Today I will share my views on investing in the third category of assets (those that generate cash flow) to achieve a hundredfold return.

To achieve a hundredfold return on these types of assets, there is a very clear logical line - that is to return to the most core characteristic of their asset attributes: the ability to generate cash flow.

We can see its basic logic clearly with arithmetic that even elementary school students can understand.

If an asset can generate 100 yuan of free cash flow each year and can continue to do so for 40 years, then even without calculating its asset value, just looking at the free cash flow it can generate over the next 40 years, it amounts to 4000 yuan.

If the current market price of this asset is only 40 yuan, it is obvious that as an investor, I can simply spend 40 yuan to buy this asset, and after 40 years, I can get a hundredfold return from its cash returns alone. If we also account for its asset value, my returns will be even more considerable.

So, the key and the most important aspect of investing in such assets revolves entirely around forecasting and judging the present value of the total future free cash flow generated by that asset.

In this regard, several predecessors have set clear examples for us, which I have also shared in my past articles.

Chronologically, they are: Philip A. Fisher, Warren Buffett, and Charlie Munger.

Fisher's era did not have as clear a concept as Buffett and Duan Yongping's "buying stocks is buying companies." But his lifelong principle was to buy good companies, and as long as the company does not go bad, he would hold on to it, which is essentially the same logic. His investment philosophy later became one of the important sources of Buffett's principles.

Fisher's two most well-known investment cases with a hundredfold return are Texas Instruments and Motorola.

For Texas Instruments, he bought in 1953 and held it until 2004. Over these 51 years, Texas Instruments brought him more than 1500 times return.

For Motorola, he bought in 1957 and held it until 1996. Over these 39 years, Motorola brought him more than 200 times return.

We are more familiar with the cases of Buffett and Munger.

The Washington Post, American Express, See's Candies, Berkshire Hathaway, Hershey, these are among the classic investments of the two predecessors that achieved or exceeded a hundredfold return.

If we also count other investments that did not reach a hundredfold but exceeded 30 times, there are even more, such as Costco, Coca-Cola, and so on.

In fact, Duan Yongping is also very impressive, for example, his investment in NetEase. However, his investment duration and cases are still too short compared to the above masters, so I didn't list him here.

The reason these predecessors were able to obtain these returns from these targets essentially returns to the fundamentals of the companies, judging whether a company can continue to profit based on its business model and corporate culture, whether it can continuously generate abundant free cash flow, and maintain growth for decades.

Then, on this basis, buy heavily when the market severely undervalues their worth.

After that, as long as the fundamentals of these targets remain unchanged, no better targets are found, and their prices are not ridiculously high, these predecessors will continue to hold, allowing the power of compound interest to take effect.

We often say there are many good stocks in the U.S. stock market; in fact, A-shares also have companies that have long provided investors with hundredfold returns through cash dividends (and reinvestment) combined with rising stock prices since their listings.

Gree Electric Appliances, Fuyao Glass, Luzhou Laojiao, Inner Mongolia Yili Industrial Group, Yunnan Baiyao, Shanxi Fenjiu, Kweichow Moutai, Wanhua Chemical, Pian Zai Huang…

are all typical examples in A-shares.

(Note: I list these A-share stocks not to suggest investing in them, nor do I think they can provide a hundredfold return in the future; this is merely a retrospective illustration of historical data.)

However, whenever these stocks are mentioned, public commentary is never assessed from the perspectives of corporate culture, business models, or free cash flow, but rather from “sexiness,” “trends,” “hype,” and other attention-grabbing and traffic-generating angles.

Is this attention-grabbing and traffic-generating judgment method really investing?

Given such clear standards and logic, why can’t the vast majority of people achieve it?

Firstly, the vast majority of us just want to get rich overnight and not want to get rich slowly;

Secondly, a more important reason is that understanding a company, its corporate culture, business model, and future free cash flow is extremely difficult - just as Duan Yongping said, understanding an enterprise is equivalent to completing an undergraduate degree.

This is so difficult; how many people are willing to invest time and effort?

So in the end, the vast majority of people want to take shortcuts or quick paths, which turns into gambling while masquerading as investment.

Therefore, is it possible for the vast majority of ordinary people to achieve this and gain a hundredfold return from such assets?

It is not possible.

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