Li Lu

• Li Lu (Founders #362)
  • Born 1966
  • Was at 天安門事件 (1989)
  • Was at Columbia Business School
  • He says he started this business late 97
  • Met Charlie Munger 2004
  • ”It’s about accurate and complete information”revisit
  • Gave a lecture at Columbia Business School (2006)
• Li Lu (Founders #363):
  • buffett and munger: “study how to die so you don’t go there”
    • always invert—study weaknesses and mistakesrevisit
  • constantly trading gets you constantly taxed (and more noise from brokers)
    • whatever style you do it has to be authentic otherwise it won’t last a decade (and that’s where the money is)
    • “sit on your arse”
  • timberland example
  • munger: “decision in life is all about opportunity cost”
    • pick the best, and don’t indulge in others
  • bbg example
    • untapped pricing power
  • 2010 talk at columbia (again)
    • he spent 2 years studying buffet
    • “business is change, and change equals opportunity”
    • “capitalism rewards people who are talented at capital allocation—it is a great game”
    • study one company thoroughly, inside out—then you can understand an industryTODO
      • find superior company in superior industry with good management and good price—you can very likely stay for a very long time—superior businesses produce a lot of positive surprises (the opposite is also true)
    • BYD example (2002~) (1:02:52~)
• the 2006 lecture:
  • what defines value investor?
    • those three things are tied together because you don’t really own the business (only a small piece of it) you want margin
      • a. owner of business
      • b. demand safety margin
      • c. don’t really care about what others think—mr. market anology
  • only 5% are value investors
    • other 95% likes trading in and out
      • why value investing is persistently low percent of asset management business?—because assets find these people
        • this is counter-point to make what people want
        • common sense is the least common commodity
  • “most of the time you’re going to spend as a value investor is really to be an academic, to be a researcher, to be a journalist actually, to basically be have insatiable curiosity to really, and try to figure out how just about everything works”
  • “the more you know the better off you are as an investor”
  • ask these things
    • is that cheap?
    • is the business good?
    • is the management somebody i can trust either because they’re good or because the external checks are sufficient
  • examples (13:13~)