Buying stocks means buying companies; the key lies in understanding corporate culture and business models. Not making mistakes is more important than doing the right thing.

This is a rare public dialogue with Duan Yongping, over twenty years after his "retirement."

In the first episode of Season 3 of the investment program "Strategy," produced by Xueqiu, Xueqiu founder Fang Sanwen crossed half the globe to meet this legendary investor face-to-face in California, USA.

This conversation lasted several hours, covering his life experiences, corporate culture, investment logic, and views on children's education, almost serving as a complete review of investment life.

In this interview, Duan Yongping mentioned "making mistakes" 10 times, "understanding" 12 times, and "very difficult" 29 times. Behind these words lies his consistent way of thinking: "Buying stocks means buying companies," but as he said in the interview, "the number of people who can truly understand this sentence may be less than 1%."

The interview took place on October 16, 2025, and below is the unedited transcript of the complete dialogue.

Key Quotes

On Core Investment Philosophy

"Buying stocks means buying companies."

"Investing is very simple, but it's not easy."

"You must look at the company, you must understand the business, and you must understand future cash flows."

"Most companies are not easy to understand."

"Buffett's margin of safety does not refer to being cheap; it refers to how well you understand the company."

"Cheap things can become cheaper."

On Understanding and Not Understanding

"Understanding or not understanding is actually a gray area."

"Not understanding does not mean not making money."

"If 1% of people can truly understand the phrase 'buying stocks means buying companies,' that's impressive; actually doing it is even harder."

On Rationality and Positioning

"If you're not satisfied, you quickly run away; it’s already not in your hands. Otherwise, the logic doesn't hold."

"If I only have that much money, I really can't hold on to it; I might sell."

"Maintaining rationality is a very difficult thing."

"The probability of making mistakes is actually similar for everyone; it's just that some people won't make the same mistake all the way."

"(After) thirty years, the difference lies in the fewer mistakes made."

On Understanding Companies

"Understanding business is very important; if you don't understand business, investing is very difficult."

"Having come from a business background, it's relatively easy for me to understand others' businesses, but I still can't understand too many businesses."

"I think I understand Apple, Tencent, and Moutai relatively well."

On Corporate Culture

"A good culture primarily means that it will ultimately return to the right path, guided by a North Star, knowing what it should do. It's not just about business; discussing business alone can easily lead to mistakes."

"Companies with good culture do not avoid making mistakes; they can ultimately return to the right path."

On the Wisdom of "Not Doing"

"People care about what we have done; in fact, a significant reason we are who we are is because of the things we did not do."

Below is the complete transcript of the interview

01

Talking About Personal Experiences

Fang Sanwen: A user asked a particularly nonsensical question: how do you spend an ordinary day, like today?

Duan Yongping: Playing ball, exercising.

Fang Sanwen: Is it like this every day?

Duan Yongping: Pretty much, playing at different courts.

Fang Sanwen: The only change is the location of the court and the partners you play with?

Duan Yongping: Sometimes I have partners, sometimes I don’t.

Fang Sanwen: A user named "Reading Craftsman Lao Zhang" wants to ask you, what kind of environment did you grow up in as a child? Does this environment relate to your current personality and achievements?

Duan Yongping: I don’t know. I was born in Nanchang, and around the age of six, I was sent with my parents to Anfu County, Jiangxi. We moved around five or six places in Anfu County, living in the countryside, and then moved back to Shigang near Nanchang. I did experience hardship; when I returned to Shigang, I started middle school, and I went to university from Shigang. After graduating from university, I was assigned to Beijing, worked for a few years, and then pursued a graduate degree. After that, I went to Guangdong, Foshan, Zhongshan, Dongguan, and finally came to live in California.

Fang Sanwen: I think this user might want to know more specifically; can you describe your family environment and what kind of education your parents provided?

Duan Yongping: These things are not very meaningful. What help can it provide to him if I tell him which river I fished in? It's hard for me to explain. I have an older brother and a younger sister, and our personalities are all different. I don’t really know how much help my parents provided.

But simply put, I think my parents treated us well; they weren't like many parents today who are very competitive and push their children. My parents seemed to not manage me much and had few demands, so I felt quite secure, and I could make many decisions on my own. I have been used to making my own decisions since I was young, and I think this is likely related to my parents.

Fang Sanwen: You had ample freedom; you think this is a good thing, right?

Duan Yongping: Yes, I think my parents had a lot of trust in their children.

Fang Sanwen: Now that you are also a parent, do you treat your children the same way?

Duan Yongping: Yes, I think I don’t require my children to do things I can’t do. If they want to play, I wanted to play at that time too. However, I find that children are quite self-disciplined; they do their homework when they need to. It's important to set boundaries and tell them what they cannot do. I think this is very important, rather than constantly scolding them. I believe giving children a sense of security is crucial; without it, it's hard for people to be rational.

Fang Sanwen: Setting boundaries and providing ample trust?

Duan Yongping: Yes.

Fang Sanwen: During your childhood and adolescence, did you have any life goals?

Duan Yongping: I didn’t have any goals; I’ve always been quite unambitious. I think of myself as an ordinary person, and living a good little life is quite good.

Fang Sanwen: So that can also be described as the goal of living well?

Duan Yongping: I didn’t even think that way; I’m not saying I must do something or achieve something. I really didn’t have that thought; I just did what I liked and was relatively happy.

Fang Sanwen: During your childhood and adolescence, did anyone describe you as having something different from others?

Duan Yongping: I remember when I was in middle school, a teacher said, "Duan Yongping, you can't be like them and not study, just play." I don’t know why that teacher said that; he might have thought I was doing well in school, and I indeed was doing well. When I later took the university entrance exam, I suddenly did well. Most people in our generation couldn’t get into university, so that teacher might have been right, but I didn’t let him down; I got into university.

Fang Sanwen: He thought you might be stronger in terms of learning ability, so he had certain expectations of you?

Duan Yongping: That was a very strange thing; he was an English teacher, and my English was terrible. I was completely baffled as to why he thought I had strong learning ability. I only learned English after going to university; I didn’t learn it at all in middle school. But that English teacher said I was different from other kids. When someone tells you that you are different, you really remember it.

Fang Sanwen: But at least it was a motivation for you.

Duan Yongping: I just remember that incident. I didn’t think it was anything special; if you hadn’t mentioned it, I would have forgotten. But once you bring it up, I remember it.

Fang Sanwen: You studied an engineering major in your undergraduate studies, and later you went on to pursue a graduate degree, which can be said to be in business. During this process, did your interests change?

Duan Yongping: Not really. First, I want to emphasize that I didn’t study business; I studied econometrics, which is actually an economics subject, and I consider it an engineering discipline; it’s a very logical field. After graduating from university, I was assigned to a Beijing electronic tube factory, then helped in the cadre department for more than half a year, and later went to the education center to teach adult education, teaching math for over two years. I felt it wasn’t very interesting, and when I had the opportunity to take the graduate entrance exam, I got into Renmin University, wanting to change my taste. I wasn’t that interested in the engineering stuff I had studied. People are exploring and trying to find what they like; I think Renmin University was helpful for me.

Fang Sanwen: Do you think the learning you did in university had a significant impact on your later life?

Duan Yongping: I think the main thing I learned in university was how to learn, how to study, and I built confidence that when I encounter something I don’t understand, I can learn it. This way, you will fear the future much less; otherwise, you fear everything. I have indeed seen many people who sometimes can’t even type on a smartphone, and I find it very strange. I used to not know how to type either, but I learned quickly and developed a habit of learning. I think graduate school was just like changing fields; I gained some different knowledge, and my perspective changed a little bit. But the main thing was that I got out of my original environment. Because at that time, we were poor students, and we didn’t even have money to go out and see anything. I went to study, changed jobs, and during this process, I was always learning, of course, I also faced a lot of hardships.

Fang Sanwen: You think the specific knowledge you learned might not be that important?

Duan Yongping: The methods and attitudes, I think, are somewhat useful. The methods and the confidence to learn new things are very important. When you encounter something, you won’t be afraid; you will think about learning rather than feeling fear. I think many people are fearful. I taught my mom how to use an iPad; I had her learn 20 years ago, and she definitely wouldn’t know how to use it now; my mom is already 100 years old. When she was in her 70s or 80s, I had her learn, and she was adamant about not learning; she believed she couldn’t learn it. In fact, it’s very simple, and it has nothing to do with age.

Fang Sanwen: After graduating from graduate school, you moved south to Guangdong. How did you make that decision?

Duan Yongping: I could have stayed in Beijing; two companies wanted to hire me. Then I happened to meet a Guangdong company recruiting in Zhongguancun, so I went there, but it wasn’t as ideal as I thought, so I later moved to Zhongshan.

Fang Sanwen: The decision to move south to Guangdong can be understood as you seeking the market to some extent?

Duan Yongping: No, we were actually at a dead end; there were no other options, just trying it out. At that time, I was still young, and trying was always good. I have a habit: if I encounter something unsuitable, I quickly leave. Beijing was unsuitable for me; I felt uncomfortable there. I didn’t know how Guangdong would be, but staying in a place I didn’t want to be was unreasonable, so I had to leave. I even considered going to Hainan, but after learning about Hainan, I thought it was better to go to Guangdong.

So I think if your decision is based on a long-term perspective of what you want your future to be, the probability of making mistakes in that decision might be lower. Many people said, "What will you do for retirement in Guangdong?" I said, "At this age, what do I need to worry about retirement for? I need to go out and see first." Of course, you might say that I was lucky and took the right path. In fact, many decisions were made because I felt uncomfortable in the environment at that time and had to leave, including after I arrived in Guangdong; my first job was also one I left after three months. I felt I was on the right path but had entered the wrong door, so I left again. Then I went to Zhongshan, and later I created Little Genius, which did very well, but due to issues with the mechanism, I felt it was still unsuitable, so I left.

Fang Sanwen: Can you talk about what was unsuitable about the mechanism specifically?

Duan Yongping: It's not about whether there are equity incentives; there were initially. Without a contract, you become untrustworthy; anything you say is not credible. If you have one or two instances, do you really need a third? It's like scratching off a bottle cap; once you reveal "thank you," do you keep scratching? If you uncover one character, you definitely won't continue. I felt that once I reached that point, I couldn't stay any longer. I left 30 years ago, and after leaving Little Genius, I went to Dongguan to start BBK.

Fang Sanwen: When you founded BBK, did you clearly resolve issues similar to those at Little Genius?

Duan Yongping: The problem with Little Genius wasn't that it lacked a shareholding system; it was that it didn't fulfill that promise. We never had that issue from the start. We were what we were, and everyone cooperated well. What we said was what we meant, so everyone felt at ease, and there was a high level of trust. I think the original big boss also regretted it.

Fang Sanwen: Looking back, was there a possibility of achieving a relatively ideal governance state under the structure at Little Genius?

Duan Yongping: I don't know how to answer that; in fact, there wasn't. I don't know how it could have been ideal because that wasn't my problem; it was someone else's. I didn't leave because of profit issues but because of trust issues. At that time, my income was already very good; I was financially free. The profit-sharing was also fair, but I didn't know what would happen in the future. Was there a way to establish a shareholding system? Was there a way to make you feel that this mechanism was protecting you? Some companies seem to treat dividends to shareholders as a favor; I think that's unreasonable. Distributing dividends to shareholders is what they are entitled to, and the bonuses employees receive are what they should get. When we distribute bonuses, some people say "thank you, boss," and I think that's inappropriate because those bonuses are distributed according to the contract; you don't need to thank me. Although everyone casually feels they should say thanks when they receive money, the direction of that gratitude is wrong.

Fang Sanwen: When founding BBK, did you consciously create a corporate culture that you liked?

Duan Yongping: Corporate culture is greatly related to the founder; you find those who resonate with you and your culture. So our corporate culture is actually one that everyone agrees upon, and we all stay together. Those who don't agree will gradually be eliminated and leave. It's not that I wrote a paper about corporate culture from the beginning and had everyone execute it step by step. Much of our culture has also evolved during the growth process, including our "not-to-do list," which has been added item by item. The things we shouldn't do are learned through many painful lessons, and we won't do them again in the future. Since I left the company, I haven't been the CEO for over 20 years, and it has indeed changed significantly; now it's very impressive. At that time, we were actually a very small company, but we were quite capable; we were already quite impressive during the Little Genius days.

Fang Sanwen: The gradually formed corporate culture has accumulated over many years; can you summarize it simply?

Duan Yongping: We always talk about being responsible, integrity, and user orientation; our principles are actually very straightforward. Our vision is to be healthier and more sustainable; we don't engage in unhealthy or unsustainable things, which is quite a common mindset.

Fang Sanwen: A user mentioned that you thought of the concept of responsibility culture in your junior year of college; is that true?

Duan Yongping: In my junior year, I accidentally came across a quote from Drucker: "Doing the right thing and doing things right," which had a significant impact on me. It immediately clarified the distinction between right and wrong. You find that if you take five seconds to think about something, it can save you a lot of trouble in your life. When our company sits down to discuss whether a business is profitable, there’s a saying: "Is this the right thing to do?" If it feels wrong, we can easily stop; if you're only considering whether it will make money, you'll find it very complicated, and many things you won't know in advance. However, some wrong things you might know early on. Of course, there are things you only realize afterward, and that's fine; just don't do them again in the future.

I can give you a simple example: we don't do OEM work; this isn't a principle because OEM can also be profitable, but I feel we aren't good at it. Once, Terry Gou chatted with me and asked about this; I said we have a not-to-do list. He asked for an example, and I said we don't do OEM. He asked, "What do you mean?" I said, "If I were to do OEM, I wouldn't be able to compete with you, right?" He agreed. But we do branding very well, and our company is not smaller than theirs. It's not that OEM is bad; it's just that it's not suitable for us, so we stopped. Anyone who comes to us for OEM business, we simply don't do it.

Fang Sanwen: You have a value system of right and wrong in place, and later, how did you develop your methodology?

Duan Yongping: Yes. Because learning has costs and curves, you may make mistakes. The mistakes made while doing the right thing and doing things right are acceptable. However, the negative consequences of doing the wrong thing are not acceptable because you know it's wrong; why would you do it? Of course, if you say you didn't know in advance, then you can avoid doing it next time. Over decades, this has accumulated, leading to fewer mistakes and not getting stuck in place.

Fang Sanwen: A user named "Learning Machine" asked whether people with shared values are mainly cultivated or chosen.

Duan Yongping: Chosen.

Fang Sanwen: The outstanding talents at BBK, are they not necessarily recognized by you when they first start working but rather cultivated over a long period of working together?

Duan Yongping: Most people are quite similar to me; they are ordinary people. Everyone shares a common value system, and of course, they have received a university education and can learn. The subsequent things are accumulated gradually through learning. However, the recognition of values is very important; if the values are not mutually recognized, then it can't work. If everyone is just looking out for their own interests, there will definitely be problems. When we celebrated our 30th anniversary, many old colleagues were there, some still working, and some retired.

Fang Sanwen: According to you, doing the right thing, finding the right people, is choosing still more important?

Duan Yongping: Finding the right people also takes time. For example, there are two types of people: one type is the wrong person, whom you gradually eliminate; the other type has both good and bad qualities. Once they recognize your culture, they will gradually follow you. So we always say we have two types of people: one is like-minded individuals, and the other is fellow travelers. They recognize you; even if they don't fully understand, they will do as you say. Sometimes these people might make mistakes, but they can also come back. Those who stay for a long time will have such opportunities; our agents over the years have actually been quite good, and everyone has a strong recognition of the culture.

02

Talking About Business Operations

Fang Sanwen: Let me ask a specific question about business operations. For BBK, a significant change was later making smartphones; you originally made other electronic products and feature phones, and then transitioned to smartphones. It seems that initially, you were not in favor of this decision?

Duan Yongping: Correct.

Fang Sanwen: How did it change to the point where you started making them?

Duan Yongping: Because they were the CEOs, my approval or disapproval didn't affect their decision-making. Everyone was at a dead end; we made telephones and quickly became number one in the country within a year or two. Later, we felt that the market didn't seem to have much of a future, and then smartphones came along. Shen Wei thought we should make smartphones. At that time, I felt we might not be able to compete with Panasonic, Sony, Motorola, etc.

Fang Sanwen: These were during the feature phone era?

Duan Yongping: Yes, during the feature phone era. Then he said, "Ah Duan, that's not the case." What ultimately convinced me was that smartphones are actually very personalized products. I originally thought they were like home appliances, and others had larger scales than us, making it hard for us to compete. I said, "If you think it's a very personalized product, then we have a chance; we can differentiate ourselves and do things differently, and in some areas, we can do better than others." Plus, we had many years of experience in business. Our company has this rule: regardless of whether I agree or disagree, the decisions made by the CEO are their decisions, and they bear the consequences. They can't say, "Ah Duan opposed it, so I didn't do it," and then avoid responsibility. I was just in an advisory role. Many people misunderstand, thinking I'm the boss; in fact, I haven't been for a long time. Even when I was CEO, I didn't manage much; I let them make decisions. So their transition was quite smooth; delegating authority takes a long time.

Fang Sanwen: Is the transition from feature phones to smartphones a bigger decision?

Duan Yongping: That wasn't a decision; it was forced. Feature phones weren't selling well, and we were almost going under. Although we had done very well with feature phones, smartphones came in very aggressively and quickly took over the market. At that time, we still had many feature phones in stock, so during the 30th anniversary, everyone felt emotional; we made it through. I even went back specifically because we had stored a lot of materials, and cash was being consumed very quickly. I remember we had 7 to 8 billion in cash on the books, watching it drop until it was almost gone, and then it started to come back. By that time, smartphones had already come out, and we had released one or two generations of smartphones, which helped us recover. There was a year, from 2012 to 2013, when we lost quite a bit of money. When I went back, I said, "If we are going to go under, let's not do it too disgracefully; I've seen how others have gone under, and afterward, it's a mess." I said this can't happen; we can't let suppliers suffer, and we shouldn't let employees suffer either. Of course, I said this with some confidence because I hadn't touched that investment area; it was like our reserve troops, which had never been deployed, and in the end, they weren't, so it turned out well. Anyway, the team really did well.

Fang Sanwen: Was the transition from feature phones to smartphones actually facing a greater crisis than the transition from making telephones to making smartphones?

Duan Yongping: Yes, because the scale was too large. I think we also made mistakes by not being sensitive enough. We had done very well with feature phones, so we actually had the capacity to bear risks, but we did lose quite a bit that time. We had made similar mistakes before, but the scale wasn't as large, so we recovered quickly.

Fang Sanwen: Did you not expect the sales to drop so drastically?

Duan Yongping: Yes. The decline was too rapid. Our past experience curve suggested it would decline slowly; in fact, we had already been developing smartphones and knew the trend, but we still placed many orders for feature phones, thinking there would be a process. We didn't expect it to happen all at once, like what's happening with AI now.

Fang Sanwen: New technology drives new products, and the speed of its adoption is faster than expected?

Duan Yongping: You could say that. Mainly, the new products are indeed very good; they completely replaced the old products in an instant. After smartphones came out, look at how many things were replaced: cameras disappeared, and products like electronic dictionaries, tape recorders, and learning machines that we made were basically replaced by smartphones.

Fang Sanwen: Because smartphones are now a very large industry. I recall some of my experiences; I saw a Motorola phone called the 6188, which actually had the prototype of a smartphone; later, there was a Nokia E71, which was also a prototype of a smartphone?

Duan Yongping: That was a dumb phone. I have a very deep impression of that Nokia model; I was very excited when I got it, but I found it very unintelligent to use. We were very accustomed to using Nokia phones, but they changed the entire interface. I picked it up and didn't know how to use it. You can imagine, as someone who studied engineering, I struggled for a long time and still didn't know how to use it. So it wasn't surprising that Nokia eventually went under; I think the culture of that company must have decayed.

Fang Sanwen: But I think it did take a step forward in that place, even though it ultimately failed. Can we understand it this way: perhaps there were people within that company who had relatively correct judgments about industry and product trends?

Duan Yongping: The product trends were not an issue; everyone could see them, but its culture was very important.

Fang Sanwen: They lacked the capability?

Duan Yongping: They focused too much on market share and business, and not enough on users, which led to significant misses, and they missed again later. In fact, when Android came out, Google approached them, hoping Nokia would switch to Android, but they refused; they wanted to hold on to their own thing and ultimately ended up killing themselves, so there was no way around it.

Fang Sanwen: At least companies like Motorola and Nokia were once very well-known enterprises, and they had considerable experience in management?

Duan Yongping: Management cannot save a company; they had strategic and cultural issues.

Fang Sanwen: I remember you once admired Panasonic's management; has that view changed somewhat?

Duan Yongping: Panasonic is still a pretty impressive company, but I think the Japanese culture is not particularly easy to understand. I initially went to Panasonic to seek cooperation in making phones. I went with Chen Mingyong and Shen Wei to Panasonic, and we met with department heads and finally President Nakamura. They asked about our intentions, and I said we felt that at that time, we weren't too confident in ourselves regarding technology, funding sources, and what would happen in the future. We thought that collaborating with a larger company might provide better opportunities. I told them that with our strength, if we collaborated, it was very possible for us to reach the top three in the Chinese market in two years and the top two in three years.

But not a single person asked me why I thought that way. So when I left Panasonic, I knew they didn't trust us at all. Panasonic was very bureaucratic in this regard. Even when I met the president, he told me, "When I make a decision, I think about how the old Panasonic leaders would view it." I thought to myself, this is a disaster because the old leaders have long since passed away.

Steve Jobs told Tim Cook that as CEO, you make decisions; don't think about what Jobs would do, and that's correct. I also tell everyone that they are the CEOs, and they must make decisions without thinking about how I would do it. If you think that way, we would have failed long ago and wouldn't be here today. So I believe Panasonic's culture indeed has problems.

Fang Sanwen: They may have placed too much importance on their past systems and achievements?

Duan Yongping: I don't know. I haven't cared about what happened; I just felt that it was wrong. Especially when a president told me that when making decisions, he thought about how the old president would think, I felt they were carrying a heavy burden. Because your eyes should be on the users, while their eyes were looking in the rearview mirror. Given enough time, there will definitely be problems.

Fang Sanwen: According to your earlier description, you established a good delegation mechanism early on, allowing partners to make decisions themselves, and you also exited early. This kind of management arrangement seems uncommon among entrepreneurs?

Duan Yongping: What does that have to do with me? I'm not a typical entrepreneur. I don't care what others want to do; I want to play ball, and if others want to play ball, they can play anywhere. The main thing is that they do better than I do; I feel their motivation is stronger than mine. I believe I've done what I should do, and I have other enjoyable things in life, so why should I stay there? Moreover, I trust them, and I think that's very important; I'm not afraid of them making mistakes.

Fang Sanwen: But many entrepreneurs I see want to stay on the front lines?

Duan Yongping: That has nothing to do with me; I don't care what they think.

Fang Sanwen: A user named "Lu Bian Bian Zou" asked how a founder or boss can judge when it's time to leave the company or when conditions are ripe for departure.

Duan Yongping: When he feels he can leave, then he can leave, but it's difficult; not many people can do that. What's difficult? It's that he doesn't want to. If he wants to, he can always find a way. This is actually uncontroversial; I don't think there's much to discuss about it. Some people enjoy doing this, while I prefer to let my team do it. I think it's just a choice; if you don't choose but want to envy my life while also wanting to enjoy your own life, then that's not possible. Some people enjoy working; I really don't.

Fang Sanwen: On one hand, I think being dedicated and always working seems like a good quality; but at the same time, we cannot deny that as people age, their abilities decline. Shouldn't we generally acknowledge that a person's contribution to a company, even a founder's contribution, is also stage-specific?

Duan Yongping: I don't think that way. I think that's unreasonable. Buffett is over 90 years old, and he's still doing quite well; he just recently retired. I don't know why he retired; maybe his health isn't as good as it used to be. A couple of years ago, when I visited him, he took us on a tour of his office, walking with a group of us for over 50 minutes, so at that time, his health was still pretty good. Recently, I don't know, but I saw him at the shareholder meeting, and he seemed okay. He might feel it's time to pass the baton. Buffett is a particularly typical example; he enjoys doing this, and he has been doing it all along.

Why must you retire just because of age? I don't think age is necessarily a barrier, but you need to evaluate yourself. If you can't remember anything and are confused when making decisions, then of course, if it's your own company and you want to, others really have nothing to say. In fact, when I was CEO, they already had a lot of autonomy, so handing over responsibilities to them was a natural thing. I was rarely in the office; I either went to play ball or went to play ball.

03

Talking About Investment

Fang Sanwen: A user named "Yi Gen Bai" asked what the opportunity was for you to first get into stock investment.

Duan Yongping: Does it need an opportunity? Everyone knows about stocks everywhere. After I retired, I moved here to live, and I couldn't play ball 24 hours a day, nor would I look for a job. Later, I thought investing seemed related to business and companies, so I started to study it and bought a lot of books, including how to read charts and lines, but I couldn't understand them. As someone from an engineering background, how could I not understand these charts while others could draw such conclusions?

It wasn't until I read something from old Buffett that I really got it; I didn't read much, just saw the phrase "buying stocks is buying companies," and suddenly it clicked for me. That phrase was enough. Because the rest is about how you view the company, and that's not something old Buffett can teach you. If you don't understand business, no amount of theory will help. However, since I came from a business background, it was relatively easier for me to understand others' businesses, but I still don't understand too many businesses; there have only been a few over the years. I think understanding business is very important; if you don't understand business, investing is very difficult.

Fang Sanwen: If you had to summarize your investment philosophy in one sentence, would it be that buying stocks is buying companies?

Duan Yongping: Yes. But the latter part is that you need to understand the company, which is very difficult. Why do people say investing is simple but not easy? It's simple because you must look at the company; you must understand the business and the future cash flow. The difficulty lies in the fact that it's hard to achieve that; most companies are not easy to understand.

Fang Sanwen: I remember Buffett or Munger once said that if you invest for a lifetime, if you had a punch card with 20 holes, would you have used up your quota?

Duan Yongping: I probably haven't.

Fang Sanwen: Out of those 20 holes, how many do you feel you've punched?

Duan Yongping: I can count; I have indeed invested a considerable amount in a few. The earliest was NetEase, then Yahoo, which I invested in because I wanted to buy Alibaba. After that, it was about Apple. My stake in Berkshire Hathaway isn't very large; Apple is relatively big, and Moutai is also quite significant. I still have Tencent. I did invest in General Electric during the 2008 crisis; I can't recall the exact weight now. But after they changed CEOs, I quickly exited. I think with today's perspective, I wouldn't invest in General Electric; its business model isn't good. I wasn't at the level I am now back then.

Fang Sanwen: Let's count the holes first. Does Google count as one hole?

Duan Yongping: Google doesn't count; I never really made a heavy investment in Google.

Fang Sanwen: What about Pinduoduo?

Duan Yongping: Pinduoduo counts. Pinduoduo is quite special because I invested in it during its early startup phase. So the money I invested was relatively small, but I made a lot of profit. Strictly speaking, it doesn't really count because I didn't invest after fully understanding it; I invested somewhat blindly.

Fang Sanwen: If you can't think of any other holes, it sounds like you haven't even finished 10 holes.

Duan Yongping: About that; it's close to 10 holes, so I still have a long way to go in investing because I need to fill 20 holes.

Fang Sanwen: Perhaps among investors in the secondary market worldwide, there are very few who can say they haven't used up their quota of 20 holes?

Duan Yongping: I don't know; it depends on your definition. Reaching 20 holes, some people may never get there in their lifetime; they may never have heavily invested in any company, with their highest stake being just 5%. Even very famous investors, like Peter Lynch, have done over 2,000 stocks in his lifetime; he must have been very busy, which is why he went gray early and retired earlier than I did. I don't know if he still invests; he probably does, just for himself. I've probably encountered many stocks; I also bought Shenhua. I didn't just buy Shenhua; I currently have Shenhua, but it's not a large stake. I have a relatively large stake in Moutai. I generally tell everyone I have three stocks: Apple, Tencent, and Moutai; it's pretty much like that.

Fang Sanwen: The rough conclusion is that you haven't used up those 20 holes?

Duan Yongping: The key is how you define a hole. Old Buffett has encountered more than 20 stocks, but the ones he truly heavily invested in are actually not many.

Fang Sanwen: Is there any hole that you feel you punched but are not very satisfied with?

Duan Yongping: That won't happen because if you're not satisfied, you quickly exit; it won't be in your hole anymore. Otherwise, it doesn't logically make sense; if you don't like it but still hold onto it, that's different from a child. If you don't like it, you have to keep it; with stocks, if you don't like it, you can vote with your feet.

Fang Sanwen: Let's get more specific. You just said that understanding the idea of "buying stocks is buying companies" is easy, but understanding a specific company is not easy?

Duan Yongping: Understanding the concept is not easy; understanding that phrase is very difficult. I see on Xueqiu that among those users, if even 1% truly understands that phrase, it's remarkable; actually doing it is even harder. But those who can't do it can still make money.

Fang Sanwen: It doesn't necessarily mean they don't understand; they might just have a different understanding.

Duan Yongping: That's exactly what I mean. Once you understand, you won't be influenced by the market. If you still check the market every day, look at the dynamics, and see how things were in the past… even if it's a big influencer, I see them talking about the market all day long; they just don't understand. You never see me talking about the market or saying, "Today it will go up" or "Tomorrow it will drop." But not understanding doesn't mean you can't make money; investing is very interesting. If you buy a stock with your eyes closed and hold it, among 100 people, actually 50 can make money, and those 50 can come out and talk. But if you ask them to repeat it, it's not that easy. I can teach everyone a way to make money: just buy the S&P 500 index, and you'll always make money in the end. But that doesn't mean you understand; if you really do that, it actually shows you do understand.

Fang Sanwen: Understanding a company is still very difficult. How do you determine that you understand a company? Let's take NetEase as an example; how do you determine that you understand it?

Duan Yongping: I come from a gaming background, and when I talked to their gaming team, I felt they were a group of people who truly loved games and were very serious about it. That's the first point. The second point is that I think their business model makes a lot of sense, especially since their cash at the time was higher than their market value. As a venture capitalist, it was easy for me to buy in. Plus, there was this opportunity at that time; the stock was low due to panic, and everyone thought they were going to fail. I felt there was a high probability they could make money, and since I had some cash on hand, I went all in on NetEase, and it increased 20 times in six months.

You ask if I understood it; if I really understood, I should have bought the whole of NetEase. So, I don't know what it means to understand this thing, but I generally felt they could make money, and I thought my investment risk wouldn't be particularly high. Why could I hold on for so long and make so much money without selling? The issue is that the money wasn't much to me, so I could think about it more rationally. If I only had that much money, I might not be able to hold on and might sell. So, maintaining rationality is a difficult thing.

Fang Sanwen: Your judgment about NetEase seems to include 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, so I understand games.

Fang Sanwen: The second part is your judgment about its pricing, for example, its stock price being very low, possibly below its net cash holdings. This is actually what Buffett refers to as a margin of safety?

Duan Yongping: Buffett's margin of safety doesn't refer to this; the margin of safety refers to how well you understand the company, that's my understanding. It's not about how cheap it is; cheap things can get cheaper. At that time, I felt they had a chance to make money, but I didn't know how much they could earn. If I had known they could earn this much today, even if I were a bit late, I would have bought more and wouldn't have sold. I eventually sold, which indicates I didn't understand that much.

Fang Sanwen: According to what you said, understanding and not understanding actually exist in a gray area; there isn't a clear standard, is that right?

Duan Yongping: I don't know, but people who ask others definitely don't understand. So, do those who don't ask understand? You could say it belongs to a gray area. At least I made over 100 times; you can say I understand or not. There are reasons for my selling, and I actually made a lot because I had other good investment targets.

Fang Sanwen: Let's talk about another target—Apple Inc. A user named "Lilian78" asked, 15 years ago, Apple was a hardware-selling company, and now profits are half from hardware and half from software. The business model has changed; did you have this judgment when you bought it?

Duan Yongping: I bought it in 2011, and by then, it was already very clear.

Fang Sanwen: At that time, could you judge that platform and software businesses would create more profits?

Duan Yongping: I'm in this industry; how could I not know? That's not even a judgment; it's something you can see.

Fang Sanwen: A fish in a barrel?

Duan Yongping: That's not quite right, but at least it's a big elephant not far away. We're in this business, so of course, I can see it.

Fang Sanwen: It seems you also have a judgment about Apple's corporate culture, right?

Duan Yongping: Yes, I think their corporate culture is very good.

Fang Sanwen: Why do you think their corporate culture is good?

Duan Yongping: I think they do a great job of being user-oriented. They are not a very business-oriented company; they care a lot about doing things well, about user experience, and about how to improve. They think very long-term. So, they won't make something that doesn't provide value to users or products that don't provide enough value, no matter how popular they are. We had a debate before; you asked if Apple would release a large screen, and I said they definitely would, but we waited three years for it to come out. But how did I know they would release a large screen?

Fang Sanwen: Because a large screen is a user demand.

Duan Yongping: Exactly, we're in this industry, and we already had large screens out. So, I knew users would definitely want large screens, but I didn't expect them to hold out for three years.

Fang Sanwen: This is something I find puzzling as well.

Duan Yongping: I was never puzzled; I just knew they made a mistake. Tim Cook made a very big mistake here; he was a bit like Nakamura. Jobs said this was the best, so they looked down on doing it. In fact, they had already been researching it; all the large screens were in their research lab, but they just didn't push it out. Of course, they might have thought the performance wasn't good enough or for some other reason; I don't know. In any case, they eventually pushed it out.

Let me give you another example. Early on, they said they would make iTV, which is a television. I remember when I was playing ball, I confidently told them they would definitely do it, and I had seen the samples. I said they definitely wouldn't. They asked me why, and I said, "What can they do?" I used the same words with my company people because we also made TVs. They later cut it off, and then Liu Zuohua came in and tried again, only to cut it off again. I said, "What's going on, Liu Zuohua? I told you back then why we shouldn't make TVs." He insisted on trying again. Chen Mingyong even let him try, just like I let Chen Mingyong try back then. After trying, he felt it was indeed wrong because this product couldn't provide much value.

More than a decade ago, everyone was saying Apple would release the Apple Car, the electric vehicle. I said they would never have this electric vehicle. Many people said it was impossible; they were all working on it. I said they couldn't produce it; it wasn't a technical issue, but rather what they could actually do. A car that big, the value Apple could provide is very limited. What price would it sell for? Do they have enough differentiation? This is where I understand Apple better than most people. If they really released the Apple Car, I would be very happy; I would love to see what they could do, but I just believe they can't produce it. Until recently, I met the owner of an Apple store in New York, and he told me their store had been closed for three years, and they had modified it once to prepare for selling the Apple Car, but then they changed it back. I said, "So you actually knew you weren't going to sell the Apple Car long ago." They at least knew this one to two years in advance, but Apple never announced it. When I heard they had indeed worked on the Apple Car, it actually exceeded my expectations; I thought they were just researching it. You see, just as I said, this is their culture. When they find that a product cannot provide enough value to users, they won't touch it. They won't do it just for business. If they were doing it for business, they could easily make cars; no one could do it better than them. But how it will turn out in the end, I don't know. This is my understanding; I think this company's culture is still quite good, and of course, there are many companies with good cultures.

Fang Sanwen: But they can also make mistakes, like you mentioned, not making large-screen phones for three years and almost making the Apple Car?

Duan Yongping: A good culture mainly means that in the end, it will return to the right path, guided by a North Star, knowing what it should do. It's not just about business; discussing business alone can easily lead to mistakes.

Fang Sanwen: If there is a good culture, it doesn't completely avoid making mistakes, but the probability of correcting mistakes may be greater than that of not having a good culture?

Duan Yongping: The probability of making mistakes is actually about the same for everyone; it's just whether you continue to make them and whether you have a list of things not to do. Over thirty years, we have made fewer mistakes than others. You see, in what I wrote on Xueqiu, people care about what we have done, but a big reason we became who we are is because of the things we didn't do. Because we know that something is not suitable for us, we just don't do it. By not doing it, we avoid making many mistakes, and the probability of doing the right thing increases. It's actually just a small difference, but over thirty years, it can lead to a significant difference.

Fang Sanwen: What do you think of Apple's current price?

Duan Yongping: It's not cheap.

Fang Sanwen: From the perspective of investment return, you can't have very high expectations?

Duan Yongping: Yes. It also depends on the opportunity cost for the users themselves. If they put their money in the bank and get a little interest, then they might as well not buy Apple. But if they can earn a dozen points a year, then it might really not be necessary to buy Apple. I don't know if Apple will develop further. Of course, it has always been very strong; it has so many users. Where AI ultimately lands, it still has to be on phones, right? It's possible that Apple could double, triple, or quadruple in the future, but I don't know. It's not that it definitely won't work, but it's not cheap.

Fang Sanwen: You also bought General Electric in 2008, and later your view on it changed. Was this change mainly in terms of business model or corporate culture?

Duan Yongping: I used to think it was about corporate culture; I never really understood the business model, but I liked their corporate culture. They emphasized that the only thing that doesn't change in this changing era is integrity. But later, when I looked at their homepage, I couldn't find that statement anymore. Once I couldn't find that statement, I decided to sell. I felt they no longer emphasized this matter, and coupled with the fact that I really didn't understand their business model, they had bought and sold too many companies. Initially, I was influenced by Jack Welch, thinking this company was amazing, but later I found out that no one is really amazing.

Fang Sanwen: Have you perhaps demystified Jack Welch?

Duan Yongping: Not really; I don't know much about him. Luckily, I sold. When I sold, the market value was over 400 billion, and now it might be less than that. Imagine if I had swapped it for Apple; what a big difference that would be. I probably held it for two or three years, or three to four years, not for too long.

Fang Sanwen: But you still made money on that trade, right?

Duan Yongping: Sometimes making mistakes can also lead to profits. I think that was a mistake; if I were to go back to today, I wouldn't buy it.

Fang Sanwen: Even if you made money, you can't deny it was a mistake?

Duan Yongping: It was definitely a mistake because it didn't align with my later decisions, which had to meet both the corporate culture and business model filters.

Fang Sanwen: You should still hold Occidental Petroleum; you said this is copying Buffett's homework?

Duan Yongping: Yes, but there are some historical elements involved. I was influenced by another friend before and bought an oil and gas index because he told me the oil and gas index had dropped too much, and oil couldn't keep dropping like that for the long term. I asked him how much correlation this index had with oil and gas prices, and he said 99%. I thought that was great, so I bought it and held it long-term. But later, when I asked him how that correlation worked, he said it was every day. I thought, "Oh no," because every day at 99%, that difference is significant. I definitely couldn't hold it long-term; the time decay was too great, so I sold it. At that time, I actually invested quite a bit, almost 100 million USD, but lost over 10 million.

You have to correct mistakes immediately. I sold everything, and after selling, I lost over 10 million, just over 10 million. But there was a small sentiment that oil is indeed hard to deal with, and then when I saw Buffett bought Occidental Petroleum, I had the idea that this is actually a very interesting way to buy oil—buying an oil field underground, which won't suffer from time decay. So I bought a little and held it, thinking that in 20 years, oil prices would definitely not be at this level. I don't know much about oil, so I don't have a very high stake. But when people see me talking about it on Xueqiu, they take it seriously. If you want to invest 100% based on me, that's your business; it has nothing to do with me. My stake is very small.

Fang Sanwen: Many users have self-awareness, saying their understanding of specific companies is limited. But they recognize that some people have an understanding of companies, and that investment method is called copying homework. Do you think copying homework is a sustainable investment method?

Duan Yongping: It's difficult because copying homework puts you at a lag. If you're copying Buffett's homework, that's fine; his stuff is transparent. But how do you copy mine? I don't disclose my holdings, so you have no idea how much I buy or sell; you can't keep up with my proportions. I might buy something just to force myself to look at it more, and then you see I've bought it, and you go all in. But your all-in could be wrong. So I think this is very difficult; if you don't understand the business, it's indeed hard. If you don't understand a business, it's best not to touch it. I'm very conservative; in the A-shares, I only bought Moutai.

Fang Sanwen: Do you think buying an index is better than copying homework?

Duan Yongping: I think if you're going to buy, you can't just say buy an index because there are many types of indices, and not all indices are worth buying. The index Buffett talks about is actually the S&P 500; it's not all indices. There may be thousands of indices, or the Nasdaq 100 index could also work.

Fang Sanwen: A user named "Charming Newbie Little Sandstorm" asked what reasons or thoughts led you to consider investing in a company like Nvidia, which seems to be in a highly changing industry?

Duan Yongping: I used to think it was highly changing, but later I found out they are indeed very impressive; their ecosystem is very strong. You can see how strong Nvidia is from their collaboration with OpenAI and AMD. Nvidia invests 100 billion, but they provide chips and take equity; AMD is like, "I give you chips, I give you equity, please use me." Now everyone wants to use other chips because they fear Nvidia's monopoly; it's too expensive, and they have to spend a lot of money. In this arms race, if AI is to catch up, you have to buy chips. So everyone is very eager to see another player emerge because once semiconductors become homogeneous, prices will drop. But there's no way to achieve that, so Nvidia is indeed powerful. I also watched many videos of Jensen Huang; I admire him. What he talked about over a decade ago is the same as what he talks about today; he saw it long ago and has been working in that direction. So now you have to think that what he talks about now is still his recognition of the future. Therefore, I think it's worth investing a little to see; I feel like I should at least get involved in AI and not miss out. Completely missing out seems a bit inappropriate.

Fang Sanwen: Do you believe AI is something in demand, and that companies like Nvidia have a certain sustainability in their competitiveness within this industry?

Duan Yongping: At least I still think so for now.

Fang Sanwen: If it were a homogeneous, non-sustainable business, you wouldn't consider investing in it?

Duan Yongping: Of course not. I used to think semiconductors were hard to do, so I wouldn't lose money on Intel because I never touched it. I hadn't invested in semiconductors before, which is also a significant reason I missed out on Nvidia. I actually saw it long ago but didn't pay attention until AI took off in the past two years. I used to think it was just an occasional hype, but now I feel it's not just hype; paying close attention is quite interesting. This company is indeed quite interesting.

Fang Sanwen: You might also have some interest in companies like TSMC?

Duan Yongping: I actually knew about TSMC long ago because we used to get chips from UMC. TSMC doesn't supply chips directly; they do foundry work, just processing chips for others. Over 30 years ago, I told UMC that they couldn't compete with TSMC because TSMC focuses solely on that. At that time, UMC was doing both foundry work and making their own chips, developing various products. I said they wouldn't be able to compete with TSMC in the long run. Unfortunately, I was right; look at the vast difference between TSMC and UMC now. UMC's foundry work doesn't seem to have any particularly strong points; you hardly hear about them anymore; you don't know what they're doing.

So I actually knew about them long ago, but I didn't understand this industry. I thought they were very asset-heavy, but now I've realized that with the rise of semiconductor AI, it seems no one can escape TSMC; it has wiped out everyone. In the past, we had to look for Samsung, and even IBM was very strong early on; Intel also made many chips. Now, when these companies look for foundry work, they all go to TSMC. I think this is still quite interesting, so I bought some, but recently the price has risen too absurdly. Absurd as it is, it's not that expensive; if future development really aligns with what Jensen Huang talks about, then the current price makes sense.

Fang Sanwen: Is that why your investment in these companies is limited?

Duan Yongping: It's not at the level of my investment in Apple. When I invested in Apple, I invested over 90% at its peak, just kept buying and buying. Every time it dropped, I bought more. Of course, I've sold some now because I sell some calls, and sometimes they get called away. When it rises, it gets called away, and when it gets called away, it gets called away, and I can buy something else.

Fang Sanwen: Extending from companies like Nvidia and TSMC, commercial innovation, especially technological advancement, creates many new businesses and uncovers new demands. It also destroys some old businesses. Typically, innovation requires high demand from companies, and there may even be an element of luck involved; they are the lucky ones who succeed in innovation. There are also some companies in industries that don't require much innovation. Between these two, which do you prefer?

Duan Yongping: I prefer what I can understand, and I prefer to think that the money it earns in the future matches my opportunity cost of investment. You see, I also bought Moutai. Moutai is a company that shouldn't change; I'm afraid a new CEO will come in and mess things up. So far, it's been fine; it hasn't deviated from its core. You shouldn't change the 53-degree Feitian. So state-owned enterprises have advantages in this regard. I've heard that some private enterprises, like Lao Gan Ma, I don't know if it's true, but I've heard online that when the son took over, he changed the recipe. Such things can't happen in Moutai; it's very dangerous. Why change something that's good? Innovation is actually about user demand; if you need to change, then change; if you don't need to change, then don't.

The tech industry must innovate because new things will come out to meet more user demands; if you don't change, you'll die. Moutai's flavor has already formed; if you change the flavor, that's just foolish. You see Coca-Cola will also change its flavor a bit, but the original flavor must be preserved; it will only add new things for health reasons or other reasons.

Fang Sanwen: From the perspective of understanding, is it harder to understand a company that needs innovation compared to one that doesn't?

Duan Yongping: Actually, understanding Moutai isn't easy either; everyone is different. Look at how many people can't understand Moutai; many people also can't understand Apple. I also don't understand Nvidia and haven't understood Google. I've always liked Google, but I just couldn't understand it. Now I understand a bit, but I'm starting to worry about how much of the search business will be replaced by AI. I don't know how much search will be replaced by things like ChatGPT and Gemini. Overall, I still think this company is quite good, so I bought some not long ago.

Fang Sanwen: Whether it's understanding something unchanging or something innovative, both are quite difficult?

Duan Yongping: Of course, understanding anything is difficult, but no matter how difficult, it's not as hard as golf.

Fang Sanwen: Has your view on Tesla changed over the years?

Duan Yongping: There hasn't been any essential change. I do think Elon Musk is impressive; he has many ideas and is indeed very advanced. But from an investment perspective, I find it quite difficult. Personally, I don't really like his character. When you invest, you're essentially becoming friends with him, and I don't want to be friends with him. Even if he offers me money, I wouldn't do it. So I don't like this matter that much, but I recognize that he is indeed impressive.

Fang Sanwen: What do you think of his business?

Duan Yongping: The electric vehicle business won't be too good; it will be very tough. The differentiation is very small. However, Tesla's electric vehicles have achieved differentiation. I think most electric vehicle businesses will be very challenging, but Tesla has indeed done well overall. You see, they have fewer models, right? Their products are very singular, and the volume is large, so relatively speaking, their costs will be lower, and they are likely to make money.

I wrote about Tesla on my blog long ago; I was initially very fond of Tesla. You see my license plate says "We Love Tesla." Later, after seeing Musk's various actions, I started to feel a bit less fond of him. Plus, after I bought their car, I wasn't very satisfied with the service and various aspects, so I sold the stock. Of course, that was a wrong decision; I probably should have held on, but I found it difficult. I really don't like this person that much, but I respect him. I think he has indeed done many remarkable things, especially with SpaceX; that's incredible, very impressive, and Starlink is also very impressive. As for electric vehicles, I think they're just okay; I'm not very fond of Tesla cars, but I like Starlink. I'm a customer of theirs, and you see SpaceX; I think that's also impressive. Musk is a remarkable person. There's no doubt he's much more impressive than I am, but that doesn't mean I have to like him.

Fang Sanwen: Buffett said not to invest in businesses with four wheels. Do you think electric vehicles or the smart driving that everyone is working on will change the essence of the four-wheeled business?

Duan Yongping: It's difficult. Electric vehicles are simpler than gasoline cars; it's just an electric motor, and they can be made in any shape. Eventually, price competition will inevitably increase. Of course, if you really end up with just one or two brands, they might reach a tacit agreement and still make money. As for smart driving, if everyone is doing it themselves, it can also be exhausting. I don't know; I'm not in this industry. I feel that in the future, everyone might use Google's solution or a few other companies' solutions, and in the end, everything will be homogeneous. Everyone's products will be similar, and in the end, they'll just earn average profits. It's not that there's no money to be made, but because there's no good differentiation, it's also hard to achieve good profits.

If everyone is competing, I don't know to what extent that competition will go. It must be that after the competition is over, the remaining players can make money. Right now, I don't know how many companies are making electric vehicles. Just like when we were making game consoles, there might have been hundreds of companies, and in the end, only a few remained profitable while the hundreds went bankrupt. So I can be sure that most of the electric vehicle companies you see now will die; I don't know who will survive.

Fang Sanwen: Overall, do you lean towards the idea that whether it's electric or smart, it hasn't changed the fundamental characteristics of the industry?

Duan Yongping: I don't know if electric vehicles can really save energy or be environmentally friendly. I've never really figured this out because from a macro and long-term perspective, batteries themselves are not very environmentally friendly. So I'm not very clear; the process of producing electricity is hard to discuss. Of course, if solar energy is really used well, electric vehicles might become particularly beneficial. If humanity really achieves nuclear fusion power generation in the future, then it would indeed be meaningful, but I haven't researched it deeply. If that's the case, gasoline cars would struggle to survive. But among electric vehicles, they will continue to compete, and their differentiation is smaller than that of gasoline cars.

Fang Sanwen: It can't change the strong competitive characteristics of this industry?

Duan Yongping: The competition in the automotive industry isn't as intense as, say, the competition in solar silicon wafers, nor is it as intense as in the airline industry. In the airline industry, it's just A to B; if you charge 100 bucks, I can only sell it for 100 bucks at most. There's no differentiation; in the end, it relies on route monopolies. Of course, you can't really monopolize a route because the government will always give you a couple of routes to compete on, and the same goes for cars.

Fang Sanwen: Now companies like Tesla are putting a lot of effort into another business, which is humanoid robots. Do you think this has commercial value?

Duan Yongping: If you have a few robots at home, you wouldn't even need to hire a nanny, which is obviously great, right? They can also provide emotional value, how wonderful! Whether it can be achieved, some people believe it definitely can, so they gamble on it. I generally wouldn't; I think unless I really understand it and can see it being done, I don't quite understand why we need humanoid robots. Robots don't need to be humanoid; whether they are humanoid is not important. Why should a cooking robot look like a nanny? Of course, if it can do the job without any cost, then maybe it makes sense because humans have their advantages. Walking on two legs is much more flexible; if you have four wheels, there are many places you might not be able to go. But whether it needs a head, I don't know; in my imagination, it's unnecessary. You can have four limbs or even eight limbs; you can have multiple hands.

Fang Sanwen: Let me ask about the oldest company—Berkshire. Buffett has just retired, and it used to be considered a perennial company. Now there are many shareholders. A user named "Jiangpan Chuyue Chuzhao Ren" asks, with Buffett retired, can Berkshire continue to thrive?

Duan Yongping: That person probably doesn't understand the company at all. First, the companies Buffett bought are still there. Second, the successors are inheriting his culture; they are all working hard to find companies with good future cash flows, and that won't change. As for the competence of the successors, Buffett has made mistakes, but the people he chooses won't be that bad. The culture won't change; they won't be a speculative company. Holding Berkshire Hathaway is definitely better than randomly buying a mutual fund. What good options do you have? If you don't understand investing, you should buy companies like Berkshire Hathaway or indices like the S&P 500; it's definitely better than buying a fund. You know who they are, and you know their history. Buying this might be better than Blackstone or others; in the long run, its returns are likely to be higher than theirs.

Fang Sanwen: Do you think the probability of Buffett's company sustaining its previous advantages is high?

Duan Yongping: I think their methods and ways of thinking are valid. As for whether they can outperform the S&P 500, I don't know. I have specifically discussed this with Buffett. I asked him if he thinks he can still outperform the S&P 500 in the future, and he said it's very difficult, but he thinks he might be able to outperform it a little bit. He just enjoys doing this; otherwise, he would just buy the S&P 500 index and not care anymore. So their opportunity cost is the S&P 500 index, and they will only act when they think they can outperform it; otherwise, they won't do it. They would just buy the S&P 500 index.

It's a simple matter. I think that one day when I really decide not to invest anymore, or when I pass it on to my children and find that one of them doesn't understand investing, you can't help it. For someone who doesn't understand, sometimes you can't do anything; you just buy the S&P 500 index or Berkshire Hathaway. I had a friend who passed away, and his child told me he bought half of the S&P 500 index and half of Berkshire Hathaway. That's right; that arrangement is quite good. Then they don't have to worry; they don't care how the market is doing. They just live their own little lives because the S&P 500 index has dividends, and the dividends from that half of the stocks are enough for them to spend. They just hold onto Berkshire Hathaway, which saves them a lot of worry.

Fang Sanwen: Let me ask about a company that everyone is more concerned about—Pinduoduo. You previously mentioned that you had a risk investment in it, and recently you have also increased your position. Is it still a risk investment?

Duan Yongping: Yes, but I understand it a bit more now. I actually sold a large position before and have almost bought it back. I think this company is still somewhat interesting, but it has risks, and I don't recommend others to buy it.

Fang Sanwen: You mentioned that you bought it back and feel you understand it better. What part do you think you understand better?

Duan Yongping: The money they earn is right there; you can see it in the financial reports. If they can maintain this business, it's very cheap. The problem is I don't know if they can really maintain it and what factors might affect it. However, I trust their entire culture and team, but I don't know about the overall environment.

Fang Sanwen: A user named "Zhang Hao_" asks, can you establish a clear expectation for Pinduoduo in 5 to 10 years?

Duan Yongping: I think there's a high probability they should be doing well, but it's not 100%. I can say with certainty that Apple will continue to do well, but I don't have that clarity with Pinduoduo. I think the changes in this industry are quite significant, but there is a possibility that it could become much stronger than it is now. That's what venture capital is about, right? If it weren't for venture capital, I should have a large position in it, but I don't. However, I think it's worth holding a portion.

Fang Sanwen: Your recognition of the team has indeed increased the certainty of your investment in it. Your largest holding among Chinese companies is Moutai. You often say that there are two types of liquor: Moutai and others. Can you explain the difference between Moutai and the others?

Duan Yongping: Isn't it strange to tell someone who doesn't drink that Moutai is good? People who like Moutai enjoy that flavor; they are used to it. If you try to explain it to someone who doesn't like or drink Moutai, it's impossible, just like trying to explain the joy of walking on the road to a fish. There's no way to do it. But the fact is, people who enjoy drinking Moutai continue to drink it as long as they can afford it and have the opportunity to drink it; it's that simple.

Fang Sanwen: Your core belief is that Moutai's unique flavor and its target consumers' recognition of that unique flavor are crucial?

Duan Yongping: The most important thing is whether there is a culture that can sustain this product. If they change the culture of production to be more about speed and cost-cutting, then they will run into problems. I think Moutai has been fine so far; I haven't seen such issues. I believe they are very strict about maintaining the most basic quality standards, so I can still be quite assured; we indeed have a lot of Moutai.

Fang Sanwen: Do you think it can maintain this flavor?

Duan Yongping: It is a state-owned enterprise, and state-owned enterprises have their advantages. I have also worked in state-owned enterprises, and there are rules that not many people dare to change; too many people are watching. So I think they should be able to go far.

Fang Sanwen: Do you think Moutai has strong stability? For example, if its valuation is very high, say a 50 times price-to-earnings ratio, would you consider selling it?

Duan Yongping: The price-to-earnings ratio is discussed at a certain moment. For example, if they write off something, the current price-to-earnings ratio might suddenly go up, right? The decision to invest is not determined by the price-to-earnings ratio; it's determined by your future cash flow. I can't tell you that if its price-to-earnings ratio reaches 50 times, I will sell. Of course, if it is in a normal situation and suddenly skyrockets to 50 times, like if Moutai's price today suddenly triples, then I might consider selling. In fact, when it was at 2600 or 2700, I thought about selling because I felt that relative to that point, it was expensive. My biggest hesitation at that time was that our position was too large. After selling, what would I buy? I started to torment myself, and looking around, I couldn't find anything to buy.

Some might say, now that it has dropped, you should have sold. Those who sold probably lost even more, right? Because they bought something else. I can guarantee that most people lost more unless they sold and held cash until today; then they would indeed be smart. I can't do that; I'm a full-position investor. If I don't buy a stock and hold it, I feel uncomfortable. Holding cash is a very uncomfortable thing; if you keep it in the bank, you earn a little interest, but you still feel uneasy. You have to buy something; once you buy it, it all goes down. You might as well hold Moutai, knowing it will eventually come back. I really came to terms with this issue. Of course, hindsight is 20/20; you didn't expect it to drop so much, from 2600 to 1200, a 50% drop, which is actually not much. If you can't withstand a 50% drop in a stock, you shouldn't have bought it. I think it's okay, so we actually bought quite a bit later; we have spare cash and will keep buying.

Fang Sanwen: In 2021, when it was around 2600, from the perspective of discounted future cash flow, you can't say that price was very attractive, right?

Duan Yongping: It actually depends on your opportunity cost. After I sold, where would I put the money? I couldn't get a higher return. In fact, its dividends are still higher than interest, so you just hold it; I didn't lose. In terms of stock price, everyone thinks if I had sold at that time, I would have made more, right? You can't think of investing that way. If you think that way, you would have sold long ago. Those who thought they should sell at 2600 might have sold at 1200, so they missed that opportunity. If they had sold at that time, they might have been able to get 3000 or 4000 in the future. I believe Moutai will definitely come back, but when, I don't know; it could be five or ten years. No one knows. The key is that if this money isn't in Moutai, it has to go somewhere. Where to? That's very important. If you can't answer that question, then discussing investments is pointless.

Fang Sanwen: If at that time there was something you thought could seamlessly replace it, with better discounted future cash flow than Moutai, would you actually switch?

Duan Yongping: Of course, I would. Investing is about selling. I think many people have a big misunderstanding about so-called value investing, which is that you have to hold long-term and can't sell. Long-term holding is an intention; when I buy, I intend to hold long-term. However, you always have to calculate your opportunity cost. If you find a better company that you feel more secure about, for example, if you understood Nvidia five years ago and saw the situation today, if you only had Moutai, and if you could switch, there would be no reason not to switch. But if you don't understand it, then don't bring it up; it has nothing to do with you.

Fang Sanwen: A user named "Daozi Langzi" asked a question directly related to liquor. He said, why can whiskey and vodka become popular in China, while Wuliangye and Moutai cannot become popular abroad? Does Chinese liquor have an opportunity for internationalization?

Duan Yongping: I don't know; I think Moutai definitely has that potential. I always say Moutai and liquor are two different things. Moutai is something that many people drink wherever they go; they drink Moutai when they arrive.

Liquor is a long-standing cultural thing. How can you get everyone to drink Moutai? Foreigners might not have even heard of it. But Chinese people have all heard of whiskey, and those who drink whiskey are mostly business people. I would rather drink whiskey than Moutai because good whiskey is smoother, while Moutai is still a bit strong for me. However, at our 30th anniversary celebration, we had 30-year-old Moutai for dinner, and that was quite good. I have some 30-year-old Moutai at home; years ago, when I bought Moutai, I bought a batch of liquor, and one batch of 30-year-old Moutai has been stored until today. Occasionally, when friends come over, we open a bottle or two, and it is indeed very smooth and quite nice.

Fang Sanwen: A user named "Non-Complete Evolutionary" asked if investing in Moutai requires looking at the macro environment.

Duan Yongping: I don't think it does. Investing is about looking at ten or twenty years. Of course, if the macro environment is consistently poor, then investing elsewhere will also be miserable. This actually makes no difference; it still depends on where you put your money. In the current situation with Moutai, the dividends might yield 3% or 4% on your investment, which is definitely better than putting it in the bank. Of course, it's better than losing it elsewhere. But will Moutai drop again? It's entirely possible. If you have money, just keep buying. Of course, I don't want to become one of their major shareholders; they don't want to sell to me, right? But I can always buy a little more.

Duan Yongping: It is definitely an industrial revolution, but bubbles will always accompany it. The characteristic of a bubble is that everyone follows along and buys whenever AI is mentioned. However, in the end, there will be some companies that will indeed be very powerful. There is a process of quantitative change leading to qualitative change; AI is not something extraordinary. AI is just an application of computers; it hasn't just increased by one level but by a hundred levels, a thousand levels. With such an increase, it truly changes things.

I remember that in computing, there was also talk about algorithms. You need to save space, and once storage became available, space became less important. But then you see DeepMind developed an algorithm that can reduce costs. Reducing costs doesn't mean people will need less computing power; on the contrary, it will stimulate more computing power. Now, more and more people are using AI, but Nvidia will not sell less because of this, so AI is definitely something that brings about significant changes. However, I still don't fully understand what kind of big changes it will bring. I think about the industrial revolution; for example, when the steam engine came out, machines gradually appeared, and farmers were pushed into factories, significantly increasing production efficiency and GDP. Later, there were cars and airplanes, which expanded people's range of activities, and GDP increased accordingly.

But I don't know how AI will turn out; I do know that many people's jobs will be affected. In the past, it was not easy to understand a new company; now it's much easier. You just need to ask AI a question, and it will follow up with several questions. You can ask them one by one, and in about an hour or half an hour, you can have a rough understanding of a company you knew nothing about, and then I can decide whether to delve deeper. The efficiency is too high. Think about healthcare; those doing drug research or medical research used to need a team to work for years, but now one person might finish it in two days. The uncertainty of what changes AI will bring in the future is quite terrifying. There may be many things; for instance, now you can't even tell whether an animation is real or not. Is that difficult for people in the film industry? Writers might also find it challenging; if it can imitate Fang Sanwen's tone to write a novel, it can indeed do that. Although it may not perfectly imitate human speech, it can do it somewhat similarly. However, investment is still something it cannot replace.

Fang Sanwen: What impact might AI have on the investment industry?

Duan Yongping: Stock traders will be in danger because you can't compete with Liang Wenfeng anymore; this has been discovered long ago, so you are all just chives. If you think you can make money by looking at charts and lines, you are definitely chives. But you can't harvest me because I just hold on; I bought Moutai, and I just keep it. Because the phrase "buying a company" is something very few people understand. The only real buyer of a company is the company itself; it relies on its profits to eventually buy itself back. However, there are many derivative states, so as long as the company makes money, when it earns enough to be up to its neck, it has to buy back. Moutai also has this issue; in the end, it has to distribute dividends, and you can either buy them yourself or it can repurchase. I think Moutai should have repurchased a long time ago; it has finally started to buy back a little bit. It really can't help it; having too much money is uncomfortable. It doesn't know where to spend that money, so it simply buys back its own stock while it's cheap.

Fang Sanwen: So you mean that AI can have a significant impact on stock trading, but the impact on investment may not be as great?

Duan Yongping: Investment is not affected; it does not influence my decision-making. If you are doing day trading based on charts and lines, you are likely to find it harder to make money than before. Some quantitative funds operate at very high speeds, indeed using computers, with human intervention, so you can't compete with them. Therefore, I think small retail investors who want to make money through short-term trading will likely find it increasingly difficult to succeed over time.

Fang Sanwen: There is currently a significant debate about the AI industry. Does using AI to improve efficiency lead to job reductions, or can it create new demand, new scenarios, and new GDP increments?

Duan Yongping: I don't know. I think it can create GDP increments, but it will also reduce jobs in certain areas; some people will definitely be replaced, but not everyone will be cut. So I think everyone needs to take this matter seriously. Don't say you can't learn; you can actually learn. If I can learn, why can't you? I believe AI will impact everyone, whether adults or children. I've seen many people in their forties who feel they can no longer accept new things. I think that way of thinking will make their lives very painful and uncomfortable. New things can sometimes be quite fun.

Fang Sanwen: But you still don't have a clear idea of how it creates increments, do you?

Duan Yongping: At least many companies have already shown clear increments. But whether this increment comes from others being reduced, I don't know. Look at companies like Meta, Google, Microsoft, Oracle, and Adobe; they all have clear increments, including Tencent. After AI started being used, advertising efficiency and many other things suddenly improved. It has indeed increased efficiency and may have also reduced manpower. As for production lines, I don't know; I can't think of all industries because this question is very broad, and it's certainly something I want to know. Just the other day, I spoke with a Nobel Prize-winning economist, and he said he also couldn't understand it and felt it was a mysterious thing. However, I think it is likely to increase, just like the industrial revolution, which improved efficiency and likely increased GDP.

Fang Sanwen: Looking back, has anything that improves efficiency always produced increments in the long run?

Duan Yongping: I can't think of a counterexample. If efficiency improves, the overall GDP doesn't go down; that seems unlikely. You might say someone's GDP has gone down, which is very possible; perhaps you lost your job and your income. After the train appeared, coachmen lost their jobs, but trains clearly created more value, significantly increasing carrying capacity and speed, and expanding the scope of business. So I guess it should be able to produce increments.

05

Talking About Education

Fang Sanwen: A user named "Chen Yi Cheng" wants to ask about children's education. What can parents do in terms of educating their children?

Duan Yongping: Everything parents do is to provide their children with a sense of security. Conversely, things that reduce that sense of security should not be done, such as hitting or scolding children. If you say you won't hit them, but they don't listen, you need to find other ways. I believe children don't need to be hit; children raised through hitting may be more obedient, but that's out of fear and habit, which is actually not good for their lifelong development. They will be unhappy. Of course, some parents don't care whether their children are happy or not; they do whatever they want. I believe that those who love their children shouldn't act that way. But that doesn't mean you can spoil your child without principles, giving them whatever they want. There are indeed some boundaries that are hard to grasp, but you really need to put in the effort to do this.

Fang Sanwen: You have a "do not" list, which includes not doing things that harm a child's sense of security. Is that clear?

Duan Yongping: I think that's very important. Because everything parents do for their children is actually teaching them how to do things. If you scold him, you are teaching him to scold others; if you hit him, you are teaching him that he can hit children in the future; if you lose your temper with him, it indicates that he can lose his temper too; if you are good to him, it means he should be good to others. Children will always have tempers, and they can express their emotions in their own language at certain moments. For example, "I don't love you anymore, Dad." He might just be unhappy at that moment; you shouldn't take it seriously and think he really doesn't love you. At that time, you don't need to fuss; don't confront him directly. Distract him, and after a while, he might say, "I love you" again. The key is not to get into a confrontation with the child.

Fang Sanwen: I understand that you have made some public welfare investments in education?

Duan Yongping: Yes, I've done a lot in many places.

Fang Sanwen: Do you think your views on education have changed through your public welfare work?

Duan Yongping: I've seen a lot. For example, when I was a ball boy with kids, I saw many parents get angry when their children didn't play well, immediately scolding them: "How come you can't hit this ball?" In fact, at that moment, the child needs support the most; he is already very upset. My view is that at that time, I would hug him and pat him. Sometimes he might ignore you, so you wait a bit, and after a while, he will be fine. You can't expect him to listen to you all the time.

I remember when my son cried, I would say, "Don't cry, don't cry; why is a boy crying?" He would say, "Dad, just let me cry for a bit." I thought he was right; why not let him cry? Let him cry for a while; it's fine. You can't confront the child. Hitting children is even worse; it doesn't solve the problem. I have hit my child before, trying to see if it would work, but I found it completely ineffective. So I quickly apologized to my son, saying, "Dad was wrong; I will never hit you again." I truly have not hit my child since then; I don't think that's a good method, and our relationship is quite good now.

Fang Sanwen: How significant do you think education is in a person's life development or path to success?

Duan Yongping: I think education is certainly very useful. People who have received a good education are completely different from those who have not received any education; you can even tell from their eyes and facial features. I can give a simple example. I remember when I was hiring at Little Emperor, someone came in with a diploma from South China University of Technology, which was then called South China Institute of Technology, graduating from the Department of Radio. From the moment he walked in, I could tell he didn't look like someone who had been educated, not like someone who had been to university. I couldn't directly question him since he had the diploma. I asked, "What courses did you take in your first year?" He said, "Math, Physics, Chemistry." I said, "Those are middle school courses; you haven't taken university courses. If you had been to university, you wouldn't answer that question like this." Of course, he graduated from a junior college, so it might not be obvious. If you haven't been to junior college or university, you really can't fake it; having a diploma is useless. From the moment he walked in, I thought, "How did this person come here?" Then I asked a very strange question, and he was stumped. If you haven't been to university, we are hiring engineers; you will definitely expose yourself in this job because you won't understand anything. He said, "I want to find a job." Then you should look for another job; this one definitely won't work; even a security guard job would be fine.

But there are indeed people who have fake diplomas, but this person is definitely not using their brain. If you want to get a fake diploma, you shouldn't take this one. So I think education, especially the ability to learn, is very important. Schools don't necessarily teach these things. Small-town test-takers might learn some of these things through practice. I also came from a small-town test-taker background. Back then, I did a lot of exercises because there were no books and no place to learn; our situation was quite special. Later, it might have improved a bit. I think doing exercises is indeed very helpful, but not everyone will grasp it. Similarly, many people fail miserably at doing exercises. I think you need to find methods from it and identify the reasons for your mistakes to learn the entire logic.

06

Talking About Aspirations

Fang Sanwen: A user named "Don't Hesitate, Don't Regret" asks, what aspirations do you still want to achieve in the future?

Duan Yongping: I am not an ambitious person; I just want to live each day well. My future aspiration is also to live each day well and do things I enjoy. There's nothing particularly remarkable about it. I have never been someone who wants to accomplish great things. Every day, I am doing things, which is to do what you enjoy and what you can like; I think that's very important. Moreover, because you like it, you can do it well. You can't reverse it and say that because you are successful now, that's why you say this. No, don't get it backward. Because I am doing what I like, I will do it seriously, and that's how I do it well. Running a company is the same; I find people who like the same things, and I can delegate to them while I do other things I enjoy. I have enjoyed running a business; I think it's indeed quite fun, but it is also quite tiring.

Fang Sanwen: What advice do you have for ordinary people's investments?

Duan Yongping: I have no suggestions. I think investment is just investment; it has nothing to do with who you are. If you are not investing well, it’s better not to invest at all. If you really don’t understand investment, don’t touch it. Stock trading is very difficult to make money in; most retail investors lose money in both bull and bear markets, about 80%, so don’t think you are the special one, unless you know what you are doing. It’s even harder now because there are quantitative funds. Although they existed before, they are now more powerful, and AI is getting stronger. So when you buy stocks, they 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 think are good and hold on to them, comparing them with your other opportunity costs. That’s why I always mention Moutai; I think Moutai is something relatively easy to understand. Of course, many people say young people don’t drink Moutai anymore, but those who are not young can still live for a long time. Secondly, if young people don’t drink Moutai now, who knows if they will in the future? Drinking is harmful to health, that’s true, but it has emotional value, so there will still be people who drink.

Fang Sanwen: Your advice is that stock trading is very difficult to make money in?

Duan Yongping: I think it’s very difficult.

Fang Sanwen: But investing is not out of the question.

Duan Yongping: The premise of investing is that you need to understand the business; you need to figure it out, or you see something reasonable that you believe makes sense. For example, I talked to a friend who particularly likes drinking Moutai. I asked him why he didn’t buy Moutai. Sure enough, he bought Moutai, but later he didn’t make any money. I told him, “What about your friends who didn’t buy Moutai? What did they buy?” He said, “Now that you mention it, I feel better; they lost more than I did.” I said, “Isn’t that right? Moutai will eventually come back; even if it doesn’t, you will still get dividends back, just a bit later.”

However, if you invest in a business you don’t understand, you will be in trouble. In recent years, it’s not just about Moutai; most stocks have dropped, so I’m not really trying to promote Moutai. I just think for most people, Moutai might be an interesting choice. Of course, if you mention other seemingly good options, I have no say because I haven’t looked into them closely. For example, many people ask me why I don’t buy Wuliangye, as its price-to-earnings ratio is lower and it can indeed be considered, but I have no say. I have never touched Wuliangye; I don’t know what that liquor tastes like. I don’t drink white liquor; I can only drink a little Moutai, and I can’t handle other liquors; they feel too strong. If you like drinking Wuliangye, you will firmly believe that many people like it too, so I think, why not buy it? Just like I like playing games, so I got into the gaming industry. Even if the gaming market is tough, I know many people will come to play. This is very important.

If you are not confident about what you are selling, and you don’t know if anyone will buy it, it’s hard to persist. If you firmly believe that no one will drink anymore, then you really shouldn’t buy; that makes no sense. But for those who don’t drink, it’s also hard to be firm.

Fang Sanwen: To summarize your advice: don’t trade stocks, as it’s hard to make money; instead, invest, as you might be able to make some money?

Duan Yongping: Of course, investing can make money; otherwise, what am I doing?

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