday, I thought I might as well take this opportunity to share with everyone my shallow understanding of Buffett's investment approach, providing a different perspective and mindset.

Buffett's investment approach is completely different from the one mentioned above, and can even be said to be the opposite.

If directly compared with the above-mentioned investment approach,

I think Buffett/Munger's investment approach can be described as: avoiding risks both in thinking and in operations.

The scenarios we need to face are all new and unprecedented, while the scenarios Buffett chooses are all existing.

For unknown scenarios, the descriptions I see in his public statements or writings are cautious, even negative.

The things we need to understand go against "common sense" and "conventional wisdom"; what Buffett understands not only cannot go against "common sense" and "conventional wisdom", but also must be something he believes he can understand deeper and better than the average person.

For things that go against "common sense" and "conventional wisdom", Buffett/Munger's approach is very simple: they just ignore them directly.

The assets we want to buy have not been verified for a long enough time and cannot be measured by traditional revenue models; whereas the assets Buffett buys not only need to be verified for a long enough time, but it is best to estimate their cash flow for the next 15 years, 20 years, or even longer, and they must be able to be clearly measured by traditional revenue models.

When selecting investment targets, with our investment approach, we often tend to choose targets with new business models, or even those that have never existed but have huge "imaginative space"; but Buffett would choose targets with very mature business models, and he understands them very deeply.

Buffett/Munger's main work is usually to read company annual reports and financial information, in order to understand the situation of various industries and companies within those industries, to understand the profit model of an industry and a company, and to try to understand whether a company still has the ability to generate continuous revenue for the next 15 years, 20 years, or even longer, and whether this ability has a threshold that allows a company to stand invincible in an industry.

When he acquires a company or buys its stock, often for more than a decade or even longer, he has already gained a deep understanding of the industry in which the company operates and even the company itself through a large amount of reading and learning. During this period, he has been patiently waiting for a company that meets his standards to appear, or waiting for the stock price of that target company to reach his buying standard.

And once he buys a company's stock, unless the company's operations, model, risks, thresholds, etc., undergo a change, or he finds much better investment targets, he will not easily sell the stocks he holds.

If we look back at his past stock sales, we will find that those actions have been proven wise afterwards.

If it is because the company has problems that lead to his selling, it is because he has become extremely familiar with the industry and the company, and even slight changes in the company can allow him to see risks and problems that others cannot see, enabling him to exit before the risks and problems erupt.

If it is because he has found better targets that lead to his selling of existing stocks, the subsequent situation also proves that indeed the new stocks he bought are more suitable than the ones he sold.

So overall, Buffett's investment approach is like steady and stable investment.

This approach does not pose such a great challenge to one's thinking or common sense, but it requires investors to put in extraordinary effort in understanding industries and companies—like Buffett/Munger, who spend years reading dry financial reports and industry analyses to accumulate an understanding and sensitivity to industries and companies that goes beyond the average person's.

When I compare these two different investment approaches, besides being curious about the magic of the investment field (both opposite investment approaches can find their own applicable scenarios), I also feel a profound impact on my thinking.

I often hear some investors say that they want to do venture capital and also invest in the secondary market like Buffett. If one can really master both of these approaches, it would be like the "Left and Right Hands" of the Old Imp in "The Return of the Condor Heroes," making them invincible.

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