The Historical Records is the first biographical general history in China, recording the Yellow Emperor era from the ancient times to the reign of Emperor Wu of the Han Dynasty. The Records of the Historian covers everything, including outstanding businessmen and investors, as well as many ideas about value investment. Today we will learn about the investment wisdom in the Records of the Historian.
Ji Ran was a subordinate of Gou Jian, the King of Yue. When Gou Jian was trapped on the Kuaiji Mountain, Ji Ran helped Gou Jian find a way to fight. What do you need most in war? War, of course, requires money and materials. Ji is a master of value investment, and he proposed several strategies or investment methods for Gou Jian.
Article 1 Investment method: "drought leads to capital boat, water leads to capital car"
However, Ji is investing from the perspective of war. Drought means boats and water means cars. That means we buy boats in drought and cars in flood. Because no one takes a boat during the drought, the boat is cheaper. At this time, you can buy a car at a cheap price. Once there is a flood, few people buy a car, and the car is cheaper. At this time, you can buy a car at a cheap price. In fact, the same is true for our investment in index funds. When they are undervalued and cheap, we buy them.
Article 2 Investment method: good at observation
Ji Ran observed that there is usually such a rule in grain observation: a bumper harvest every six years, a severe drought every six years, and a major famine every twelve years. When selling food, if the price is too cheap, farmers will suffer losses. If it is too expensive, merchants will have no profit space, and merchants will suffer losses. Therefore, the state should balance the price of food so that both sides can make some profits.
Article 3 Investment method: "follow the principle of doing things, no interest money, trade with things, do not keep goods that are corrupt and eat, and do not dare to be expensive"
It means that we should not hoard too many goods, especially goods that are easy to corrupt and corrode. At the same time, we should not borrow too much money with interest to invest. In fact, this is also Buffett's advice to ordinary people. Buffett believes that ordinary people should not borrow money to invest in order to avoid permanent loss of principal.
Article 4 Investment method: "In terms of the surplus and deficiency, we should know the value of the high and the low. The high and the low are opposite to the low, and the low is opposite to the high. The high is like dirt, the low is like pearls, and the money is like running water."
It means that we need to study the situation of commodity surplus or shortage, so as to know whether it is cheap or expensive. If the goods are extremely expensive, they will return to cheap in the future. If the goods are extremely cheap, they will rise back in the future. This is the same as the bull and bear market of the stock market. When things are expensive, we should sell them as if they were dirt. When things are cheap, we can buy them as if they were jewelry. This is what we call undervalued buying and overvalued selling. At the same time, money runs like running water, and cash flow should be stable.
Jiran's fourth investment method is to highly summarize the value investment concept. We need to carefully study and judge the investment value of this item, that is, to establish a capability circle. We need to know the value of an item, so that we can buy when the price is lower than the value, and sell when the price is overvalued. At the same time, we can keep our cash flow unbroken and make long-term investments. Jiran's investment philosophy is very similar to that of Graham and Buffett. Therefore, value investment will reach the same goal by different routes in the end. Not only in investing in the stock market, but also in governing the country.
