“Punching Machine” Made Less Than 10 Holes! Duan Yongping and Fang Sanwen’s Latest Dialogue Explains “How to Truly Understand Investments”

Source: Smart Investor

On the afternoon of November 11, in the first episode of the third season of 'The Principle,' Fang Sanwen, founder and chairman of Snowball, held an in-depth discussion with renowned investor Duan Yongping. The conversation covered topics including his personal experiences, investment philosophy, understanding of companies, analysis of his stock portfolio, and views on education.

This marks Duan Yongping’s reappearance in the public eye following a 90-minute exchange with faculty and students at Zhejiang University earlier this year. It is also one of the rare video dialogues he has participated in over the past 20 years since retiring from BBK.

Moreover, this in-depth discussion, primarily focused on investment, took place in California, USA, where he faced the consistently sharp questioning of Fang Sanwen, such as directly asking, "Do you think copying someone else’s homework is feasible?"

Under the ultra-clear camera lens, the granularity of the exchange was distinctly visible… Fundamental, transparent, sincere, Duan Yongping, embodying the unity of wisdom and spirit, came to life. However, he appeared significantly thinner compared to his appearance during the Zhejiang University discussion earlier this year.

01 On Investment Philosophy

Fang Sanwen: A user named 'A White Line' asked, what was the opportunity that first brought you into stock investment?

Duan Yongping: After I retired, I moved here (California) to live, but I couldn't play ball 24 hours a day, and I wouldn't go looking for a job.

Later, I thought that investment seemed to be related to business and enterprises, so I started researching it and bought many books, including chart-reading ones, but I couldn’t make sense of them.

As someone with an engineering background, how could I not understand these charts while others could draw such conclusions from them?

Later, until I read Buffett’s works—I didn't actually read much, just one sentence: 'Buying stocks is buying companies.' When I saw that sentence, I suddenly understood; that was all I needed.

Because the rest is about how you evaluate companies, which Buffett can't teach you. If you don’t understand businesses, no amount of theory will help. But since I come from a business background, it's relatively easier for me to understand other people's businesses, though I can only understand a few industries after all these years.

I think understanding businesses is very important; without that understanding, it's difficult to invest.

Fang Sanwen: If you were to summarize your investment philosophy in one sentence, would it be 'buying stocks is buying companies'?

Duan Yongping: Yes. That’s it.

But the latter part of the statement is that you need to understand the company, which is very difficult.

Why is it said that investing is simple, but not easy? The simplicity lies in the fact that you must look at the company, you must understand the business, and you also need to comprehend future cash flows; the difficulty is that it’s hard to achieve this, as most companies are not easy to understand.

Section 02: On the 'Punch Card'

Fang Sanwen: I remember Buffett or Munger once said that if there were a punch card for your lifetime of investing, with only 20 punches available, have you used up your quota?

Duan Yongping: I don't think I have.

Fang Sanwen: With 20 punches, how many do you feel you’ve used so far?

Duan Yongping: I can count them. The first significant investment I made was in NetEase, then Yahoo should be counted—investing in Yahoo was essentially about buying into Alibaba.

After that, it was pretty much Apple. $Berkshire Hathaway-A (BRK.A.US)$ My stake wasn’t very large. $Apple (AAPL.US)$ It's relatively large, $Kweichow Moutai (600519.SH)$ In fact, it's also quite large.

Tencent, actually, I’m doing fine at the moment; it’s not necessarily more than Berkshire Hathaway.

General Electric was indeed an investment during the 2008 financial crisis. I can't recall the exact proportion now. However, after they changed their CEO, I quickly exited. Based on my current perspective, I wouldn’t invest in General Electric. Their business model isn’t very strong. Back then, I didn’t have the level of insight I possess today.

Fang Sanwen: Let’s first count the holes—does Google count as one hole?

Duan Yongping $Alphabet-A (GOOGL.US)$ Actually, none of them count; I haven’t placed any significant bets on Google.

Fang Sanwen: Does PDD Holdings count?

Duan Yongping $PDD Holdings (PDD.US)$ It can count. PDD Holdings is quite unique because I invested in it during its early stages, at the very beginning of its founding. So, the proportion of money I invested was actually very small, but the returns have been substantial.

But strictly speaking, it doesn't really count because I didn't invest after fully understanding the company—I did it rather blindly.

Fang Sanwen: If you can't think of any other holes, it sounds like you haven't even used up 10 holes yet.

Duan Yongping: More or less. So, I still have a long time to continue investing because I need to reach 20 investments.

Fang Sanwen: Perhaps there are very few investors in the global secondary market who would dare say they haven't used up their quota of 20 holes?

Duan Yongping: I don’t know about that; it depends on your definition.

Some people may never reach 20 holes in their entire life because they've never heavily invested in any company—their highest investment allocation might only be 5%.

Even very famous investors, for instance, Peter Lynch, who has traded over 2,000 stocks in his lifetime, must have been extremely busy, so his hair turned white early, and he retired even earlier than I did. I'm not sure if he still invests now; I assume he does, but only for himself.

I've probably come across a lot of stocks as well. I even purchased $CHINA SHENHUA (01088.HK)$ . It's not that I just bought China Shenhua; I currently hold it, but its weight in my portfolio is relatively small. In contrast, Kweichow Maotai has a larger proportion.

I usually tell people that I own just three stocks: Apple, Tencent, and Maotai, and that's pretty much the case.

Fang Sanwen: Is there any investment you made that you later felt dissatisfied with?

Duan Yongping: Such a situation wouldn't exist because if you're dissatisfied, you'd quickly exit, and logically speaking, it would no longer remain in your portfolio. If you dislike it but still hold on to it, that’s illogical—it’s unlike dealing with children where, even if you don’t like them, you’re still stuck with them.

If you don't like a stock, you can simply vote with your feet by selling it.

03 On How to Understand a Company

Fang Sanwen: Let's delve deeper into this topic. You mentioned earlier that understanding the concept of 'buying a stock is equivalent to buying a company' is straightforward, but truly understanding a specific company is not easy, right?

Duan Yongping: It is not easy to understand the concept, and it is extremely difficult to comprehend this statement. Looking at the users on Xueqiu, it would be remarkable if even 1% truly understand this statement, and putting it into practice is even harder.

However, those who cannot achieve it may still make money.

Fang Sanwen: It’s not necessarily that he doesn’t understand; perhaps his interpretation is different.

Duan Yongping: That is exactly what I mean. Once you truly understand, you won't be influenced by the market. If you are still watching the market every day, checking dynamics constantly, or looking at past performance... even people with a large following who talk about the market all the time — they simply don't get it.

When have you ever seen me talk about the market? When have I ever said on Xueqiu, 'It's going to rise today' or 'It's going to drop tomorrow'?

But not understanding does not equate to not making money. Investing is interesting in this way. If you blindly buy a stock and hold onto it, out of 100 people, actually 50 might make a profit, and those 50 can come out and talk about it.

But if you ask them to repeat their success, it won’t be so easy.

Let me teach you a way to make money: just buy the S&P 500 index, and in the end, you will always make money. But that doesn’t mean you truly understand. However, if you really follow through with this approach, it actually shows that you do understand.

04 Case Study on Investing in NetEase

Fang Sanwen: Evaluating a company remains difficult. How do you determine that you fully understand a company? Let’s take NetEase as an example. How do you confirm that you truly understand it?

Duan Yongping: I come from a gaming background, and after chatting with their game team, I feel they are a group of people who are very passionate about games and truly dedicated. That’s the first point.

Second, regarding the business model, I think it makes a lot of sense, especially since its cash holdings were higher than its market capitalization at the time. As a venture capitalist would do, buying in was quite straightforward.

Moreover, there was an opportunity at the time when the stock price had dropped so significantly that everyone was panicking, thinking the company was doomed. However, I believed there was a high probability they would make money.

It just so happened that I had some cash on hand, so I went all-in and bought NetEase. Within six months, it surged 20 times.

If you ask whether I fully understood the situation, if I really did, I should have bought the entire $NetEase (NTES.US)$ / $NTES-S (09999.HK)$ .

So to say I understand this fully, I don’t know what that really means, but I roughly believe they can make money. I think my investment risk isn't particularly high.

Why can you hold on for so long and make so much money without selling? Because that amount of money doesn’t mean much to me, so I can think about things more rationally.

If I only had that much money, I might not be able to hold on and would probably sell. So staying rational is actually a very difficult thing to do.

Fang Sanwen’s analysis of NetEase seems to include two parts: one is your judgment on the gaming business itself, believing it can be profitable?

Duan Yongping: Of course, who am I? I come from the gaming industry; I know games very well. (Smiling modestly)

Fang Sanwen: Second, your judgment on its valuation—for example, its stock price being low, possibly below its net cash holdings. Isn’t this what Buffett refers to as a margin of safety?

Duan Yongping: Buffett’s margin of safety doesn’t refer to that. The margin of safety means how well you understand the company—that’s my understanding.

It’s not about how cheap it is—cheap things can get even cheaper.

At the time, I just thought they had the opportunity to make money, but I didn’t know how much they could earn. If I had known they could make as much money as they are making today, even if it was later, I would have bought more and not sold. But I did sell, which shows that I don’t really understand as much as I thought.

Fang Sanwen: Understanding and not understanding—it seems, based on what you’re saying, that it falls into a gray area, without a clear standard. Is that correct?

Duan Yongping: I don’t know either, but people who keep asking others definitely don’t understand. Does that mean those who don’t ask truly understand? You could say it falls into a gray area.

At the very least, I have earned more than 100 times my initial investment. Would you say I understand or not? There must be a reason and justification behind my decision to sell. Moreover, I haven’t lost out significantly because I have other excellent investment opportunities.

Section 05: Apple's Business and Culture

Fang Sanwen: Let’s talk about another stock—Apple Inc. A user named 'Lilian78' asked whether, 15 years ago, Apple was a hardware company, but now its profits are split equally between hardware and software, indicating a shift in its business model. Did you anticipate this when you purchased the stock?

Duan Yongping: I bought it in 2011, and by that time, it was already quite clear.

Fang Sanwen: Could you foresee at that time that platform-based businesses and software services would generate more profits?

Duan Yongping: Given that I’m in this industry, how could I not know? It wasn’t even a matter of prediction—it was something visible and evident.

Fang Sanwen: The fish in the barrel?

Duan Yongping: That might be overstating it, but at the very least, it was like seeing an elephant not far away. Since we ourselves are in this business, I could naturally see it clearly.

Fang Sanwen: It seems that you also had some insights regarding Apple’s corporate culture, correct?

Duan Yongping: Yes, I believe their corporate culture is excellent.

Fang Sanwen, why do you think their corporate culture is good?

Duan Yongping: I think they do a great job of being user-oriented. They are not a company that is overly profit-driven; they care deeply about doing things well, about the user experience, and about how to improve. They also think very long-term.

So if something cannot provide value to users or a product doesn’t offer sufficient value, no matter how popular it might be, they won’t do it.

We once had a disagreement about whether Apple would release a large-screen phone. I said they definitely would, but it took three years for them to do so.

But how did I know they would release a large screen?

Fang Sanwen: Because a large screen meets user demand.

Duan Yongping: Exactly. In our industry, large screens have already been introduced. So I knew users would definitely want a large screen, but I didn’t expect them to hold out for three years.

Fang Sanwen: This is something I find very puzzling as well.

Duan Yongping: I’ve never been puzzled. I knew they made a mistake. Tim Cook made a very big error here—he’s a bit like Nakamura.

Steve Jobs once said small screens were the best, so they didn’t bother with larger ones. In reality, they had already been researching them; they had all sizes of large screens in their labs, but they just didn’t push forward with it.

Of course, it may also be because they felt the performance was not good enough, or for some other reason—I don’t know. Anyway, they eventually gave up.

Let me give you another example. At first, they said they were going to make iTV, which is a television set.

I remember when I was playing ball, someone confidently told me that they were definitely going to do it and that they had already seen the samples. I said they absolutely wouldn't. They asked me why, and I replied, 'What can they actually do?'

I used the same reasoning with my own company's people because we also made televisions. Later on, they canceled the project. Then, when Liu Zuohu came in, he tried again, only to cancel it once more.

I said to Liu Zuohu, 'I told you years ago why we shouldn’t make televisions.' But he insisted on trying again. Chen Mingyong even let him try, just as I allowed Chen Mingyong to try back then.

After trying, he realized it was indeed incorrect because the product could not provide anything of significant value.

More than a decade ago, there was widespread talk that Apple would launch an Apple car or electric vehicle. I said they would never have such an electric vehicle. Many people said it was impossible since they were already working on it. I argued that they wouldn’t succeed—not because of technological issues, but because of what they could actually achieve.

For such a large vehicle, the value Apple could add would be extremely limited. What price would they sell it at? Would they have sufficient differentiation? This is where my understanding of Apple surpasses that of most people.

If Apple really does release a car, I’d be delighted and very curious to see what they could possibly do. However, I still believe they won’t succeed.

Just recently, when I was in New York, I met the owner of an Apple store who told me that their store had paused operations for three years and underwent renovations intended for selling Apple cars, but later reverted to its original setup.

I said, so you already knew long ago that Apple wasn't going to sell an Apple car. They knew at least one to two years in advance, but Apple never officially announced it. When I heard that they actually worked on the Apple car, it really exceeded my expectations. I thought they were just researching it.

You see, as I expected, this is part of its culture. When it realizes that a product cannot provide sufficient value to users, it won’t proceed with it. They don’t do things just for the sake of business.

If they were doing it purely for business, they could easily make a car. If Apple were to make a car, no one would do it better than them. But what will ultimately happen, I don’t know.

This is my understanding. I think the company’s culture is pretty good, although there are certainly other companies with good cultures as well.

Fang Sanwen: But it can still make mistakes, such as the example you gave earlier about not making large-screen phones for three years and almost proceeding with the Apple car?

Duan Yongping: A good culture ensures that the company will eventually return to the right path. There’s a guiding star leading it, showing what it should do.

It's not for the sake of business. Simply discussing business can easily lead to mistakes.

Fang Sanwen: If a company has a good culture, it may not completely avoid making mistakes, but the probability of correcting errors might be higher compared to companies without a strong culture?

Duan Yongping: The likelihood of making mistakes is actually similar for everyone. The key lies in whether you continue making the same mistake and whether you have a 'stop-doing' list.

Over the past thirty years, we’ve made fewer mistakes than others.

As I wrote on Xueqiu, people care about what we have done, but the reason we are who we are is largely because of the things we choose not to do.

Since we know that something is not suitable for us, we simply don’t do it. By not doing it, aren’t we avoiding a lot of mistakes? And doesn’t that increase the probability of doing the right thing?

It’s just a tiny difference, but over thirty years, it could amount to a significant gap.

Fang Sanwen: What do you think about Apple at its current price?

Duan Yongping: It’s not cheap.

Fang Sanwen: Even in terms of return on investment, can we not expect very high returns?

Duan Yongping: Yes. It also depends on the user's opportunity cost. If he puts the money in the bank to earn slightly higher interest, then buying Apple might still make sense. But if you can achieve annual returns of more than ten percent, then perhaps there’s no need to buy Apple. Whether Apple will continue to grow in the future, I really don’t know.

Of course, Apple has always been strong with so many users. Where will AI ultimately land if not on mobile devices? It’s possible that Apple could double, triple, or even quadruple in value in the future, but I don’t know. That doesn’t mean it’s necessarily a bad investment, but it’s not cheap.

06 On the 'Mistaken Investment' in General Electric

Fang Sanwen: You also bought General Electric back in 2008, but your view on it has changed since then. Has this change in perspective primarily been related to its business model or corporate culture?

Duan Yongping: Previously, I thought it was about corporate culture. I have never really understood the business model, but I used to like their corporate culture. They said that in an ever-changing era, the only constant is integrity, which they emphasized greatly.

But later, when I visited their homepage, I couldn't find that statement anymore. From the moment I couldn’t find it, I decided to sell because I felt they no longer emphasized this matter. Coupled with the fact that I truly didn’t understand the business model and had traded too many companies.

At first, it was due to the influence of Jack Welch. I thought this company was amazing, but later I realized that no one is truly extraordinary.

Fang Sanwen: Have you perhaps demystified your perception of Jack Welch?

Duan Yongping: Not exactly. I didn’t know much about him, but fortunately, I sold my shares.

When I sold, the market capitalization was over 400 billion yuan, but now it may not even reach that. Imagine if I had converted those holdings into Apple, what a huge difference it would make. I probably held them for two to three or three to four years, not very long.

Fang Sanwen: But did you still make money from this trade?

Duan Yongping: Sometimes making mistakes can still earn you money. I consider that a mistake because, given the chance today, I wouldn’t buy it again.

Fang Sanwen: Even though you made money, does that mean you can't deny it was still a mistake?

Duan Yongping: Of course, it was a mistake because it didn’t align with my later decision-making criteria of meeting both the filters of corporate culture and business model.

07 On NVIDIA and AI

Fang Sanwen: There is a user named 'Charming IPO Sandstorm,' who asked, 'What reasons or thoughts made you consider investing in $NVIDIA (NVDA.US)$ a company in such a highly volatile industry?'

Duan Yongping: I used to think it was highly volatile too, but later I realized they are indeed very impressive, and their ecosystem is extremely strong. Look at NVIDIA's collaboration with OpenAI, as well as AMD’s collaboration with OpenAI, and you can see how powerful NVIDIA is.

NVIDIA invests 100 billion, but it provides chips and takes shares; AMD gives you chips and begs you to use them by offering shares.

The reason everyone wants to use other chips now is due to the fear of NVIDIA’s monopoly.

AI is too expensive and requires a lot of money. In this arms race among major companies, if you want to catch up in AI, you have to buy chips. Therefore, there is a strong hope to promote another company because once semiconductors become commoditized, prices will drop significantly.

But it is impossible to achieve that, so NVIDIA is indeed remarkable.

I also watched many videos of Jensen Huang, and I really admire him. What he said more than ten years ago is consistent with what he says today. He foresaw it long ago and has been working towards that direction ever since.

So now you have to think, what he is talking about still reflects his belief in the future. Therefore, I think it's worth investing a little to explore, especially in AI. At least get involved and don't miss out.

Completely missing out seems somewhat inappropriate.

Fang Sanwen: You believe that AI represents a demand-driven field, and companies like NVIDIA possess a certain level of sustainable competitiveness within this industry?

Duan Yongping: At least that is my current view.

Fang Sanwen: Extending our discussion from companies like NVIDIA and Taiwan Semiconductor, technological innovation, particularly advancements in technology, creates many new business opportunities and uncovers fresh demand. However, it can also destroy old industries. Innovation typically places high demands on enterprises, sometimes even requiring an element of luck. Those who succeed are often fortunate beneficiaries of innovation.

There are also companies operating in industries where significant innovation is not as critical. Comparing these two types, which one do you prefer?

Duan Yongping: I prefer businesses that I can understand and those where I believe the future earnings justify my investment opportunity cost.

Take my investment in Kweichow Maotai, for example. This company should remain unchanged. My only concern would be a new CEO making unnecessary changes. So far, they have adhered to their core principles. Whatever you do, don’t change the classic 53-degree Feitian Maotai.

In this regard, state-owned enterprises have certain advantages. I’ve heard that in some private enterprises, successors have altered time-tested recipes. Such a thing would never happen at Maotai—it would be highly risky.

If something is already working well, why change it? Innovation essentially means responding to user needs—change when necessary, but avoid changing for the sake of change.

The technology industry must innovate because new things will emerge to meet more user demands. If you don’t change, you’ll be left behind.

Moutai's flavor profile has already been established. Trying to change it would be foolish and should not be done. Take Coca-Cola for instance—they might tweak their flavors, but the original taste must remain intact. They only add new options due to health considerations or other reasons.

Fang Sanwen: In terms of gaining understanding, is it harder to understand a company that needs to innovate?

Duan Yongping: Actually, it’s not easy to fully understand Moutai either. Everyone is different. Look at how many people fail to understand Moutai, just as many struggle to understand Apple.

I also don’t quite understand NVIDIA, nor do I fully grasp Google. I’ve always liked Google, but I just can’t figure it out.

I’m starting to get it a bit now, but I’ve begun to worry again. To what extent will the search business be replaced by AI? For example, tools like ChatGPT, including Gemini itself—how much of the search market will they replace? I don’t know.

But overall, I think this company is pretty good, so I bought some shares recently.

Fang Sanwen: Whether it’s understanding something constant or something innovative, both are quite challenging?

Duan Yongping: Of course, understanding anything is difficult, but nothing is as hard as golf.

08 About the Inheritance of Berkshire

Fang Sanwen: Let me ask about the oldest company—Berkshire Hathaway. Old Buffett has just retired, and it used to be considered an evergreen company. Now, many people hold its stock. A user named 'Moonlit Riverbank' asks: With Buffett retired, can Berkshire Hathaway remain an evergreen company?

Duan Yongping: He probably doesn’t understand this company at all.

First, all the companies that Buffett invested in are still there; second, his successor inherits his culture—they continue to seek companies with strong future cash flows, and that will not change.

As for how capable the successor is, Buffett may have made mistakes before, but the person he chose won’t be too bad. The company’s culture will not change—it will not become a speculative firm. Holding Berkshire Hathaway is certainly better than buying a random mutual fund.

What other good options do you have? If you don’t understand investing, you should buy companies like Berkshire Hathaway or something like the S&P 500 Index—it’s definitely better than buying a mutual fund.

You know who they are, and you know their history. Buying this might be better than Blackstone or others, and in the long run, its returns are likely to outperform them.

Fang Sanwen: Do you think the probability of Buffett’s company maintaining its previous advantages is high?

Duan Yongping: I believe their methods and ways of thinking are sound, but whether they can outperform the S&P 500 Index remains to be seen.

I’ve specifically discussed this with Buffett before. Do you think you can continue to outperform in the future? $S&P 500 Index (.SPX.US)$ He said it's extremely difficult, but he feels that he might be able to slightly outperform.

He simply enjoys doing this; otherwise, he would just buy the S&P 500 Index and completely ignore it thereafter.

Therefore, their opportunity cost is the S&P 500 Index. They will only act if they believe they can outperform the S&P 500 Index; otherwise, they won't bother and will simply buy the S&P 500 Index.

It's as simple as this: If one day I truly decide to stop investing or pass it on to my children and discover that one of them doesn’t understand investing, just buy them the S&P 500 Index or Berkshire Hathaway.

A friend of mine passed away, and his child told me that he had purchased half in the S&P 500 Index and half in Berkshire Hathaway.

This arrangement works well. Afterward, they don’t worry about it or care how the market performs because the dividends from the S&P 500 Index are sufficient for their needs.

Just hold onto Berkshire Hathaway, and it will save a lot of trouble.

09 Regarding 'Venture Investment' in PDD Holdings

Fang Sanwen asked another question concerning a company that garners significant public interest — PDD Holdings. You previously mentioned that your investment in it was a venture investment, but recently you added to your position. Is it still considered a venture investment?

Duan Yongping replied: It still is, but I understand it a bit better now. I actually sold off a large portion before, and then bought it back almost entirely. I find this company somewhat interesting, but it does carry risks. I wouldn’t recommend others to buy it.

Fang Sanwen, you mentioned that you bought it back. Do you feel like you understand it a bit better now? What specifically do you think you understand?

Duan Yongping: The money they’ve earned is right there, and their financial reports are publicly available. If they can sustain this business model, it’s very cheap.

The problem is, I don’t know if they can really sustain it or what factors might impact them. However, I trust their culture and the entire team, but I’m unsure about the broader environment.

Fang Sanwen: There is a user named 'Zhang Hao' who asked, in 5 to 10 years, do you not have a clear expectation for PDD Holdings?

Duan Yongping: I believe there’s a high probability they’ll do well, but it’s not guaranteed.

I am quite certain Apple will continue to thrive, but with PDD Holdings, I don’t have as clear a view. I think there are significant changes happening in this industry, but there is a possibility they could become much stronger than they are today. That's the nature of venture capital, isn't it?

If it weren't for venture capital, I would invest a large portion in it, but I haven’t. Still, I think it’s worth holding some shares.

10 Suggestions for Ordinary Investors

Fang Sanwen: Do you have any advice for ordinary people regarding investments?

Duan Yongping: Not really. I think investment is investment, regardless of who you are. If you’re not going to invest properly, you might as well not invest at all.

If you really don't understand investing, then don't get involved. It's very difficult to make money in the stock market, and most retail investors lose money during both bull and bear markets—around 80%. So don't think you're the exception unless you know what you're doing.

It's even harder now because of the rise of quantitative funds. They've been around for a while, but they're much more advanced now, with AI becoming increasingly powerful. That's why it often feels like the stock drops as soon as you buy it, and it rises right after you sell.

But if you truly know how to invest, you don't need any advice. Just buy companies you believe in and hold onto them, comparing them to your other opportunity costs.

That's why I always talk about Moutai—it may be one of the easier things to understand.

Of course, many say that young people no longer drink Moutai, but those who aren’t young can still live a long time. Besides, just because young people don’t drink Moutai now doesn’t mean they won’t in the future. Drinking is indeed harmful to health, but it holds emotional value, so there will always be consumers.

Fang Sanwen: So your suggestion is that it's hard to make money from stock trading?

Duan Yongping: I think it’s very difficult.

Fang Sanwen: But investing is not entirely out of the question.

Duan Yongping: The prerequisite for investing is that you must understand businesses—you need to thoroughly comprehend them or see something rational that makes sense to you.

For instance, I once told a friend, who was a big fan of Moutai, 'Why don’t you buy shares in Moutai?' He did buy some, but in the end, he didn’t make any money.

I just said to him, 'What did your friends who didn’t buy Moutai invest in?' He replied, 'Now that you mention it, I feel better—they’ve lost much more than I have.' I said, 'That’s the point! Moutai will bounce back eventually. And even if it doesn’t, you’ll still get your dividends, it’ll just take a bit longer.'

However, if you invest in businesses you don’t understand, you’ll end up in serious trouble.

The issue over the past few years hasn’t been with Moutai; rather, most of the economy has declined. So I’m not really promoting Moutai, I just think for the majority of people, Moutai might be an interesting option.

If you’re not confident about what you’re selling, or whether there are buyers for it, it’s hard to stay committed. If you firmly believe no one will drink alcohol anymore, then indeed you shouldn’t buy it—that would make no sense. But it’s also difficult for someone who never drinks to hold such a firm belief.

Fang Sanwen summarized your advice as follows: Don’t trade stocks—making money through stock trading is very difficult. Instead, invest—perhaps investing can make some returns?

Duan Yongping: Of course investing works—otherwise, what am I doing?

Editor/KOKO