I'm reading "Snowball" and just reached page 213, which is just a little over 20%. But it already hits me that this guy, Mr. Warren Buffet, has such a spirit of businessman. I'm quite impressed by his secret purchasing of National American stocks from countryside.
Actually this story of National American reminds me of the early Chinese capitalists in the 1980's. Back in the 1980's virtually no Chinese know what a stock is, and no one is going to touch it. They simply thought it was a scam or something. How could a piece of paper worth that much? They said to themselves. China was undergoing a huge political and economically shift in the 80's, and some state-owned-companies (at that time virtually all medium/large companies were owned by the state)were incorporated. Now that's the interesting part, and I'd like to explain it in two parts:
PART I Eventually, in late 80's and early 90's some of the incorporated companies were going to list on the stock exchange (at Shanghai), and at that time you couldn't just buy stocks straight from the brokers, you had to purchase "Certificates to buy stocks" first. They were like call options with fixed prices (about 30 CNY per book, and each book contains certain number of certificates that would expire at the end of the year), but were actually lotteries as only a small part of them were valid. Apparently some people figured out that the demand of the Certificate books was way larger than the supply, so they began to accumulate the books. Soon everyone in Shanghai saw the gold in this and the price of the Certificates shot to the sky. I googled a bit and found that the highest price was 20,000 CNY, which was almost 700 fold!
A lot of smart guys made a fortune speculating on the Certificates. And that's not the end of story. There were only 2,070,000 books of Certificates sold by the brokers, and most of them were thrown away as they were not valid (and the valid ones were exercised to buy the stocks). Guess what, nowadays they were so precious that even the prices of some invalid certificates are very high, even to 1 million CNY per certificate (Of course the majority is still very cheap, maybe 10 cents or a few CNY).
PART II Some of the state-owned companies were incorporated, and they were supposed to gather capital from IPO, right? Well in the 80's the idea of IPO was pretty new in China, and lots of the companies simply could not find buyers, so they "sold" the shares to their employees. By saying that they "sold" the shares to employees, I meant that they forced their employees to purchase the stock. Remember that at that time most people thought this was some kind of scam and had no idea about the stock market? Well someone who did know something about the stock market managed to buy those stocks at a huge discount (probably 70-80% off), and the sellers were happy to get rid of the stocks anyway.
I'm not going to continue as you probably know what happened next.
Why am I writing this? Well the thing is, I don't think we can simply COPY Buffett's methods and wish to get rich when we retire. I'm not sure about the methods after page 213, but I'm pretty sure about most of the things before page 213. But the more important things is, we can still learn a lot from Mr. Warren Buffett, that is, the business of life, or as I prefer, a life of business. I admit that I'm not a businessman in heart, and I really learned a LOT from the 213 pages I read.
Submitted February 24, 2017 at 09:28PM by levelworm http://ift.tt/2mgNIqx
