Looking at the data from 2022, it's quite amusing. Tesla's capex has decreased while its market cap has already increased significantly. Apple is still doing its own thing, and Amazon has now seen its market cap turn negative. There are various concerns about what decisions Berkshire Hathaway will make regarding Tesla and Amazon in the future. I believe that understanding this is key to stock investment. The essence of stocks lies in the question of what value they can provide to an individual. When you delve into that question, you can reach a conclusion. Additionally, we need to consider which stocks we should hold and with what mindset and attitude we should approach those stocks. I think this understanding makes stock investment much easier and clearer, preventing us from being swayed by other distractions.

This is a story told by Charlie Munger, and I will read it for you. In the long term, it is difficult to expect returns from stock investments that are significantly better than those of the companies issuing the stocks. If you buy shares of a company with a return on invested capital of 6% over 40 years and hold them for 40 years, even if you initially purchased the shares at a heavily discounted price, your investment return will not deviate much from 6%. On the other hand, if you buy shares of a company with a return on invested capital of 18% over 20 or 30 years and hold them for 20 or 30 years, even if you initially bought the shares at a high price, you can ultimately achieve good results. If you have read Poor Charlie's Almanack, you will know this content well. The asset of stocks has shown significant performance for investors in the long term. Stocks have outperformed bonds, gold, and any other assets. However, this high return is often justified by the associated risks.

They say it's because they bear the burden. Stocks have a very high short-term volatility, so in exchange for enduring that high short-term volatility, they earn high returns. This is often referred to as hybrid sky return. However, if you extend the investment period, the longer you extend it, the more the volatility actually decreases, and the returns become more consistent. This leads to a seemingly absurd outcome where the returns fluctuate for a while but then stabilize. That stabilized point represents the average return. This average return is incredibly high compared to other assets. So, the risk is low, and the return is high when you hold it for the long term. This means it's not a reward for taking on risk. What does this mean? It relates to figures like Buffett, or perhaps Paris Smith, or John Bogle, and others who have practical experience along with theoretical considerations.

Many people who are experienced in investing say that stocks have a very unique characteristic: the reinvestment returns from retained earnings. No other asset grows through retained earnings in the same way. For example, with bonds, you receive interest, but that interest comes in cash, and we have to invest that cash elsewhere. Similarly, with real estate, you receive rental income, but you need to use that income to purchase other assets. When we buy other assets, we have to buy them at market prices. Stocks also provide dividends, and when you receive dividends, if you want to buy more shares of a good stock, the price-to-book ratio (PBR) is likely to be very high, meaning you have to buy at a premium over the book value. However, when a company generates retained earnings...

Some of the retained earnings will be returned to shareholders through dividends or share buybacks, but there are many cases where the funds are reinvested internally. However, the amount I invest is reinvested at book value. Therefore, whether it's ROIC or ROE, a great company is fundamentally one that has high capital efficiency, meaning that when you invest 10 billion won, a company that earns 5 billion won is less impressive than one that earns 2 billion won from the same investment. It's a very simple criterion. The question is how much you invest and how much money you can extract from that investment; this is capital efficiency. It would be great if you could continuously invest in companies with high capital efficiency. However, when you receive dividends and reinvest them, efficient companies often have a high book value with a significant premium attached, meaning you have to reinvest at a high premium.

Internal reserves are reinvested at book value. However, if the reinvested book value continues to maintain a high return on investment (ROI) or a high return on invested capital (ROIC), it generates profits. These profits can then be reinvested into the internal reserves for greater growth. If this cycle of achieving significant growth and reinvesting the profits continues, it results in compound growth. Therefore, a company that can consistently reinvest through internal reserves and maintain a high ROIC is an exceptional company. This is not an easy standard to meet. Generally, as a company grows, it becomes more challenging to seek new investment alternatives. Often, in such situations, companies may end up making poor decisions, investing in options that are less efficient and less productive than their existing operations, which can lead to a decline in overall profitability.

It's not just about having many options; being able to continuously identify high-profit investment targets is quite remarkable. You can't just apply these criteria to any company that happens to have a high ROIC or ROA this year. You need to understand that such opportunities are fundamentally very rare. If a company can maintain a high ROIC for 20 or 30 years, it can significantly increase its intrinsic value through compounding in the long term. In the case of such companies, thinking that their current net income or book value is too expensive based on metrics like PER or PBR could be a significant mistake. Conversely, if a company has an ROIC of 6%, that essentially means it is generating almost no value. Companies like this may not create value at all or could even be destroying value.

If I continue to hold onto such companies, the investment returns will be low due to internal reserves. Ultimately, if the company is somewhat honest, it will pay dividends, and I can use those dividends to invest elsewhere. However, if I keep pouring money into a place with low reinvestment returns, the company's growth in value will not be significant. If such a company has not been able to generate value until now, the likelihood of it doing so in the future is also low. If a company makes strange decisions, there may come a time when it makes even worse decisions, reducing its value to almost zero. So, if I buy into a company that seems undervalued based on low PER or PBR ratios compared to my current earnings, I might regret it as time goes on.

If you look at it, there's a high probability of getting the result that it doesn't make much money. I mentioned the term money machine in the first part. The criteria discussed there are exactly what I'm talking about. Stocks are assets that continuously generate money. If they perform their fundamental role of generating money well for the shareholders, then I can ride that wave and make money. Naturally, we need to assess that criteria qualitatively as well. We need to understand what industry the company is in, what kind of business it operates, what new technologies it is developing, what new products it is launching, and so on. We also analyze what competitors are doing, how they are positioned compared to competitors, what their strengths and weaknesses are, and of course, we do all that analysis. After that, we look at how that translates into actual financial performance.

We look at indicators like ROIC, and then the profits the company earns should not just be accounting profits but should reflect a healthy cash flow that is actually coming in. Furthermore, we need to consider whether that cash flow is being used well for the shareholders. If there are good investment opportunities, the company should continue to reinvest through internal reserves to maintain its ROS. If there are no such investment opportunities, the company should honestly return profits to the shareholders. Therefore, if a company meets these two rare conditions—having good capabilities and using those capabilities well for the shareholders—then I can maintain a long-term partnership with that company and enjoy significant profits over time. The important thing is that during the period of enjoying those profits, I feel very at peace, regardless of any changes in the macro environment.

Regardless of how the competitive landscape of the industry is changing, if the industry faces difficulties, a reputable company should be able to adapt by entering new industries or, if no alternatives are visible, it may indicate poor management. If there are no more options, the company might choose to return capital to shareholders. This allows investors to feel at ease, and after a period of accumulation, their assets can grow significantly through compound interest. This means they can enjoy peace of mind and good returns. Buffett has been repeating this style of investment for decades. It may sound a bit abstract, so let me share two well-known examples. If one does not understand Buffett's perspective, they might find his individual investments puzzling.

You can interpret it in various ways. So, I will discuss Buffett's actual statements in relation to this. Buffett calls Apple the best stock. However, many people also say that Apple is the best stock. The reasons for considering it the best vary from person to person. Generally, people mention Apple's brand recognition, its status as the company with the largest market capitalization, and the dominance of its products in the market, along with various profitability indicators. But Buffett's reasoning boils down to two main points. People are willing to spend $1,500 to buy a phone, and they are also willing to spend $35,000 to buy a second car. However, if you ask these people whether they would give up their second car or their iPhone, many would choose to give up their second car.

There aren't many people who react that way to other phones, but when it comes to the iPhone, let's imagine someone considers themselves an iPhone user. They probably wouldn't agree with the idea of not being an iPhone user. For instance, if you were told that you could never buy a certain car brand for the rest of your life, like GM or Ford, but in exchange, you would receive 100 million won or even 1 billion won, many people would likely accept that offer. However, if the proposal was that you could never use an iPhone for the rest of your life, even with the same compensation of 100 million or 1 billion won, a significant number of people would decline that offer. This indicates that the iPhone holds a unique value that cannot be replaced by any other phone, providing a distinct added value that resonates deeply with customers.

I think it's an incredible thing. In the past, there were similar discussions about See's Candies. It has immense value as a Valentine's Day gift, a value that cannot be replaced by any other candy. Buffett placed great importance on that. However, it's a business that is far better than just candy. Candy is just candy; once you sell candy, you might sell chocolate, and then that's pretty much it. The company See's Candies has become one that generates current value for Berkshire by significantly returning capital to shareholders while reducing internal costs. On the other hand, Apple, as it is, has the potential to accomplish so many great things in the future. They started with phones, then moved on to tablets, and now they have even released the Vision Pro, a remarkable device. They are doing incredible things, and there is an infinite possibility based on customer recognition.

He is looking at it positively, and of course, various financial indicators must have been considered. However, in addition to that, the element that Buffett likes the most is the increasing ownership percentage that grows even when you just sit still. He expresses it this way: We are extremely happy that we own 5.6% of the money that Apple will earn for the rest of its life, and every time that percentage increases by 0.1%, we are very happy. This aligns perfectly with the essence of stocks that I mentioned earlier. What do stocks provide to shareholders? I mentioned equity. The money that this company earns from its business throughout its lifetime, minus expenses, is equity, and that belongs to the shareholders. Since it is money earned over a lifetime, we cannot carelessly assess its value. It could be very large or almost zero.

When you earn money and continue to operate internally, if you embezzle and send it somewhere, the value of the stock becomes zero. Therefore, the value of stocks has a very wide range, but the important thing is that our ownership percentage represents what percentage of the money we will earn for the rest of our lives is ours. If just sitting still increases that percentage of our share continuously, then that's incredibly good. So, it's basic to run a business well and have an excellent business. My share of the profits that the company earns continues to increase, which is why Buffett goes crazy over this. To express this in numerical terms, we use the concept of owner earnings. We add back depreciation, which is an accounting expense that hasn't been spent in cash from the net income. Then, the chairman continues to...

Somewhere, money will be spent, so this is called capital expenditure, or CAPEX. What we are excluding from this CAPEX investment is the net profit, which is an accounting profit. From the owner's and shareholders' perspective, we are adjusting two important figures. This includes the capital expenditures that were made in the past, which now only remain as accounting costs. We add this back to the net profit and subtract the actual ongoing expenses that need to be incurred from now on. By making these adjustments to the net profit, we can determine how much money is mine for this year. This is a very rough calculation that anyone can do. 

Now, from this perspective, it becomes quite clear why, despite Tesla being such an excellent company, some choose not to invest. Tesla's net profit was negative but has recently turned positive. Additionally, depreciation expenses have been steadily increasing.

There is a significant amount of capital expenditure, which means that the small expenditures are increasing faster than the net profit. As a result, the owner's equity is either negative or barely exists. So, while the net profit appears on the books, the shareholders' share is not that substantial. This is Buffett's perspective. Additionally, he does not favor companies with superstar CEOs. 

When capital expenditures increase significantly, the owner's equity relative to net profit decreases sharply. I can't help but think that the person responsible for recommending the purchase of Amazon might be in a bit of trouble. This data is up to 2021. Looking at the 2022 data, it's quite amusing. Tesla's capital expenditures decreased, leading to a significant increase in owner's equity. Apple is still doing its thing, while Amazon's owner's equity has turned negative. There are various concerns.

In the future, it will be very interesting to see what decisions Berkshire will make regarding Tesla and Amazon. By the way, Apple recently announced something called Vision Pro. There are various review videos about Vision Pro, and since I am not an expert in IT devices, I won't comment extensively on it. However, when looking at these new developments, I have some thoughts on what investors who share a similar perspective to Buffett might consider. 

First of all, after the announcement of Vision Pro, the stock took a bit of a hit. There were quite a few disappointed people. The main point of disappointment for many was that the price is too high, exceeding 4 million won. As a result, the sales forecast, which was originally expected to be around 1 million to 2 million units, has become quite daunting for this VR product.

I was expecting a device to come out, and I thought it would be around 200,000 units. What is this? I was hoping for something that could provide Apple with a very hot mass sales volume, but if the price is just high, then this is a product that can only appeal to a very limited customer base targeting the premium market. If that's the case, it won't really help Apple's profits in the future. I was disappointed in that way. There were also various minor discussions about design, weight, and so on, but putting all that aside, I feel that this was a very Apple-like move. The reason why virtual reality devices have not been widely adopted so far is that there are indeed many devices available. Quite usable devices are out there, and they can be purchased for several hundred thousand won. So, there are devices that only a few people know about.

The problem lies in the fact that it is set up this way. Why do devices only use this frozen adapter? Whenever a new form factor emerges, there is always controversy over whether content comes first or hardware. A representative example of this is the failure of 5G. Those investing in 5G infrastructure have been saying that there needs to be interesting and meaningful content that works well only on 5G for us to invest. By the way, I am referring to the 28 GHz investment in 5G, the real 5G. However, from the content side, free content cannot be released until the infrastructure is in place. Content creators cannot just dig into the ground; they need to see a viable market to develop and provide content accordingly. This ongoing struggle has been dragging on, and now we are at 28 GHz.

Investment has not been made, and now the business seems to be almost a national scam. In fact, among the 5G content, AR and VR content were highlighted. There are various contents that can be done with AR, but for it to work wirelessly, it needs to be at 28 GHz to experience low latency effectively. In my opinion, Apple has clearly answered the debate about whether content or hardware is more important. They have stated that it is hardware that matters. The user experience (UX) through hardware is crucial, and the content should simply remain as it is. Of course, in this announcement, there were also contents related to Disney, such as performances or watching sports events, which are specialized in VR and AR.

They did present the content, but it comes up quite late in the discussion. In the beginning, they emphasized user experience. So, what is the user experience that Apple has raised concerns about? First of all, when you try on the VR device, you can immediately see the pixels right in front of you, which creates a sense of disconnection. You feel like you are looking at something right in front of you. Then, when you try to interact with it, even if you are holding something in your hand, it feels uncomfortable. Usually, when it comes to hand recognition, you have to awkwardly raise your hand in front of you for it to be recognized. This can be very tiring for people. The basic idea is to use it for enjoying content, doing productivity tasks, or communicating, but it ends up making things difficult for users. However, regarding this, we...

They promised to provide a UX that allows for a truly immersive experience, presenting hardware with an absurdly high PPI of 3400. When it comes to operation, it recognizes the pupil's movement, so when I am looking at something, actual reviews say it recognizes it extremely well. Deep learning must have been involved here as well. In such situations, it likely extracts that the user is looking at a text input screen or an icon and then highlights it nearby. There are probably technologies that enable this. Additionally, even if I just rest my hands on my waist, it recognizes hand movements very well. They presented it in a way that you can comfortably use it and do whatever you want. You can use all the content you were already using before. This is another interesting aspect.

The interesting point is that they did not emphasize the underlying technologies that much. What matters is what people will experience through those technologies. It is not very important what goes into deep learning or other specifics; what matters is the experience you have. This is what they are saying. Additionally, Apple wanted to convey that the price does not meet the user's expectations. To align with those expectations, a certain level of hardware is necessary, which is likely Apple's perspective. If sufficient hardware specifications to satisfy the desired user interface were already available in other devices, they would have used devices with those appropriate specifications. So, from Apple's standpoint, it is somewhat of a gamble to use existing hardware while lowering the price and enhancing the user experience.

If they made such a choice, it would have reflected Apple's trust. However, they have set user experience as a non-negotiable element and adjusted the hardware accordingly. This approach has been seen several times in Apple's past actions. Apple typically does not use cutting-edge hardware, but occasionally, when necessary, they do. Therefore, this is not a significant departure from Apple's existing practices. They had no choice but to set a high price, as the importance lies in the user experience becoming more widespread. They likely adjusted the price to account for any yield issues. Once this technology becomes more common, the price will naturally drop. This means that Apple does not intend to position this exclusively for the premium market; they are simply presenting a prototype for now.

They presented a role model in the market. This was discussed not at a product launch event but at the WWDC developer conference. It seems they are sending a message to other developers: devices of this kind should head in this direction. Software developers should develop accordingly, and hardware developers should also take this into account. This way, companies that manufacture hardware components can improve their productivity. They can invest more in capacity and lower production costs. Therefore, Apple's announcement is a message to the entire market. The user interface we propose is like this; it provides users with such experiences. To achieve this, we need incredible hardware, which is honestly expensive. So, let's all work together to create this hardware and lower the component costs. This is the message being conveyed.

I believe that this is a move that does not deviate much from Apple's existing leadership in the industry. For those who have trusted Apple in the past, the key is to create next-generation devices that succeed in the mass market. How did Apple get here? It can be said that Apple has rarely introduced cutting-edge technology. What Apple always prioritizes is user experience. There is a famous saying from Jobs that consumers don’t even know what they want. So, by providing experiences that people may not realize they need, Apple creates new markets. This is what they have done again with the Vision Pro. It could fail, and whether it does or not is not that important. What matters to those who have trusted Apple is that the company continues to...

Apple is still on a reliable path, showing consistent progress. If there were to be a presentation from Apple that seemed untrustworthy, it might look like this: they introduce a new technology, saying, We have incorporated this exciting new technology, but it doesn't resonate with the audience. For instance, if they announce a product that looks nice but doesn't really differentiate itself from competitors, it could lead to questions like, What makes this product different? If that happens, people might start to feel uncertain about Apple, leading to a loss of trust. This would prompt us to reconsider our stance on the company. I just used the term trust, and I think it's very important. The immediate actions Apple takes will have financial implications.

Will it bring results, or how much money will it generate? Setting that aside, I wonder why such a decision was made and why this type of new product was launched. When reflecting on Apple's past actions, I ask myself if I can understand it. If I can't, then even if the product seems to be doing well, it’s worth looking at it with skepticism. From Buffett's perspective, when a company announces new news, I believe the key question to ask is this. Recently, he has been buying a lot of Japanese trading company stocks. There was quite a bit of controversy over why he was purchasing so many. In the past, many people thought that this was a bet on the rise in commodity prices due to inflation. Ultimately, that may turn out to be correct, but fundamentally, Buffett does not bet on a single investment idea like the rise in commodities. He does not solely bet on the rise in commodities.

If he was going to do it, he could have simply bought raw materials. However, Buffett did not do that; he bought stocks. Do you remember in the previous part, I mentioned the three types of assets that Buffett looks at? It's important. There are bond-type assets, non-producing assets, and producing assets. What Buffett likes is fundamentally producing assets. Raw materials, in themselves, are non-producing assets. Even if you own one ounce of gold, that one ounce of gold will still be just one ounce of gold ten years later. He said that. Even if raw materials seemed appealing, Buffett was more likely to buy stocks that deal with raw materials rather than betting on raw materials themselves. So, I think there are various other reasons beyond just betting on raw materials, and this was evident in the recent shareholders' meeting regarding Japanese trading company stocks.

he provided a clear answer regarding this. First of all, they issued yen bonds. Berkshire issued a large amount of energy bonds and used that money to buy shares in Japanese trading companies. So, fundamentally, they hedged against the yen exchange rate. The yen is originally very favorable for borrowing, known as the NK trade, because it is a very good asset to borrow. The interest rates are quite low, and in the long term, the value of the yen has been continuously weakening. Therefore, if you borrow money in yen and convert it to dollars to buy dollar assets, the interest rates are low, and the amount in dollars also decreases. This is why many engage in yen carry trades. However, Buffett did not engage in a carry trade; instead, he borrowed in yen to purchase yen assets. He did not convert it to dollars but hedged against the fluctuations in the yen exchange rate. So, he did not bet on the exchange rate. And...

This is what I'm talking about: I borrowed at a cost that is only half of 1%. With that, I can earn 14%. How great is that? This is the concept of borrowing transactions. However, I have some doubts about what the 14% refers to. The dividend yield is about 4%, and the share buyback is around 3.5%. Just with these figures, since I borrowed at 0.5%, arbitrage is possible. But the 14% likely refers to the inverse of the P/E ratio, or earnings yield. If you divide 100 by 7, you get approximately 14. So, if I bought at a P/E of 7, the company is giving me an annual return of 14% based on my investment. Since the interest rate I borrowed at is only 0.5%, it's almost free money. There are no currency issues, and I'm earning 14%, which is an incredibly good deal. This is fundamentally approached as a borrowing transaction.

It is about the scarcity of raw materials. That was a kind of bet, but that bet could fail, right? There are concerns about inflation, but Buffett has consistently expressed worries about inflation during low-interest periods or even before that, throughout the 2000s. If you look at the annual meetings or shareholder letters, discussions about inflation come up almost every year. During the recent inflation period, especially when money was being pumped during COVID, he likely had strong confidence that inflation would be significant. However, betting solely on inflation means that if that prediction is wrong, there’s no way to back out. So, if we are betting on a company that is managed well, that company has gone through both high and low inflation periods. We need to think about the business model of trading companies. The trading model is quite unique; there are not many like it in the world.

There aren't many business models; it seems like they only exist in Japan and Korea. As far as I know, this is a trading company, which involves buying and selling goods. It's similar to the merchants of Venice from the past. Therefore, there isn't much reason for it to remain as a large publicly listed company in today's world. Japan has had a developed commercial sector since ancient times, but it was forcibly opened to foreign trade. At that time, there were a few trading companies established with the intention of not leaving all trade to foreign imperial powers and actively engaging in trade ourselves. After the war, as many Japanese manufacturing companies grew, there was a greater need for trading companies to export these products. The reason trading companies are necessary is that when we have good products, but the manufacturers are not large enough, it becomes difficult to establish export trading routes despite having excellent products.

If there is a company that can focus on securing trade routes, it would be beneficial for everyone involved. This is why trading companies have developed. After the war, Japanese companies grew significantly in size, making trading companies less necessary as they became capable of independently establishing overseas trade routes. As a result, these trading companies found themselves in a precarious position, with their business shrinking. At that point, they began to contemplate what they had done well so far: they had built a network by cold calling various companies to identify which countries had buyers and what demand existed, as well as which manufacturers had what capabilities. They also had the ability to negotiate well to take a margin when making connections. This led them to consider whether they should directly engage in business development.

So, in reality, they are also acquiring manufacturing companies and directly entering the manufacturing sector, and they are heavily involved in resource development like mining. In a way, they have become a holding company. When you look at it that way, what is Berkshire doing? It's a holding company. Although Berkshire is insurance-based, it also has railroad companies, retail companies, furniture companies, home-building companies, and airline companies. It has an incredibly diverse range of businesses as a holding company. In that sense, Japanese trading companies are doing similar work to me. But I wondered if they are doing it as honestly and passionately as I am, and it turns out they are doing well. They are running their businesses in a way that creates shareholder value, and even the prices are low. However, to buy this, I have to purchase it in yen, so I don't really want to bet on the exchange rate. How can I eliminate the exchange rate risk?

So, if you want to borrow money in yen, that's possible. The interest rate for yen is really low. For Buffett, this is an option he can't pass up. Recently, he went to Japan and had meetings with the executives of Japanese trading companies. He said they are truly excellent executives, and he feels he can trust them more, so he plans to increase his stake and has bought more shares. It's not just about the low price or that the price-to-earnings ratio is better; Japanese trading companies have incredible business development know-how and have actually delivered good results. They will continue to achieve even better results, and he has gained confidence that they can use those results for their shareholders. Additionally, when making these purchases, he was able to mitigate currency risk, and there was a significant gap between the current yield he could earn and the borrowing costs.

Even those events will continue to grow larger in the future. Seeing that, I judged it to be a good price. Up until now, Buffett has discussed his perspective on the financial system and individual companies. I have repeatedly mentioned certain words here: structure and trust. Heliki Shinjo said that the crisis of a system is inherent in its structure. I often talk about probabilistic thinking. Typically, people think of investing as predicting how the future will unfold and then betting on it. However, I have consistently emphasized that we should approach it probabilistically, and Buffett shares this view on probabilistic thinking. Probabilistic thinking means that things can go well or poorly, but if they go well...

When things go well or poorly, one must consider the extent of potential losses. If the risk-reward ratio is favorable, it makes sense to place a bet. However, rather than putting all your money into one option, it is better to combine several bets with a favorable risk-reward ratio to make a profit. Buffett often discusses this. He maintains this perspective when looking at systems. The term skin in the game is often misunderstood, but he emphasizes it greatly. Therefore, if certain individuals can gain significantly when a bet pays off, they should also bear the losses when the outcome is unfavorable. In light of the banking crisis, it is appropriate for bank executives, as well as shareholders and creditors who invested in those executives, to incur losses. Meanwhile, depositors, who bear no responsibility for their mistakes, should be protected.

The Federal Reserve's response is functioning well. Powell understands the current situation very well. He mentioned that the structure of this system operates in a way that identifies who is responsible and holds those responsible accountable. The authorities have responded appropriately, and that is the current Federal Reserve. The Federal Reserve is reliable. However, the problem extends beyond this, as it relates to currency. The government's fiscal spending has a significant impact on the overall money supply. While Powell understands the current situation well, he lacks the authority, and politicians are fighting to maintain their positions. This situation is very concerning. Therefore, trying to solve problems by printing more money every time an issue arises is not a sustainable approach. Caution is needed, as the structure could collapse. A system that leads to such a breakdown is not trustworthy.

Warren Buffett talks about the importance of not being able to do so. He applies the same perspective to individual companies. He evaluates the roles of stakeholders in the financial system based on what they should do. What is the role of corporate management? Of course, it cannot be said that the only job of management is to create shareholder value. Management must balance the interests of numerous stakeholders. There are employees, vendors, taxes to be paid, and various social and environmental responsibilities to consider. Among all these stakeholders, shareholders are one group. If we find a rare manager who protects shareholder rights and respects shareholder value, then by trusting them and moving forward, we can comfortably earn significant profits over the long term.

When looking at the macroeconomic financial system, Buffett's perspective aligns with his view of individual companies. He emphasizes the importance of finding reliable companies that can perform their duties well within a good structure. Once he identifies such a company, he trusts it, invests in it, and monitors its progress. As time goes on, whenever we face new situations, the question we need to ask ourselves is not about predicting the future, but whether we can continue to trust the people currently in charge. Can I keep trusting my money with them? We must continuously pose this question and seek answers. This is not about throwing out a question and doing nothing; rather, it involves having different criteria for judgment while observing the same issues. It’s not about predicting the future, but about whether we can keep trusting the people who need to operate in the actual market and field. We must continually make judgments about this. Furthermore, this applies not only to investing but also to our lives.

He also shared a lot of great insights. To briefly touch on this topic, the important discussions we need to have regarding various life decisions are as follows: It's not just about whether a bet will yield good or bad results, but rather how much damage we could incur if we fail. What is the limit of loss that I can tolerate? This is a crucial consideration when making decisions. No matter how much we could potentially earn, if a single mistake could prevent us from participating in the game again, then that bet should not be made. 

Next, we should spend less than we earn. This may seem obvious and straightforward, yet many people fail to adhere to it. Additionally, we should avoid toxic individuals and toxic activities, and continue to learn without succumbing to immediate gratification. This reminds me of the three principles that Teacher Park Jin-young mentioned during character education: truthfulness, diligence.

There is humility. The truth is that you should not create situations that you need to be cautious about. Always treat people sincerely. And every day, continue to carry out the tasks you need to do. Regardless of what achievements I have made or what position I have reached, it is not because I am exceptional; it is a gift that society gives me. Have a grateful heart. I talked about this, and it seems very similar to what I am experiencing. As I grow older, I keep thinking that ultimately, living a happy life is much more about who is around me. Right now, my income or the consumption I am flexing about is not that important. What matters is who I want to share a meal with today, who I want to spend time with today.

When I said, Let's eat, and they responded, That sounds good, isn't that really nice? And if those people can also provide me with good motivation and are individuals from whom I can learn, that would be truly wonderful. It's best not to keep negative people around at all. It's one of the most important things for having a happy day and living peacefully in the future. I think a lot about the saying Birds of a feather flock together and also the phrase Everything returns to its rightful place. We can't know whether our future will be good or bad, but when something good happens, having good people around allows us to share those good experiences. And when something bad happens, even if it's tough, the good people around us encourage and help us. If I had good intentions all along, then...

In the end, I think things tend to flow in a good direction. So, it's not just a situation where you can succeed only if you're lucky; rather, the idea is to create a structure where you can succeed even without good luck. The key to achieving that is having good people around you. This applies not only to investments but also to looking at the overall economy and our lives. It provides a lot of inspiration regarding what kind of attitude is beneficial. To summarize, behind stocks, there are businesses. The market is a place we briefly visit to respond to attractive offers, specifically when they present appealing prices. What we should be doing on a daily basis is to trust and delegate to capable management that works for us to create value. When new events occur, we must continue to believe.

The question of whether we can continue to ask ourselves is something I should do regularly. The structure formed by capitalism and the financial system must be robust; it should serve as a foundation so that when I invest in a company, I can earn money in the long term. Therefore, when we look at macroeconomics, the questions we should be asking are not just about the direction of interest rates, but rather whether we can trust these authorities. This is a question we must keep asking continuously. 

In general, whether in investing or in life, it is important to secure safety and adopt probabilistic thinking. The core of probabilistic thinking is understanding the structure and identifying who the partners are that I can trust and rely on. Once I choose to trust a partner, I must continue to believe in them and assess whether their actions are justifiable.

It is important to keep asking the question of whether we can continue to believe. I hope this has been somewhat helpful. There are many analyses available about Buffett, and what I discuss may differ from those. There are a lot of detailed aspects, but it would be too limiting to cover them all in four YouTube videos. Therefore, I included perspectives that differ from others and aspects that I believe are truly, truly important in the video. I hope you find it enjoyable. Thank you.

[월가아재x홍진채] 테슬라, 애플, 아마존, 그리고 일본을 보는 워런 버핏의 관점 4부 (총 4부작)

시카고 옵션 거래소(CBOE)에서 파생상품 트레이더로 커리어를 시작하여, 보스턴과 홍콩의 헤지펀드를 거쳤고, 데이터 과학 분야로 전향하여 월가의 투자은행 Lazard, 핀테크 스타트업 Kensho Technologies를 거쳐, S&P Global의 리드 데이터 과학자로 일했습니다. 

현재는 가치투자의 4단계를 반자동화하는 플랫폼 Valley AI(www.valley.town)를 개발하고 있는 핀테크 스타트업 NeuroFusion(www.neurofusion.ai)를 운영하고 있습니다.
