2016.12.01 By Qu Hongyan and Zhu Xianni, China Securities Time Views:
As Howard Marks stated in The Most Important Thing Illuminated: Uncommon Sense for the Thoughtful Investor, "first-level thinking is coming to a simple obvious conclusion and making a bet on it, while second-level thinking is deep, complex and convoluted and involves many factors." To obtain excellent investment results, one has to take an extraordinary but correct view towards value.
As Howard Marks stated in The Most Important Thing Illuminated: Uncommon Sense for the Thoughtful Investor, "first-level thinking is coming to a simple obvious conclusion and making a bet on it, while second-level thinking is deep, complex and convoluted and involves many factors." To obtain excellent investment results, one has to take an extraordinary but correct view towards value.
Zhang Wei's investment decisions are exactly the case in point.
In 2004 when China's macro-economic regulations aroused pessimistic moods, Zhang invested in SunWard (002097.SZ); when market players almost unanimously thought only the top three internet vertical websites could survive, Zhang invested heavily in the little known House365.com (300295.SH) and was handsomely paid back; when market players almost unanimously thought that feed enterprises would be impossible to grow bigger for the limited gross profit, Zhang was determined to invest in New Hope (000876.SZ). All these successes are achieved by Zhang's unique second-level thinking.
"In Joseph Schumpeter's words, the most typical entrepreneurship is hard-working. Successful entrepreneurs are resilient. Their business sense will lead them to extraordinary and ground-breaking decisions,directing their companies to a bright future. Meanwhile, successful entrepreneurs are ambitious and generous. Ambition is about making things happen not just money while generosity is sharing innovations and profits," said Zhang.
The above is part of an interview with China Securities Times where Zhang shared that investment is all about companies and entrepreneurship, so investment decisions only depend on how factors contribute to the company's growth and the evaluation.
Rewritten by Chen Cong, Edited by Li Yunzhen, Du Zhixin
The year 2019 marks the fortieth anniversary of China’s Reform &Opening-Up, once again, we meet at the turning point of history. What’s the next step for the game, is there any clear guidance? The answer is affirmative.
Our country is enjoying a good momentum of development, which does not come from the Washington Consensus nor the Beijing Consensus. China’s experience has proved that both the visible hand and the invisible hand are crucial: the visible hand, stands for the government-led reform, and would yield benefits for reform and opening up; the invisible hand, stands for the Marginal Power represented by the private sector, and would improve economic efficiency and tax collection, create jobs and employment opportunities.
Provided that we want to protect and expand the benefits form reform, three simple but mandatory agreements are to be made and followed: No.1 Private ownership must be recognized, protected and treated equally with public ownership constitutionally, both ownerships are scared and inviolable;No.2 Make further clarification of the principal position of market economy, “deepen economic system reform by centering on the decisive role of the market in allocating resources”, as President Xi addressed in the third Plenary Session of the 18th CPC Central Committee;No.3 Implement the guiding principles of “comprehensively promoting law-based governance” of the fourth plenum. The rule of law is essential for economic growth, irreplaceable to protect private ownership, and necessary to encourage innovation and entrepreneurship.
Above are three rules for us to avoid falling into the Middle-income Trap. Assuming that we are breaking systematic barriers to private enterprises’ participation in market economy, and boosting innovation and entrepreneurship of our society, then we are heading towards a promoting direction. We are marching in the path of light, regardless of the ups and downs of Sino-US relationship, the drop in GDP growth rate, or the monetary policy.
These principals also apply on knowing how better to run a business: don’t be hedged by rules and regulations at the beginning, pay more attention to your survival, and you’ll learn more when you start your second business.
For many years, Huawei has been the only Chinese company on the list of the Top 50 R&D Spenders. Regardless of the economy and its income, what Huawei has been doing is investing in its future, dedicated to R&D, continuously and resolutely. This provisional work underscores Huawei’s accomplishments, making Huawei anindustry leader.
So, there are standard answers on how to run a company,which could be summarized as concentration and professional dedication, continuous investment on innovation and trying harder in R&D. Entrepreneurship is also important, every single company needs entrepreneurs to push aside all obstacles and difficulties, to implement strategies and ideas. We, as investors, are destined to look for such outstanding entrepreneurs and their companies, invest in them and partner with them.
At this key point of history, a country, a company, or asingle individual, will all need to find the right path. Four decades after the Reform and Opening-up, it’s time to learn from our experience and stop “wadding across
