James Ng

Buffett put forward this kind of advice to investors: “Successful investors sometimes need to do something differently.” In Buffett’s portfolio, he changed the traditional method of calculating investment risk based on beta, and gave up the history of price changes. He is more concerned about the business-related information of the company. Even if the market stalls for a long time, Buffett will not be uneasy. For See's and H.H Brown, who have a 100% stake, he will not be around the market all day, trying every means to grasp market conditions. In recent years, the market share of Coca-Cola and Gillette’s razors has continued to grow. Their strong brand penetration, high-quality product features, and global sales network make them always have a strong, unparalleled market competitive advantage. If a competitor of the same kind of product wants to seize the market share, it is tantamount to hitting a stone with an egg and destroying itself. However, if traditional risk is used to calculate the risk of these companies, it is not difficult to find that the beta value of the stock is similar to other companies in the market that are slightly competitive or even not competitive. Therefore, in Buffett's view, beta value and investment risk are not equivalent concepts. The risk aversion theory generated by the beta value cannot distinguish the investment inherent risk.

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James Ng