A friend asked, can there be a Buffett among China's fund managers?

Simply being a fund manager makes it difficult to become a Buffett.

Buffett's Investment Experience

If we look at Buffett's investment experience, it can be divided into three stages.

▼Stage One: Wage EarnerThe first phase involved working for Graham's company as a teacher.

During this stage, Buffett was akin to a laborer, working while accumulating investment experience.

▼ Phase Two: Fund Manager & Fund Company Owner

Later, when Graham retired, Buffett also acquired some clients from his mentor and established his own partnership firm, similar to a private equity fund.

Buffett was both the fund manager and the owner of the fund company.

This marked Buffett's second phase.The main clients are one's own relatives and friends, as well as some clients recommended by teachers.

Some public fund managers in China who switch to private funds are similar.

**Stage Three: Controlling Berkshire Hathaway**

By the end of the 1960s, Buffett liquidated his partnership fund.

At this time, Buffett had personal wealth of over 25 million US dollars. With this wealth, he gained control of the company Berkshire Hathaway.

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Using this company as a platform, he invested in many other companies, including both publicly traded and privately held ones, thus beginning Buffett's legendary investment career.

This is Buffett's third stage, which continues to this day.The familiar Berkshire Hathaway shareholder letters by Warren Buffett, also known as the third phase of Buffett, are the annual letters written by Buffett to the shareholders as the chairman of Berkshire Hathaway.

Mismatch between investment strategy and capital duration

What's the difference between the second and third phases when both involve being the boss?

In fact, the difference is quite significant.

If it were the second phase, Buffett would be in the role of a fund manager, needing to serve clients.If customer communication and service are inadequate, investors can redeem their funds.

In such cases, if the fund manager sees a good investment opportunity but lacks sufficient funds, it can be quite awkward.

Similar situations are not uncommon.

Let me give two examples.

(1) A few years ago, there were both 300 Value and 300 Growth index funds in the market.

From 2016 to 2018, the value style was relatively strong, while the growth style underperformed the market for three consecutive years.In 2018, during the most depressed period for the growth style, the 300 Growth Fund was redeemed by investors, leading to a scale that was too small, which resulted in liquidation.

However, in the following two years, 2019-2020, the growth style significantly outperformed the value style for two consecutive years.

Customers who redeemed the 300 Growth Index Fund at the bottom fell before the dawn.

(2) Is the value style smooth sailing then?

Not necessarily.

From 2019 to 2020, the growth style outperformed the broad market significantly for two consecutive years.Deep value style funds are shunned by investors.

Funds such as the CSI Dividend and 300 Value are questioned by investors.

There is a veteran fund manager with a deep value style, whose managed fund has been redeemed by investors by 90%.

It almost ended up like the 300 Growth of that year.

However, from 2021 to 2022, the deep value style began to turn around.

The dividend index took the lead in rising, and the 300 Value has also started to gain momentum in the recent year.

Every asset class has phases of good and poor performance.When a particular variety underperforms and is temporarily weaker than the market, often at this time the investment value is quite good.

However, investors may redeem due to short-term performance.

Buffett's Key to Long-Term Investment

Buffett also encountered a similar situation.

But Buffett was smart and solved the problem in another way.

(1) Buffett dissolved the fund company and acquired Berkshire Hathaway.

Berkshire Hathaway serves as a platform to invest in the varieties that Buffett is optimistic about.(2) Previously, Buffett's clients,

- If they continue to have confidence in Buffett, they can become shareholders of Buffett.

- If they do not have confidence in Buffett, they can sell their shares in the secondary market to other investors who do.

At this point, no matter how clients buy or sell these shares, the funds in Buffett's hands will not decrease.

This way, Buffett's investments will not be shaken.

(3) If Buffett needs money for investment, he can sell Berkshire Hathaway shares or issue bonds through Berkshire Hathaway to raise funds.What if Berkshire Hathaway's stock price is very low?

Buffett has previously promised that if Berkshire Hathaway's price-to-book ratio is in a relatively undervalued area, Buffett would repurchase shares of Berkshire Hathaway.

This provides a strong support for Berkshire Hathaway's stock price.

This solves the problem of fund clients withdrawing investments when there are many investment opportunities at the bottom.

This is also the key to Buffett's ability to make long-term investments calmly.

Unity of purpose leads to victory.

Perhaps the fund manager is determined to invest for the long term, but the clients may not be.If fund managers cannot solve this problem, then long-term investment becomes a non-starter.

Of course, as individual investors, the advantage is that our own investments are determined by ourselves.

Other investors may chase gains and cut losses in the short term, but as long as we are not distracted, we can manage our own investments well.

United we stand, divided we fall.

As a fund manager, in a sense, the investment strategy must be matched with the investors.

A long-term investment strategy requires patient investors with a long-term perspective to achieve mutual success.

If the investment strategy is long-term, but the investor's funds are short-term, that is a disaster.It seems like your text was cut off before you could provide the content you'd like me to translate into English. Please provide the full text or content you need translated, and I'll be happy to assist you.