Introduction: What is “Buffett’s Iron Eye”?
I.
Buffett once “flaunted” two of his extremely small money-making cases to illustrate the investment philosophy he adheres to.
Case 1: In 1986, purchased a farm in Nebraska.
From 1973 to 1981, farm prices in Nebraska, the Midwestern United States, soared. It was widely believed that hyperinflation was on the way (how much like it is now), and small township bank loans added fuel to the fire. Subsequently, the bubble burst, with prices dropping by 50% or even more, destroying farmers who were operating on debt, creditors and banks.
In 1986, Buffett bought a 400-acre farm from the Federal Deposit Insurance Corporation for $280,000, which was much lower than the previous price. He knew nothing about running a farm, but through his son who loved the farm, Buffett estimated that the farm had an annual return of 10%. Productivity will increase over time, and the prices of crops will also keep rising. Later, all these expectations were confirmed.
Twenty-eight years have passed, and the farm’s income has tripled, while the property price has increased fivefold or even more.
Case 2: In 1993, purchased commercial real estate near New York University.
In 1993, the bubble burst again. A liquidation trust company intended to sell a commercial property near New York University. Buffett calculated that the current unleveraged yield of this asset is approximately 10%. However, the assets are being operated inefficiently by the liquidation trust company and are vacant. More importantly, the rent per unit of the largest tenant, who accounts for approximately 20% of the real estate project, is only 1/14 of that of other tenants.
Buffett joined a small group to acquire this building. As the old lease expired, his income tripled. By 2014, the annual dividend had exceeded 35% of the initial investment. In addition, the original mortgage was refinanced in 1996 and 1999 respectively. This approach allowed for several special dividends, which combined exceeded 150% of the investment amount.
Buffett said, “The income from that farm and New York University’s real estate is likely to continue to grow in the coming decades.” Although the returns are not dramatic, these two investments are reliable and satisfactory. I will hold them for a lifetime and pass them on to my children and grandchildren.
He wants to use this story to illustrate:
My two purchases were completed in 1986 and 1993 respectively. When I decided to make these investments, the economic conditions at that time, interest rates or the trend of the securities market in the following year (1987 and 1994) were not important to me. I can no longer recall the headlines or what the authorities said at that time. No matter what others say, the corn in Nebraska has been growing and students have been gathering at New York University.
Even someone as candid as Buffett, in order to support his point of view, would blur certain concepts. Among his two investments, what is unshakable certainty is not “the corn in Nebraska is always growing and students will gather at New York University”, but:
The farm and commercial real estate have always been there
Ii.
Let’s jump back to a previous article by “Lonely Brain” : “The Two-Eyed Theory – Insights into the World through Go”.
In the above article, I want to express:
A good company, institution or person usually has “two eyes”, just like a piece of Go must have two real eyes to survive.
The advantage of the analogy method is that it is vivid and figurative. The drawback is that it is not precise enough. Sometimes it seems to be a mechanical copy, like hitting randomly with a hammer. But if you are as smart as you are, you will naturally understand and distinguish.
People who are not very familiar with Go may have misunderstandings about this concept. For example: Does the two-eyed theory mean that a cunning rabbit should have three dens? Does the “two-eye Theory” refer to having the ability to cross boundaries? Does the two-eye theory refer to walking on two legs?
In a general sense, “walking on two legs” refers to a company that sells both hamburgers and coffee, and makes both mobile phones and electric vehicles.
But for people, walking on two legs means doing one thing. The two eyes are focused on one thing. This is closer to my metaphor.
The two stories about Buffett mentioned at the beginning of the article can be well explained by the “two-eye Theory” :
“First eye: (appreciable) Real estate” + “Second Eye: Operating (Rental) Income”
After going in such a long circle, when it comes to the title of this article:
What is “Buffett’s iron Eye”?
Iii.
Let’s jump to Go.
A piece of chess has two eyes, but it doesn’t necessarily survive because:
It might be a prosthetic eye;
It’s possible that in battle, one’s eyes might be destroyed by the enemy.
So, there is a kind of eye called the “iron eye”, that is, no matter what the opponent is like, even if he stands still and strikes several times in a row, it cannot blind the eye.
Let’s jump back to the case of Buffett.
As long as the Earth does not perish, the United States does not decline, and New York does not experience an earthquake, “commercial real estate” and “New York University” will be two unshakable eyes. So, buying at a low price is a sure bet.
This is the true secret behind the two stories mentioned above by the stock god.
Monopolies such as Microsoft and Bill. Gates would always say that we are only 18 months away from bankruptcy.
In fact, there aren’t many insiders who can hold onto their company’s stocks for a long time and make money. Because when looking closely, the internal affairs of those star enterprises may be in a mess, which is terrifying.
It’s only a matter of time before all enterprises go bankrupt. The rise and fall of an industry is something no one can predict. Even monopolistic enterprises may have their moats torn down at some point.
So, most of the eyes in business, even if they are real at a certain stage, can easily become fake. Even for real estate, how many shopping malls have become sparsely populated under the impact of e-commerce?
In business and life, where is there such a thing as true vision?
Not to mention the iron eyes.
In reality, “two eyes” have become “two wheels” : just like riding a bicycle, if you don’t want to fall down, you must keep moving forward.
Go is not only the smartest intellectual game, but also the best simulation of the real world. Even if the “two-eye theory” fails to hold water, I can still come up with another “model” to simulate the chaotic reality of our lives.
This model is: robbery.
Four
“Jie” has different meanings in terms of “taking advantage of the fire to rob”, “beyond redemption”, and in the game of Go.
The rules of Go are extremely simple: “When one’s energy is exhausted and the game is over, a move of the hand is separated.” “Jie” refers to the scramble for a certain undetermined piece. It is so named because one can retrieve the opponent’s piece an unlimited number of times before filling it back (hence it is stipulated that it can only be retrieved one move away).
To put it figuratively, it’s like two children fighting over a toy. You pull and I pull back. To avoid an endless vicious cycle, set the rules of the game: after you “pull”, I must move another hand, for example, touch your cake, forcing you to respond, and then the next hand can “pull away” the toy again. This cake is called “Jie CAI”.
Novices don’t like robbing because the changes are complex. Experts, on the other hand, are adept at using robbery to either achieve victory in one fell swoop or turn a desperate situation around. For instance, in a robbery, a piece of chess seems dead, but it is held up by a robbery where you carry it back and forth.
V.
Nine years ago, two designers who couldn’t afford the rent decided to rent out three mattresses in their living room and created a website for this model. At first, no one was optimistic about it and it was deserted.
To survive, the two used their own business to design the packaging of cereal and launched an Obama flavor. Each box cost 40 dollars and they sold 1,000 boxes, making a profit of 30,000 US dollars. The unsold cereal became their staple food.
Such an insignificant little “trial” enabled them to get through the most difficult time. In the second half of 2009, the two continued to utilize their most proficient ability – design – to activate the popular password of the website and reversed the situation in one fell short.
In 2017, the website named “Airbnb” in Chinese was valued at 31 billion US dollars.
Six
The “jie” in Go, borrowed from Buddhism, is an abbreviation for “jie Bo”, meaning an extremely long period of time. In ancient Indian legends, it was said that the universe would be destroyed once every few thousand years and then start anew. This cycle was called a “kalpa”. Later generations used it to refer to natural disasters and man-made calamities.
In modern Chinese, “jie” generally refers to natural disasters and man-made calamities, such as “jie nan” and so on. The phrase “inescapable” means that one is destined to suffer misfortune and cannot escape.
In Japanese, the concept of “time” is often retained, for instance, “ikaku” and “Yonkaku” refer to extremely long or even infinite periods of time.
In “The Legend of the Condor Heroes”, Jin Yong wrote about Go: Duan Yu was trapped in the Valley of Ten Thousand Calamities. The Yellow-browed monk went to rescue him but was stopped by Duan Yanqing. The “ten thousand tribulations” here might have both meanings.
In Go, the “robbery” for the passive player is somewhat like being robbed (a disaster). For the active party, it means “time” and “starting anew”.
Vii.
Sometimes, what was originally intended to be a robbery for survival turns out that the “robbery” itself becomes life.
Stewart Butterfield was obsessed with making games. In 2002, he made the MMOPG game and died. But when making games, a by-product of sharing pictures was created: Flickr, which was acquired by Yahoo for 35 million in 2005.
In 2009, with his lofty aspirations unfulfilled, he continued to make games. Three years later, he died again. This guy once again took on a challenge: Slack, a by-product of the gaming process. Today, this product for team collaboration is valued at 3.8 billion US dollars.
This guy majoring in philosophy, when asked why Slack is so popular, replied: “I have no idea, damn it.”
Viii.
One calculation method for the changes in Go is:
The chessboard has 361 intersections, so there are 361 choices in the first place.
- There are 360 choices left in the second hand, and so on.
So, all the changes should be: 361×360×359×… ×3×2×l, approximately 10 to the power of 768.
The above algorithm ignores the number of changes in the subsequent moves after a pick.
Especially, the robbery was overlooked. Once a local area forms a repeated robbery of back-and-forth, the changes are almost endless.
The more changes there are, the more possibilities there are, the more time there is, and the more choices there are.
Just as a crying child gets milk to drink, a disaster can make the dice of fate fly a little longer.
Although it was just a forced glide, it was still a form of flight.
IX
Do we need to play a few more “tribulations” to make God roll the dice for a while longer?
As Bill Gates said, life is about snatching things from a burning house.
It seems that the common trait among heroes is to fight to the death like a robbery.
For instance, Chu Shijian, who started growing oranges again in his seventies and didn’t bear fruit until he was in his eighties;
Like Musk, who has been repeatedly pushed to the brink of a cliff;
For instance, Momofuku Ando, who went bankrupt at the age of 48 and started from scratch to build an instant noodle empire;
And Luo Yonghao, who has been ridiculed as “redefining idiots”, has suffered repeated setbacks in making mobile phones and is still fighting hard to this day.
Repeated defeats and unceasing robberies.
General Patton said, “The measure of a person’s success is not when he stands at the top, but when he rebounds after falling from the top to the bottom.”
After landing, there may not be a rebound. Before the rebound force occurs, it needs to be tenaciously held up by some force.
Even if one’s life hangs by a thread.
Wait for the restart of the next cycle. Or perhaps, this calamity itself is already a brand-new cycle.
As Rilke wrote:… All the things that have happened always precede our judgment. We have no way to catch up and find it hard to recognize… What victory can there be? Holding on means everything.
X.
Those who accomplished great deeds in ancient times not only had extraordinary talents but also an indomitable will. Su Shi said.
In 1986, Zhao Zhixun was involved in a car accident, resulting in injury to his right knee, a fracture of his right tibia, and a torn ligament in his left knee. But he still insisted on participating in the competition.
I don’t know what it means to forfeit. I would rather fall on the chessboard than play chess. Besides, my head and right hand are not injured. It’s enough that I can play chess.
Zhao Zhixun is skilled at surviving a solitary situation in the midst of the opponent’s tight encirclement. He once wrote: “I am a solitary chess player.” And my life is like a path to heal orphans. The world is so vast; how could there be no place to stay? No matter how fierce the wind and waves are, there is always a harbor to anchor in. In the life of treating loneliness, there is only a narrow space, not a narrow mind.
Robbing is an even more cramped way to treat loneliness.
Oliver Wendell Holmes said: If I had a formula to get around the trouble, I wouldn’t tell it to anyone. This is not beneficial to others. Trouble can create an ability to deal with it.
Robbery is a common occurrence in life.
The more impressive an entrepreneur seems, the more he or she will say that he or she is always on tenterhooks.
Just like a never-ending, never-ending “robbery”.
Life has no true eyes.
Keynes said: “The long term is a wrong guidance for current affairs.” In the long run, we will all die.
Living by robbery is just like Heidegger’s “living towards death”.
Eleven
Someone on Quora asked, “How can I become a great person like Bill Gates, Steve Jobs, Elon Musk or Richard Branson?”
The responder turned out to be Justine Musk, Elon Musk’s ex-wife. She said:
Extraordinary success often stems from an extreme personality, but it also requires the sacrifice of many other things.
You will encounter problems with your biological clock, feel mentally exhausted, experience endless revelry, loneliness and meaningless meetings, face major setbacks, family upheavals and relationship issues with your partner, get through the night of your soul, meet all kinds of people, and have trouble sleeping at night. The list goes on and on.
They are not afraid of failure – even if they are afraid, they will forge ahead without hesitation. They will experience heroic, humiliating and well-known failures, but they will also try every possible way to rise again and shake off their previous decline. Their distinctive failures brought them unique experiences. In adversity, they demonstrated astonishing courage and tenacity.
She added:
The so-called “extraordinary success” is often different from the “success” you imagine. Therefore, it should be clear that you don’t have to be like Richard or Elon and live their lives. In this way, you will find your own happiness more easily.
Voltaire said: Talent is continuous patience.
Not many players can be as patient as the German team in passing the ball in the midfield when trailing by three goals.
Zhao Zhixun, known as the “Fighting Soul”, has repeatedly achieved remarkable comebacks in seven-game finals, winning four consecutive games after three consecutive losses.
Zhao Zhixun is particularly skilled at counting the seconds. Even in the ticking sound like a time bomb, he can still think calmly and make quick moves as if unaffected.
In the semi-final of a certain Samsung Cup, Cho Ji-hoon’s situation was not optimistic, but he took the opportunity of the countdown to get up and watch the game beside him. The opponent later said, “This move seemed very simple, but his effortless posture did indeed give me quite a shock.”
To be born from robbery is a kind of talent.
While falling off the cliff, he was assembling the plane and humming a tune.
Twelve
“Poetic perseverance.” ” This is a brief review I wrote after watching Nolan’s “Interstellar”.
Family affection, death, rescue and time – the film is filled with Nolan’s elements and philosophy.
Amid HansZimmer’s highly personal piano and organ music, the male lead Cooper bid a final farewell to his daughter Murphy.
According to Heidegger’s view, each of us has one