After 20+ years of retirement, Duan Yongping's rare public interview: Buying stocks is buying companies, but less than 1% truly understand this
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After 20+ years of retirement, Duan Yongping's rare public interview: Buying stocks is buying companies, but less than 1% truly understand this
Buying stocks means buying companies; the key lies in understanding corporate culture and business models, and avoiding mistakes is more important than making correct moves.
Navigating Web3 tides with focused insightsThis is a rare public conversation with Duan Yongping over twenty years after his "retirement."
In the first episode of Season 3 of Xueqiu's professional investment series "Fanglue," Xueqiu founder Fang Sanwen crossed half the globe to meet face-to-face with this legendary investor in California, USA.
This hours-long dialogue covers nearly every aspect of an investment life—from his personal journey and corporate culture, to investment logic and views on parenting.
During this interview, Duan Yongping mentioned "mistakes" 10 times, "understand" 12 times, and "difficult" 29 times. Behind these words lies his consistent way of thinking: "Buying stocks is buying businesses." But as he noted during the interview, "Fewer than 1% of people truly understand this statement."
The interview was conducted on October 16, 2025. Below is the full, unedited transcript.
Key Quotes
On Investment Core Principles
"Buying stocks is buying companies."
"Investing is simple, but not easy."
"You must look at the company, you must understand the business, and you must understand future cash flows."
"Most companies are hard to understand."
"Buffett’s margin of safety isn’t about cheapness—it’s about how well you understand the company."
"Cheap things can get even cheaper."
On Understanding vs. Not Understanding
"Understanding or not understanding is actually a gray area."
"Not understanding doesn’t mean you can’t make money."
"If just 1% of people truly understood 'buying stocks is buying companies,' that would be impressive. Actually doing it is even harder."
On Rationality and Position Holding
"If you’re unhappy, you’ll leave immediately—otherwise, it doesn’t make logical sense."
"If I had only so much money, I might really have sold."
"Staying rational is very difficult."
"The probability of making mistakes is roughly the same for everyone; the difference is some don’t persist in their errors."
"Over thirty years, the difference comes down to fewer mistakes."
On Evaluating Companies
"Understanding the business is crucial. Without it, investing is very hard."
"Since I came from running businesses, I find it relatively easier to understand others’ businesses, though I still can't understand many."
"I feel I reasonably understand Apple, Tencent, and Moutai."
On Corporate Culture
"A good culture ultimately brings the company back on track, guided by a moral compass. It's not just about business—focusing only on business easily leads to mistakes."
"Companies with strong cultures do make mistakes, but they eventually return to the right path."
On the Wisdom of 'Not Doing'
"People care about what we’ve done, but a big reason we are who we are is because of what we haven’t done."
01
Personal Journey
Fang Sanwen: A user asked a rather random question: How do you spend an ordinary day, say today?
Duan Yongping: Playing ball, exercising.
Fang Sanwen: Every day like this?
Duan Yongping: More or less, at different golf courses.
Fang Sanwen: The only variables being the location and your playing partners?
Duan Yongping: Sometimes there are partners, sometimes not.
Fang Sanwen: A user named "Reading Master Lao Zhang" wants to know: What kind of environment did you grow up in? Does that upbringing relate to your current personality and achievements?
Duan Yongping: Hard to say. I was born in Nanchang. Around age six, my family was sent down to Anfu County in Jiangxi Province. We moved five or six times within rural areas before returning to Shigang near Nanchang. Yes, we suffered hardships. When I returned to Shigang, I entered middle school, then took the college entrance exam. After graduation, I was assigned to work in Beijing, worked for several years, then pursued a master's degree. Later, I went to Guangdong—to Foshan, Zhongshan, Dongguan—and finally settled in California.
Fang Sanwen: I think the user wants more detail—could you describe your family environment and how your parents educated you?
Duan Yongping: Honestly, these details aren’t particularly meaningful. What help does it give someone to know which river I caught fish in? I can't clearly explain it. I have an older brother and a younger sister—we all have different personalities. I’m not sure how much influence our parents really had.
But simply put, my parents were genuinely good to us, unlike many parents today who are overly competitive and push their kids around. My parents didn’t pressure me much—they didn’t micromanage, had few demands. So I felt relatively secure, able to make my own decisions. I’ve been used to making my own choices since childhood—I think this stems largely from my parents.
Fang Sanwen: You had full freedom—you see that as positive, right?
Duan Yongping: Yes, I think my parents deeply trusted their children.
Fang Sanwen: Now that you're a parent, do you treat your children the same way?
Duan Yongping: Yes. I won’t ask my kids to do things I wouldn’t do myself. If they want to play, I also wanted to play when I was young. But I’ve found my kids are quite self-disciplined—they do their homework, manage themselves. Setting boundaries is important—telling them what they absolutely cannot do. That’s critical. Not constantly scolding them. For children, providing security is essential—without it, rationality is hard to achieve.
Fang Sanwen: Set boundaries, offer full trust?
Duan Yongping: Exactly.
Fang Sanwen: Did you have any life goals during your childhood or youth?
Duan Yongping: I never had any real goals. I’ve always lacked ambition—I saw myself as an ordinary person. Living a decent life was enough.
Fang Sanwen: Could that itself be described as a goal—living well?
Duan Yongping: I didn’t even think that far. I wasn’t driven to accomplish something grand. I just did what I enjoyed, and was happy.
Fang Sanwen: During your childhood or teenage years, did anyone ever tell you that you were different from others?
Duan Yongping: I remember in middle school, a teacher said, “Duan Yongping, you can’t be like the others—just playing around, not studying.” I don’t know why he said that—he probably thought I was a good student, which I was. When I prepared for the college entrance exam, I studied hard and got in. Most people back then couldn’t enter college, so maybe he was right. Anyway, I didn’t disappoint him—I got into college.
Fang Sanwen: He must have seen stronger academic potential in you, hence higher expectations?
Duan Yongping: That’s odd—this was an English teacher, but my English was terrible. Why would he think I was academically capable? I was completely baffled. I only started learning English in college—didn’t study it at all in high school. Yet this English teacher said I was different from other kids. When someone tells you you’re different, you remember it.
Fang Sanwen: At least it served as encouragement.
Duan Yongping: I just remembered it. I didn’t think it was a big deal. If you hadn’t brought it up, I’d have forgotten. But now you mention it, I recall it.
Fang Sanwen: Your undergraduate major was engineering. Later you pursued graduate studies—supposedly in business. Did your interests shift during that time?
Duan Yongping: Not really. First, I should clarify—I didn’t study business. I studied econometrics, which is economics-based and actually quite technical—a highly logical discipline. After graduation, I was assigned to Beijing Electron Tube Factory. I helped out in the personnel department for over half a year, then moved to the education center, teaching adult education math for over two years. Eventually, I found it meaningless. When I got the chance to take the postgraduate entrance exam, I passed and entered Renmin University—partly to try something new. I wasn’t deeply interested in engineering. People explore, trying to find what they enjoy. I think RUC helped me.
Fang Sanwen: Do you think university education significantly impacted your later life?
Duan Yongping: In university, I mainly learned how to learn—developed a method and built confidence that I could master unfamiliar subjects. This reduces fear about the future—otherwise, you’d fear everything. I’ve met people who can’t even type on a smartphone—that seems strange to me. I couldn’t type either, but quickly learned. I developed a habit of learning. Graduate school was like switching careers—gaining new knowledge, slightly broader perspectives. But most importantly, it got me out of where I was. Back then, as poor students, we couldn’t afford to travel. Going to grad school, getting a new job—throughout, I kept learning, though endured many hardships.
Fang Sanwen: So specific knowledge learned may not have been that important?
Duan Yongping: Method and attitude mattered somewhat. Confidence in your ability to learn is key. It stops you from fearing the unknown—you think, “I can learn this,” not panic. Many people are fearful. I tried teaching my mom to use an iPad—started 20 years ago. She’ll never learn now—she’s 100. Even at 70 or 80, she refused—convinced she couldn’t learn. But it’s simple—has nothing to do with age.
Fang Sanwen: After graduate school, you moved south to Guangdong. How did you decide that?
Duan Yongping: I could’ve stayed in Beijing—two organizations wanted to hire me. Then, a Guangdong company recruiting in Zhongguancun happened to need staff, so I joined. But it wasn’t ideal, so I later switched to Zhongshan.
Fang Sanwen: Could moving south be seen as chasing market opportunities?
Duan Yongping: Not really. We were out of options—no other paths. Just trying something. I was young—trying was better than nothing. I have a habit—if something feels wrong, I leave quickly. Beijing didn’t suit me—I felt uncomfortable. I didn’t know about Guangdong, but staying somewhere I disliked made no sense, so I left. I once considered Hainan, but after researching, decided Guangdong was better.
So if your decisions are based on long-term vision—what you truly want for your future—the likelihood of error decreases. Many asked, “What about retirement in Guangdong?” I replied, “At my age, why worry about retirement? I need to go see the world.” Some might say I was lucky to choose right. Actually, many decisions stemmed from discomfort with the environment—forcing me to leave. Even my first job in Guangdong—I left after three months. I chose the right path but entered the wrong door, so I left again. Then in Zhongshan, I built Xiaobawang. It succeeded brilliantly, but due to structural issues, I felt it was unsuitable, so I left again.
Fang Sanwen: Could you elaborate on those structural issues?
Duan Yongping: Initially, we were promised equity—starting with a 70-30 split, then changed to 80-20, later 90-10. I recruited people, making commitments to my team, but realized I couldn’t fulfill them—eventually, even the 90-10 would vanish. By 1994–1995, I knew it wouldn’t work, so I quit.
Fang Sanwen: “Quitting” likely involved two aspects: wanting equity incentives, and desiring a sound contractual relationship with him?
Duan Yongping: It wasn’t about having equity incentives—initially we did. Without contracts, you become untrustworthy—everything you say loses credibility. After one or two broken promises, will there be a third? Like scratching a bottle cap—if you reveal “Thank,” do you keep scratching? Once you see one character, you stop. That’s when I knew I couldn’t stay. Thirty years ago, I left Xiaobawang and founded BBK in Dongguan.
Fang Sanwen: When founding BBK, did you clearly resolve similar Xiaobawang-type issues?
Duan Yongping: Xiaobawang’s problem wasn’t lacking an equity system, but failing to honor commitments. We avoided that from the start. We were transparent—cooperation remained smooth. We meant what we said, building high mutual trust. I believe the original boss later regretted it.
Fang Sanwen: Looking back, could Xiaobawang have achieved an ideal governance structure under its original setup?
Duan Yongping: I don’t know how to answer. It didn’t happen. I can’t speculate on ideals—that wasn’t my issue, but theirs. I didn’t leave for financial reasons—I already earned well, was financially free. Profit sharing existed, but its future was uncertain. Could they establish equity? Could the mechanism ensure protection? Some companies treat shareholder dividends as favors—that makes no sense. Dividends belong to shareholders; employee bonuses belong to employees. When someone says “Thank you, boss” upon receiving a bonus, I say that’s inappropriate—it’s contractually owed, no thanks needed. Though casually saying thanks feels natural, the sentiment is misplaced.
Fang Sanwen: When founding BBK, did you consciously create a corporate culture you liked?
Duan Yongping: Corporate culture heavily depends on founders—finding people who share your values. Our culture formed organically—those aligned stayed; others gradually left. I didn’t write a cultural manifesto upfront for strict adherence. Our culture evolved continuously—even our “Don’t Do” list grew over time. Knowing what not to do came from painful lessons—we stopped, learned. After I stepped down as CEO over 20 years ago, the company transformed dramatically—it’s now incredibly strong. Back then, we were small, yet still impressive—Xiaobawang was already powerful.
Fang Sanwen: Since this culture evolved over decades, can you summarize it briefly?
Duan Yongping: We emphasize integrity, customer orientation, staying grounded. Our principles are plain-spoken. Our vision is “healthier, longer-lasting”—we avoid anything unhealthy or unsustainable. It’s common sense.
Fang Sanwen: A user claims you conceived the “integrity” culture in your junior year of college—is that true?
Duan Yongping: In my third year, I偶然 read Peter Drucker’s phrase: “Do the right things, and do things right.” It deeply impacted me—suddenly clarified right versus wrong. Realizing this saves countless future troubles. In company discussions about whether a venture is profitable, we ask: “Is this the right thing to do?” If it feels wrong, we easily stop. If focused only on profit, complexity arises—many outcomes are unpredictable. But knowing something is wrong often comes early. Of course, some things only become clear later—no problem, just don’t repeat them.
Let me give a simple example: We don’t do OEM manufacturing. It’s not a principle—OEM can be profitable—but we’re not good at it. Once Guo Tai-ming asked me why. I said we have a “Don’t Do” list. Example? “We don’t do OEM.” “Why?” I replied, “If I do OEM, I can’t beat you, right?” He agreed. But we excel in branding—our company isn’t smaller. Not that OEM is bad—just unsuitable for us, so we stop. Anyone requesting OEM gets a simple answer: No.
Fang Sanwen: So you prioritize ethical values, then operational methodology?
Duan Yongping: Yes. Learning has costs and curves—you’ll make mistakes. While doing the right things and executing them properly, mistakes are acceptable. But consequences from knowingly doing wrong things are unforgivable—why do them? If unaware initially, avoid repeating. Accumulated over decades, fewer mistakes, no stagnation.
Fang Sanwen: A user called “Learning Machine” asks: Are people with shared values primarily cultivated or selected?
Duan Yongping: Selected.
Fang Sanwen: Within BBK, were top talents recognized immediately, or did they develop over time through immersion?
Duan Yongping: Most are like me—ordinary. Shared values matter, along with university education and decent learning ability. Everything else accumulates gradually. But value alignment is crucial—without it, cooperation fails. Everyone pursuing personal agendas causes problems. Returning for our 30th anniversary, many longtime colleagues attended—even retired ones, some still working.
Fang Sanwen: According to you, doing the right things and finding the right people—which is more important, selection or cultivation?
Duan Yongping: Finding the right people takes time. Two types: those fundamentally wrong, gradually eliminated; and those with mixed traits—who, aligning with your culture, eventually follow. We distinguish “like-minded companions” from “temporary associates.” The latter may lack clarity but comply: “You tell me to do it, so I do.” They occasionally slip but recover. Longtime associates gain such opportunities—our agents over the years are solid, strongly aligned culturally.
02
Talking Business Operations
Fang Sanwen: Another specific business question: For the BBK ecosystem, a major shift occurred—moving from earlier electronics and feature phones to smartphones. This was a huge change. Weren’t you initially against this decision?
Duan Yongping: Yes.
Fang Sanwen: How did you eventually support it?
Duan Yongping: Because they were CEOs—my approval didn’t affect their decisions. We were desperate. Our phone business reached national #1 within one or two years. But the market seemed stagnant, then smartphones emerged. Shen Wei believed we should enter smartphones. I doubted we could beat Panasonic, Sony, Motorola.
Fang Sanwen: This was during the feature phone era?
Duan Yongping: Feature phone era. But he convinced me: “Phones are highly personalized.” I’d assumed they were like appliances—larger competitors would dominate. He argued that if phones are personalized, we could differentiate, do things differently, potentially outperform in certain areas. Plus, we had extensive business experience. Our company policy is clear: Regardless of my opposition, CEOs make their own decisions and bear the results. They can’t say, “Duan opposed it, so I didn’t act—I’m not responsible.” I’m merely an advisor. Many misunderstand, thinking I’m the boss. I haven’t been for years—even as CEO, I rarely intervened, always empowered them. Succession was smooth—delegation requires long preparation.
Fang Sanwen: Was shifting from feature phones to smartphones an even bigger decision?
Duan Yongping: Not really a decision—more forced by circumstances. Feature phones became unsellable—we nearly died. Despite excelling at feature phones, smartphones arrived fiercely, instantly capturing most of the market. We held excess inventory. At our 30th anniversary, we reflected gratefully—we survived. I visited specifically—material stockpiles consumed cash rapidly. I recall our balance showing 7–8 billion RMB, sharply declining, nearly bottoming out—then recovering. Smartphones launched—one or two generations—revived us. From 2012 to 2013, we lost significant money. I returned and said: If we collapse, let it not be ugly—I’d seen others fail messily. Suppliers and employees shouldn’t suffer. I said this confidently—my investments remained untouched, like a reserve force, never deployed, fortunately unnecessary. My teammates truly performed admirably.
Fang Sanwen: Transitioning from feature phones to smartphones posed a greater crisis than shifting from telephones to phones?
Duan Yongping: Due to scale, we erred—insufficient sensitivity. Though experienced, we suffered substantial losses. We’d made similar mistakes before, but smaller scale, recovered quickly.
Fang Sanwen: Didn’t expect sales to drop so severely?
Duan Yongping: No. The decline was too fast. Past experience suggested gradual decrease. We were developing smartphones, aware of trends, but still placed large feature phone orders—assuming a transition period. Unexpectedly, it vanished overnight—like today’s AI.
Fang Sanwen: New technologies driving products spread faster than anticipated?
Duan Yongping: You could say that. Mainly, the new product was genuinely superior—completely replaced old ones. With smartphones, countless items disappeared: cameras, our electronic dictionaries, language labs, learning machines—all replaced by phones.
Fang Sanwen: Smartphones are now a massive industry. Recalling my experiences, I saw Motorola’s 6188—already resembling a smartphone. Later, Nokia’s E71—also a prototype?
Duan Yongping: It was “dumb-smart.” I vividly remember getting one—excited at first, but found it frustratingly weak. We were used to Nokia’s interface—this completely changed it. I couldn’t operate it. As an engineer, struggling for ages—Nokia’s eventual downfall wasn’t surprising. Their culture was clearly rotten.
Fang Sanwen: Still, they took a step forward—though unsuccessful. Can we interpret that some within the company correctly perceived industry and product trends?
Duan Yongping: Product trends were visible to all. The issue was cultural.
Fang Sanwen: Lack of capability?
Duan Yongping: They prioritized market share, focused on business, neglected users—causing massive misses. They missed again. When Android emerged, Google approached them, hoping Nokia would adopt Android. They refused, clinging to their own system—ultimately sealing their fate. Unavoidable.
Fang Sanwen: Motorola and Nokia were once highly renowned, experienced in management?
Duan Yongping: Management can’t save a company flawed strategically or culturally.
Fang Sanwen: I recall you once admired Panasonic’s management. Has that view changed?
Duan Yongping: Panasonic remains impressive, but Japanese corporate culture is hard to grasp. I once sought collaboration with Panasonic on phones. Chen Mingyong and I visited—meeting managers, directors, finally President Nakamura. They asked our purpose. I explained: We lacked full confidence—in technology, funding sources, future uncertainties. Partnering with a larger firm might increase chances. I told them: With our capabilities, cooperation could reach top three in China within two years, top two within three—highly plausible.
Yet no one asked, “Why do you believe that?” Leaving Panasonic, I realized they didn’t trust us. Panasonic was bureaucratic. Even meeting the president, he said, “When I make decisions, I consider what Mr. Matsushita would have thought.” I thought, “We’re doomed—Mr. Matsushita is long gone.”
Jobs told Tim Cook: “As CEO, you make decisions—don’t think about what I’d do.” That’s correct. I tell my team the same: They are CEOs—don’t wonder what Duan would do. If they did, we’d have failed long ago. So Panasonic’s culture was clearly problematic.
Fang Sanwen: Perhaps they valued past systems and achievements too highly?
Duan Yongping: I don’t know. I didn’t investigate—just felt their approach was wrong. Especially when a CEO says he considers the founder’s perspective while deciding—I saw heavy baggage. Your eyes should focus on users, not rearview mirrors. Given enough time, problems inevitably arise.
Fang Sanwen: Based on your description, you established strong delegation early—empowering partners to decide independently, exiting early. This management style seems uncommon among entrepreneurs?
Duan Yongping: What does that have to do with me? I’m not a typical entrepreneur. I don’t care what others do—I want to play golf; if others want to play, they can. Mostly, they perform better than I would. I’ve done what I needed—now enjoy other pursuits. Why stay? Crucially, I deeply trust them—and不怕 their mistakes.
Fang Sanwen: But many entrepreneurs prefer staying on the front lines?
Duan Yongping: That’s irrelevant—I don’t care what they think.
Fang Sanwen: A user named “Walking by the Roadside” asks: How can a founder determine when conditions are ripe to leave the company?
Duan Yongping: When he feels ready, he can leave. But it’s difficult—few achieve this. Why difficult? Because he doesn’t want to. If he truly wanted, he’d find a way. This isn’t debatable—I see no point discussing it. Some love their work; I prefer letting my teammates handle it. It’s a choice. Don’t expect to envy my lifestyle while insisting on working—you can’t have both. Some genuinely enjoy work—I truly don’t.
Fang Sanwen: On one hand, dedication and continuous work seem admirable qualities. Yet we can’t deny that with age, abilities decline. Overall, should we acknowledge that contributions to a company—even by founders—are阶段性?
Duan Yongping: I don’t agree with that framing. It makes no sense. Buffett, at over 90, performed well until recently retiring. Why retire? Maybe health declined. Two years ago, I met him—he personally toured us around the office, walking over 50 minutes with a group. He seemed fine then—recently unsure, but his shareholder meetings still appear OK. Perhaps he felt it was time to pass the baton. Buffett is a classic case—he loves the work, so continued.
Why retire solely due to age? Age isn’t necessarily a barrier. But self-assessment matters—if you forget everything, make hazy decisions, obviously unfit. If it’s your company, you can stay—others have no say. Even as CEO, my team already had great autonomy—handing over was natural. I rarely stayed in the office—either playing golf, or going to play golf.
03
Talking Investing
Fang Sanwen: A user named “One White” asks: What prompted your first encounter with stock investing?
Duan Yongping: Did it need a trigger? Stocks are everywhere. After retirement, moving here, I couldn’t play golf 24/7, nor seek a job. I thought investing related to business—so I researched, bought many books—charts, technical analysis—couldn’t understand. As an engineering graduate, how could I not grasp these charts—yet others derived conclusions? Then I read Buffett—actually read nothing specific, just “Buying stocks is buying businesses.” That single sentence suddenly made sense—enough. Everything else—evaluating companies—Buffett couldn’t teach. Without understanding businesses, no theory helps. But coming from business, understanding others’ ventures was relatively easier—though I still couldn’t understand many. Over the years, only a few. Understanding business is vital—without it, investing is extremely difficult.
Fang Sanwen: If summarizing your investment philosophy in one sentence—would it be “Buying stocks is buying businesses”?
Duan Yongping: Yes. But the follow-up: You must understand the company—very difficult. Why is investing simple but not easy? Simple: Focus on the company, understand the business, assess future cash flows. Difficult: Achieving this is hard—most companies are tough to understand.
Fang Sanwen: I recall Buffett or Munger saying: If you had a lifetime punch card with only 20 holes, would yours be used up?
Duan Yongping: Probably not.
Fang Sanwen: Out of 20 holes, roughly how many have you used?
Duan Yongping: I can count. Major investments: Early on, NetEase, then Yahoo—investing in Yahoo was essentially betting on Alibaba. Then roughly Apple. Berkshire Hathaway isn’t a large portion—Apple is bigger. Moutai is also substantial. Tencent—I still hold. General Electric—briefly invested during the 2008 crisis—can’t recall the weight. After they changed CEOs, I exited quickly. By today’s standards, I wouldn’t invest in GE—its business model isn’t good. I wasn’t as skilled then.
Fang Sanwen: Let’s count the holes—does Google count as one?
Duan Yongping: Not really—I never made a significant bet on Google.
Fang Sanwen: Pinduoduo?
Duan Yongping: Pinduoduo counts. It’s special—I invested early, during startup phase. My stake was small, profits large. Strictly speaking, it doesn’t count—I didn’t invest from deep understanding, more stumbled into it.
Fang Sanwen: If no more come to mind, sounds like fewer than 10 holes used.
Duan Yongping: Roughly—nearly 10. So I still have room for investment—need to fill 20.
Fang Sanwen: Among global public market investors, few might claim unused capacity in a 20-hole limit?
Duan Yongping: Unknown—depends on definition. Reaching 20 holes—some never do, never holding concentrated positions—maximum 5%. Even famous investors—e.g., Peter Lynch—handled over 2,000 stocks, must’ve been busy, hair turned white early, retired sooner than me. Not sure if he still invests—probably does privately. I’ve touched many stocks—bought Shenhua. I currently hold Shenhua, just small weight. Moutai—larger weight. Generally, I say I hold three: Apple, Tencent, Moutai—pretty accurate.
Fang Sanwen: So conclusion—20 holes not yet filled?
Duan Yongping: Depends on hole definition. Buffett touched more than 20 stocks, but truly concentrated holdings were few.
Fang Sanwen: Any hole you regret—unsatisfactory?
Duan Yongping: Impossible—because if unsatisfied, you exit immediately. Otherwise, logically inconsistent—holding something you dislike. Unlike children—you dislike but must keep. Stocks—you vote with your feet.
Fang Sanwen: Let’s delve deeper. You said grasping “buying stocks is buying businesses” is easy, but understanding specific companies is hard?
Duan Yongping: Understanding the concept isn’t easy—truly comprehending this sentence is very difficult. On Xueqiu, if 1% of users truly understand this, that’s remarkable. Acting on it is even harder. But those who don’t understand can still profit.
Fang Sanwen: Not necessarily misunderstanding—perhaps interpreting differently?
Duan Yongping: Exactly. Once you understand, market fluctuations won’t sway you. If you constantly monitor markets, daily movements, past performance—even prominent influencers—I see many obsessively discussing markets, proving they don’t understand. When do I discuss markets? Have I ever posted on Xueqiu: “Will rise today,” “Fall tomorrow”? But not understanding doesn’t mean no profit. Investing is interesting—blindly buy a stock, hold it: 50 out of 100 people profit. Those 50 can then speak. But replicating success isn’t easy. I can teach a profitable method: Buy S&P 500 index—eventually profit. Doesn’t mean you understand, but acting so implies understanding.
Fang Sanwen: Understanding companies is hard—how confirm you understand one? Take NetEase—how did you confirm understanding?
Duan Yongping: I came from gaming—chatted with their game team, sensed genuine passion and seriousness—first point. Second, the business model made sense. Plus, their cash exceeded market cap. Like a VC, entry was simple. Combined with timing—stock crashed, panic selling, everyone thought they’d collapse. I saw high probability of profit. Had spare cash—went all-in on NetEase. Six months—20x return.
Did I truly understand? If I did, I’d have bought the entire company. What “understanding” means—I’m unsure. But generally felt they could profit—investment risk wasn’t exceptionally high. Why hold so long, sell only after massive gains? Those profits weren’t huge for me—enabled rational decisions. If that were my entire wealth, I might’ve sold—maintaining rationality is difficult.
Fang Sanwen: Judging NetEase involved two parts: assessment of gaming’s profitability?
Duan Yongping: Naturally—I came from gaming, understand games well.
Fang Sanwen: Second, valuation—stock price low, possibly below net cash. Isn’t this Buffett’s margin of safety?
Duan Yongping: Buffett’s margin of safety isn’t this—safety lies in your understanding of the company. Not cheapness—cheap things can get cheaper. Then, I sensed profit potential, but didn’t know how much. Had I known today’s profits, I’d buy more later, never sell. I did sell—proving I didn’t fully understand.
Fang Sanwen: Per your view, understanding vs. not understanding exists in a gray zone—not a clear standard?
Duan Yongping: Unclear. But those constantly asking others clearly don’t understand. Those not asking—possibly in the gray zone. I profited over 100x—am I considered understanding? Selling had reasons—valid reasons. Didn’t lose much—had other excellent investments.
Fang Sanwen: Another holding—Apple. User “Lilian78” asks: 15 years ago, Apple was hardware-focused; now half profits from software. Business model evolved. Did you anticipate this when investing?
Duan Yongping: I bought in 2011—by then, already clear.
Fang Sanwen: Could you foresee platform/software services generating more profits?
Duan Yongping: I’m in this industry—of course I knew. Not prediction—visible reality.
Fang Sanwen: Fish in a barrel?
Duan Yongping: Not quite, but at least an elephant nearby—we’re in this business, naturally see it.
Fang Sanwen: You also assessed Apple’s corporate culture?
Duan Yongping: Yes—excellent culture.
Fang Sanwen: Why consider their culture strong?
Duan Yongping: Strong customer orientation—not business-driven. Deeply committed to quality, user experience, continuous improvement, long-term thinking. Won’t pursue hot products lacking user value. We debated—would Apple release large screens? I insisted they would, waited three years. How did I know?
Fang Sanwen: Large screens meet user demand.
Duan Yongping: Exactly—we in the industry already had large screens. Knew users wanted them—surprised they resisted three years.
Fang Sanwen: I was also puzzled.
Duan Yongping: Never puzzled—I knew they erred. Tim Cook made a huge mistake—similar to Nakamura. Jobs declared it best—so they scorned alternatives. They researched—lab had all large-screen prototypes—but delayed launch. Possibly deemed performance insufficient—or other reasons—unknown. Eventually released.
Another example: Early plans for iTV—televisions. While golfing, they confidently told me they’d produce TVs—showed prototypes. I insisted they wouldn’t. Asked why—I said, “What can they do?” Told my team similarly—we made TVs, later canceled. Liu Zuohu revived, then canceled again. I asked: “Didn’t I warn you? Why attempt?” Chen Mingyong allowed testing—like I once allowed Chen. After testing, he agreed—product offered insufficient value.
Years ago, rumors swirled—Apple would launch cars, EVs. I insisted they wouldn’t. Many said impossible—they’re developing. I said they can’t—technical feasibility aside, what value could they add? A car—Apple’s contribution extremely limited. Pricing? Sufficient differentiation? This insight exceeds general understanding. If Apple truly launched cars, I’d be delighted—curious what they’d achieve. But I believe they can’t. Recently, met an Apple Store owner in New York—he revealed their store closed for a year, renovated for car sales—later reverted. “So you knew they wouldn’t sell cars,” I said. They knew at least one to two years prior—Apple never announced. Hearing this, they truly attempted cars—beyond my imagination, thought mere research. Exactly as I said—reflects their culture. When realizing products can’t sufficiently enhance user value, they abstain—not driven by business. If business-driven, they could build cars—likely excel. But their final direction—unknown. This reflects strong culture—though not unique.
Fang Sanwen: They may err—e.g., delaying large-screen phones three years, nearly launching cars?
Duan Yongping: Good culture ensures eventual return to the right path—guided by a moral compass defining core purpose. Not business-driven—focusing solely on business easily causes errors.
Fang Sanwen: Good culture doesn’t prevent errors, but increases correction likelihood compared to poor culture?
Duan Yongping: Error rates are similar—difference lies in persistence and “Don’t Do” lists. Over thirty years, we made fewer errors. As I wrote on Xueqiu: People focus on what we’ve done, but becoming who we are largely stems from what we haven’t done. Knowing something’s unsuitable, we refrain—fewer errors, higher chance of doing right things. Tiny differences accumulate—over thirty years, vast divergence.
Fang Sanwen: Current Apple valuation—your view?
Duan Yongping: Not cheap.
Fang Sanwen: So investment returns—low expectations?
Duan Yongping: Depends on opportunity cost. If bank interest offers slightly above 1%, buying Apple might still be better. But if alternative investments yield 10+%, perhaps unnecessary. Whether Apple develops further—I don’t know. But it remains strong—massive user base. Where will AI land? On phones. Apple doubling, tripling—possible. But not guaranteed—currently not cheap.
Fang Sanwen: You bought General Electric in 2008—later views changed. Shift mainly in business model or corporate culture?
Duan Yongping: Initially cultural—business model I never understood. But I liked their culture—“In changing times, integrity remains unchanged”—strong emphasis. Later, visiting their website, couldn’t find that statement. From then, decided to sell—felt they no longer emphasized it. Combined with opaque business model—excessive acquisitions. Initially influenced by Jack Welch—thought the company magical. Later realized no one’s magical.
Fang Sanwen: Did you also demystify Jack Welch?
Duan Yongping: Not exactly—don’t know him. Fortunately sold. Sold at ~$40B market cap—now possibly lower. Switching to Apple—huge difference. Held ~2–3 years, not long.
Fang Sanwen: But this trade still profited?
Duan Yongping: Mistakes sometimes profit—I consider it an error. Today, I wouldn’t buy.
Fang Sanwen: Even profiting, can’t deny it was a mistake?
Duan Yongping: Obviously a mistake—violates my later-established filters: business model and corporate culture alignment.
Fang Sanwen: You currently hold Occidental Petroleum—copying Buffett’s move?
Duan Yongping: Yes—but historical context. Influenced by another friend, I bought oil & gas index—then extremely depressed, unlikely to sustain. Asked: How correlated with actual oil prices? Said 99%. Thought great—bought long-term. Later re-asked: What correlation? Daily. Realized disaster—daily 99% differs vastly. Couldn’t hold long—time decay severe—sold. Invested ~$100M USD—lost >$10M.
Wrong actions require immediate correction—sold all, lost >$10M. But lingering sentiment—oil is indeed problematic. Seeing Buffett buy Occidental—thought: Interesting way to invest in oil—owning an oil field underground—immune to time decay. Bought small position—hold ~20 years. Oil won’t stay this cheap. Don’t deeply understand oil—small allocation. But Xueqiu users take my words seriously. Following 100%—your responsibility. My stake is tiny.
Fang Sanwen: Many users recognize limited company understanding. But trust others’ insights—“copying homework.” Is copying sustainable?
Duan Yongping: Difficult—lagging inherently. Copying Buffett—fine, his moves transparent. Copying me? I don’t disclose holdings—weights unknown. Can’t match allocations. I might buy to force deeper research—you blindly follow—All In—wrong. Very difficult. Without understanding businesses, best avoid. I’m conservative—only bought Moutai in A-shares.
Fang Sanwen: Is buying index better than copying homework?
Duan Yongping: Must specify index—many exist, not all suitable. Buffett’s index refers to S&P 500—not all indices. Nasdaq 100 also viable.
Fang Sanwen: User “Charming IPO Sandstorm” asks: What reasoning led you to invest in Nvidia—an apparently highly volatile industry?
Duan Yongping: Initially thought highly volatile—later recognized strength—ecosystem robust. Compare Nvidia’s OpenAI partnership with AMD’s—reveals Nvidia’s dominance. Nvidia invests $100B, provides chips, takes equity. AMD offers chips, gives equity begging for adoption. Everyone seeks alternatives—fearing Nvidia’s monopoly, high costs. In AI arms race, all must buy chips. Desperately hope another emerges—once semiconductors commoditize, prices plummet. But impossible—Nvidia truly exceptional. Watched Huang Renxun’s videos—admire him. His messages—ten years ago vs. today—identical. Saw the future, consistently pursued. Now, his current statements likely reflect future conviction—so I’ll invest modestly. AI—must participate. Complete omission—unwise.
Fang Sanwen: You see AI as genuine demand. For companies like Nvidia, is competitiveness sustainable?
Duan Yongping: Currently believe so.
Fang Sanwen: If commoditized, non-sustainable—wouldn’t consider investing?
Duan Yongping: Definitely not. Previously thought semiconductors too hard—never lost money on Intel—never touched. Also skipped Nvidia—key reason. Saw early, ignored—assumed temporary hype. Now realize not hype—close attention reveals fascinating company.
Fang Sanwen: Might you also be interested in companies like TSMC?
Duan Yongping: Knew TSMC long ago. Originally sourced chips from UMC—TSMC doesn’t supply directly—pure-play foundry. Over 30 years ago, told UMC: “You can’t beat TSMC—focused solely on foundry. UMC does foundry, owns chips, develops various products—you’ll lose long-term.” Sadly accurate—TSMC vs. UMC—worlds apart. UMC’s foundry shows no particular strength—now unheard of, unknown activities.
Knew them long ago—just didn’t understand the industry. Assumed asset-heavy—difficult. But semiconductor AI boom—seems unavoidable—TSMC dominates all. Previously dealt with Samsung, IBM, Intel—all now turn to TSMC for foundry. Intriguing—bought some. Recently prices soared—absurd? But not excessively expensive—if future unfolds as Huang Renxun describes, current pricing justified.
Fang Sanwen: Hence, your stakes in these companies remain limited?
Duan Yongping: Not like Apple. At peak, Apple allocation reached 90%—kept buying, buying, buying—dipped, bought more. Now sold some—writing calls, etc.—when called away, so be it—can buy others.
Fang Sanwen: Extending from Nvidia and TSMC—business innovation, especially tech progress, creates new ventures, uncovers new demands. Destroys old industries. Innovation demands high capability, sometimes luck—innovators are fortunate winners. Other companies operate in stable, low-innovation sectors. Between these, which do you prefer?
Duan Yongping: Prefer what I understand—where future earnings match my opportunity cost. I bought Moutai. Moutai thrives unchanged—fear new CEOs altering it. So far, fine—core principles preserved. Don’t change 53° Feitian—state-owned enterprises benefit here. Heard民营企业 like Lao Gan Ma—rumored son altered formula—true or false? Unknown. Such changes unthinkable at Moutai—dangerous. Why change if successful? Innovation responds to user needs—change if needed, else don’t. Tech must innovate—new offerings satisfy growing demands—stagnation means death. Moutai’s flavor is established—changing it is insane—should never happen. Coca-Cola alters flavors slightly—but retains original—adds variants for health or other reasons.
Fang Sanwen: From understanding perspective—harder to grasp innovative companies?
Duan Yongping: Understanding Moutai isn’t easy either. Many don’t understand Moutai—many don’t understand Apple. Don’t understand Nvidia—didn’t understand Google—always liked Google, but unclear. Now slightly understand. But now worried—how much will AI replace search? ChatGPT, Gemini—how much search displaced? Unknown. Overall, still good company—recently bought more.
Fang Sanwen: Understanding stability vs. innovation—both difficult?
Duan Yongping: Naturally—understanding anything is hard. But not as hard as golf.
Fang Sanwen: Your views on Tesla—changed over years?
Duan Yongping: No fundamental change. Elon Musk impressive—many advanced ideas. But investing difficult—personally, dislike his character. Investing means befriending him—I wouldn’t, even for money. Don’t particularly like it—but acknowledge his brilliance.
Fang Sanwen: His business model?
Duan Yongping: EV business won’t be great—exhausting, minimal differentiation. But Tesla achieved differentiation. Most EV businesses will struggle—Tesla overall performs well—few models, singular focus, massive volume—lower relative costs—likely profitable.
Wrote about Tesla early on blog—initially loved it—license plate reads “We Love Tesla.” Later, observing Musk’s behavior—grew disliking. After buying their car—service, various aspects—many dissatisfactions—sold stocks. Wrong decision—should’ve held. But truly difficult. Don’t particularly like him—but respect. Achieved remarkable feats—especially SpaceX—extremely impressive. Starlink also amazing. EVs—uncertain—“meh.” Don’t particularly like Tesla cars—but am a Starlink customer. SpaceX—undoubtedly impressive. Musk is extraordinary—no doubt surpasses me greatly. Doesn’t mean I must like him.
Fang Sanwen: Buffett says don’t invest in four-wheeled businesses. Will EVs or current autonomous driving change the essence of four-wheeled businesses?
Duan Yongping: Difficult. EVs simpler than gasoline cars—single motor, flexible shapes. Price competition inevitable. If reduced to one or two brands, might tacitly collude—still profit. Autonomous driving—if everyone develops independently—exhausting. Unknown—outside industry. Possibly, all adopt Google’s solution or a few providers—eventually commoditized—similar offerings—average profits. Not unprofitable—lacking strong differentiation, hard to achieve high margins.
Competition intensity unknown—eventually, survivors profit. Now, countless EV startups—like our old game console days—hundreds enter, few survive—
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