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Collection: Li Lu - #1 'How I Got Started In Value Investing?'


Video Link: https://youtu.be/qstRc5zbAmU


In this episode, Li Lu talks about his investment philosophy and how his focus on value evolves over time?


In this episode, you’ll learn:

  • What is value investing?

  • How Li Lu got started in value investing?

  • How does Li Lu's focus on value evolves over time?

To check out all Collection: Li Lu <click here>

 

[Transcript]

(Source: https://youtu.be/FiHrWy2jGbA)

LI LU 00:00

So the philosophy is that – it is, you know, relatively simple. The practice is really hard. So I wouldn’t say the philosophy really evolved all that much for me.


Before I got really exposed to value investing through Buffett’s lecture at Bruce Greenwald’s class, I think my whole approach to life was pretty much a set along similar lines and so there's not much of a jump for me.


The idea of buying something at a discount of something that is really worth more is simply intelligent. So I would assume most of all intelligent investing involves some kind of value investing. And now the difference is that your focus on value evolves over time and two different individuals they tend to focus on different areas of that.


For me, when I first started as a value investor, this is now 27-28 years ago when I bought my first stock. I didn’t really know much about business. I was born and raised in China during the Cultural Revolution. There was not much of a private business or market economy back then, so I had to learn everything new.


So at the beginning, obviously look for value primarily on the balance sheet in the classic style of Benjamin Graham, looking for a cigarette-butt, looking for the last puff basically. Looking for a statistically cheap businesses and ignore what the business really is. And that served me well.


Then over time, I evolved into understanding smaller businesses because I was just intensively curious about how business run. So much so, actually I evolved to help funding or co-created a dozen or so early-stage startup companies. And that experience has taught me a lot about how business is run, what constitutes a good or bad or mediocre businesses.


And so over time I evolved into looking for really good businesses, small maybe, but really good businesses. And then that leads me to look for good businesses in Asia, and eventually for businesses with an enduring competitive advantage with a long growth trajectory ahead of it.


And so the places where we’re looking for value evolves over time, but the basic philosophy I have pretty much remained the same. It’s just our core competence expanded over time.

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