Maintaining a Calm Mind

01 How to Understand Integrity and a Calm Mind?

1. Ordinary people often find it difficult to maintain a calm mind.

2. It’s like playing golf. Investment and life are never perfect.

Good golfers and average golfers usually don’t show much difference most of the time. The only difference is whether they can consistently maintain a calm mind. No matter how good a golfer is, if they lose their calm, they will play poorly.

3. A calm mind means returning to the essence of things. It means striving to understand what the right thing to do is and recognizing the nature of things.

4. Integrity, in my understanding, is "doing the right thing and doing things right." Knowing something is wrong and still doing it is not integrity. Integrity is a great tool for self-examination.

5. I personally believe that only with a mindset of "not taking advantage of others" can there be a win-win situation. Therefore, "not taking advantage of others" has become part of integrity.

6. Integrity, as I understand it, means not doing things that lack integrity.

The so-called integrity mainly refers to values and within one's ability. How much money you earn is not decided by you; it’s given by the market. Man proposes, God disposes.

If you earn money with integrity, you will sleep well. Good health leads to a long life, and eventually, you will earn a lot of money. Most importantly, people who make money without integrity are not happy.

7. What is the right thing to do?

My understanding is that the right thing generally refers to principles and is often expressed by what is not the right thing to do. For example, lying is wrong.

So, doing the right thing often translates to not doing the wrong things in practice. For example, not doing things you don't understand.

8. Ordinary people who persist in doing the right things can achieve extraordinary results!

02 When You Can't Surpass Others, You Can Only Surpass Yourself

1. People often pay attention to us because of what we have done. But in reality, a large part of why we have become who we are is because of what we have not done.

2. The greatest success in life is to be a person with goals. All the joy lies in achieving this goal, not in getting a result.

3. I can’t think of a single piece of advice that can apply to everyone. If I had to say something, it would be “enjoy life,” because that is why we are here.

4. Many people forget what they truly want to do as they go along.

Really, don’t spend your entire life accumulating fame, power, or wealth without enjoying life.

One should first leisurely sweep their own house before sweeping the world.

5. People often mention financial freedom, and most seem to think it mainly depends on the amount of wealth, as if reaching a certain amount will make them free.

Personally, financial freedom doesn’t necessarily have much to do with how much wealth one has, especially for those who already have a lot.

My definition is: when you don’t do things you don’t want to do for money, you already have financial freedom.

Then you may find that many not-so-wealthy people are very happy because they are doing what they want to do.

Conversely, some very wealthy people are not very happy because they have to do many things they don’t want to do every day.

6. When someone looks back at their path, they often don’t understand it. Experience is something others summarize.

Starting a business is sometimes an impulse. Doing things is similarly an impulse; if you succeed due to an impulse, people will say it’s entrepreneurial spirit or risk-taking. But if you fail, people will say it was reckless or gambling.

7. If someone can not only achieve success but also sustain it, it must be due to their qualities.

A university president in the U.S. once said that the qualities of successful CEOs in Fortune 500 companies are integrity and honesty. Character is very important.

8. The longer the time, the smaller the role of luck.

9. Mistakes are inevitable, but staying within your circle of competence, focusing, and working hard can greatly reduce the chances of making mistakes.

10. When I encounter unsolvable problems, I play games. After all, everything passes with time.

11. I don’t think anyone is born insightful. The insightful people I’ve seen are generally very willing to be insightful and are used to thinking about the essence and the long term.

12. Zeng Guofan relied on perseverance in battles.

Zeng Guofan fought with perseverance and didn’t rely on cunning. He didn’t seek small gains or tricky strategies; he was practical and steady.

He said, "Fight battles steadily." He never fought unprepared or uncertain battles.

He spent a great deal of effort studying the situation of both sides, battle plans, logistics, and rescue plans for unfavorable situations. He considered every detail before deciding to fight.

In his interactions, Zeng Guofan was sincere and used perseverance.

He demanded of himself "not to boast or seek false fame," and preferred others to take advantage rather than himself. Even when others deceived him, he remained sincere and persevering.

Zeng Guofan’s wisdom was built on such perseverance and exhaustive thinking.

Indeed, “stupidity” to the extreme is “cleverness,” and “clumsiness” to the extreme becomes “skill.”

13. Chinese people need to adjust their mindset first, to be humble and learn to retreat.

Like a farmer coming to the city from the fields, they can only start as laborers. Only by being humble can they strive and succeed.

We must acknowledge our shortcomings compared to others and humbly learn good management practices and technologies.

Mindset is crucial. When you can’t surpass others, you can only surpass yourself, even if it’s just overcoming your narrow pride.

14. Great people don’t act overbearing, right? The arrogant ones I’ve met usually have deep insecurities.

15. Regardless of educational background, everyone understands something. And what you understand may someday reveal an opportunity. The opportunities I seized don’t seem to have much to do with education.

03 Maintain a Calm Mind in Life and Business

1. One must have a calm mind in life, and so must enterprises.

Often, the larger the enterprise, the harder it is to maintain a calm mind.

For a new enterprise, its sole goal is survival. When a small enterprise tries something, its opportunity cost is low. If it fails, it can try again with little loss.

However, when an enterprise reaches a certain scale, it becomes difficult for managers to maintain a calm mind because they have more choices and a wider range, increasing the likelihood of making mistakes.

Big enterprises compete by who makes fewer mistakes.

2. Have you seen any enterprise that died because of others? They all died from their own mistakes.

The evergreen enterprises in the world operate strictly by business rules.

In China, those who can truly stand on the world stage and grow strong are those entrepreneurs who operate strictly by business rules. It’s like only a ninth-dan player can play professional ninth-dan Go.

3. Jim Collins summarized in "Built to Last" that one of the traits of great companies is the "pursuit beyond profit." Jobs and Apple exemplified this trait perfectly.

A pursuit beyond profit makes it easier to see the essence of things, adhere to doing the right thing, and avoid straying due to short-term temptations.

If you are a manager with a pursuit beyond profit, you will find many ideas. But if not, no matter what others say, you will view it from a utilitarian perspective.

Supplement: Having a pursuit beyond profit is not a sufficient condition for a good enterprise, but such enterprises are more likely to become good ones over time.

4. What defines a "good company"?

A "good company" is one with principles, not solely profit-oriented; one that knows the right things to do (or what not to do) and pursues high efficiency in doing them.

Doing things right is a learning process. Everyone makes mistakes, and good companies are no exception.

5. Without a strong culture, there will be no great company.

6. Core competence is the ability of an enterprise to gain a long-term competitive advantage. It is unique to the enterprise, stands the test of time, is extensible, and is difficult for competitors to imitate.

Corporate culture defines what is right (or wrong) and how to do the right things right.

7. Integrity and honesty are common traits of all great enterprises and the biggest "leak" in troubled enterprises.

8. Only a few companies genuinely have a "consumer orientation" at their core and possess the ability to achieve it. These companies are often called "great companies."

9. "Maintaining integrity does not seek tricks" means maintaining integrity is not for seeking shortcuts.

Many people think of "winning through unusual strategies" when talking about "integrity with unusual tactics." Great companies' "unusual strategies" are mostly born out of perseverance, otherwise, they won't last long.

10. Running a business and investing are alike; avoiding mistakes is crucial. But avoiding mistakes is not achieved by being too cautious, which leads to stagnation. It’s achieved by consistently doing the right things.

Consistently doing the right things means stopping the wrong things immediately, no matter the cost. A "stop doing list" is important.

11. For a company, finding (or developing) products that can meet users' needs in the long term is doing the right thing. How to find them is about "doing things right."

12. It looks simple, but it’s very difficult to achieve. Sales frontline always demands more variety. Decision-makers need to face these demands with clarity.

13. Few enterprises can survive without innovation, but innovation must be consumer-oriented, not for the sake of being different.

Our company calls it differentiation, which means meeting unmet user needs. Of course, products that meet user needs and are provided by everyone should not be lacking. Blind innovation is dangerous, while consumer-oriented innovation is a critical basis for survival.

14. Developing products and markets often involves many varieties, good for attacking competitors from different angles but bad for inventory management and quality control.

A single variety requires great skill—making the product excellent. It’s tough. Because it’s tough, most prefer multiple varieties. Like investing, value investing is simple but not easy. Volatility is often more attractive.

04 Don't Let Important Things Become Urgent

1. Enterprises must first establish their core values and recruit people who fit these values.
2. Suitability is often more important than qualification.

Qualification refers to ability. Suitability refers to cultural fit.

Internally cultivated employees have strong suitability, while some externally recruited talents are highly qualified.

Suitability is hard to cultivate and takes a long time, sometimes to no avail. Qualification can mostly be improved through training.

Qualification can be improved through training, but suitability is hard to change. I recommend Jack Welch’s "Winning" for issues related to transmitting corporate culture.

Many companies look at qualification first when selecting people, leading to problems. If the company’s core values are problematic, selecting people will naturally be difficult.

3. Good companies usually don’t have the highest salaries. While studying at CEIBS EMBA, I learned an important concept—money is a hygiene factor, not a motivator.

Employee income is a hygiene factor—it’s necessary but not sufficient. This can be an absolute value or a relative value (proportion).

Enhancing team cohesion with money is ineffective, but reducing money has a significant destructive effect.

Motivators are things unrelated to money but make everyone happy working together, also called the pursuit beyond profit.

4. While studying at CEIBS, I learned that the most important quality for entrepreneurs is integrity. Therefore, qualities that violate integrity can be fatal if time is long enough.
5. For managers, the most important thing is to establish the company's various systems, set service standards, and do important things well. The rest can be handled by employees.
6. When I was a CEO, I didn’t have a time allocation table but roughly knew what was important.

In short, don’t let important things become urgent.

7. I think the most important thing for entrepreneurs is that they believe their product or idea can provide something others can’t.

If you just want to do business, the probability of success is much lower.

The imbalance of supply and demand is not something anyone can "choose" before starting a business. Even if you encounter it, you will quickly fall into the red ocean.

For example, the shortage of Moutai was not planned by an entrepreneur before starting.

8. Companies where employees are always intimidated by leaders will have problems over time.

In such companies, employees will gradually become less responsible, hoping to delegate everything to superiors, and efficiency will slowly decrease.

Unless the company's product is highly focused and the boss can handle everything, problems will arise sooner or later. I think Japanese companies have faced issues in some industries for this reason.

9. Regarding authorization, very few people understand or do it better than I do.

The authorization process generally is: instructions, guidance, consultation, authorization, delegation, and finally, never out of control (only good culture can achieve this).

The most important thing here is "doing the right things and doing things right."

10. "Industries with large capital expenditures rarely have good companies," I agree with this view.
11. All masters dare to follow the beaten path, but they do it better.

Our company’s success is not accidental. Sticking to our "Stop Doing List," selecting partners and suppliers, slowly building a good circle, is very valuable in the long run.

12. Daring to follow the beaten path refers to product categories. Because guessing market demand is difficult, you follow and meet the demand others have identified.

(Daring to follow the beaten path means "doing the right things," and "catching up from behind" means "doing things right.")

13. So-called "business intuition" shouldn’t be considered a talent but a result of rational thinking.

05 Views on Current Business

1. I personally think it’s normal for the game market to decline. Games are just about time; some people might be spending a lot of time on other things (like short videos), so they spend less on games.
2. I can understand the power of short videos. I watched short videos on WeChat for hours before. This might affect games too.

I don’t know how long this product will last; I’ve stopped watching them.

3. (Tencent and ByteDance) both companies are valuable. I’m not sure who is more valuable. In the long run, people might depend more on WeChat, but I might be wrong as I haven’t used TikTok.

Either way, I’m not unhappy about who is more valuable.

4. I have nothing new to say about Zoom. I admire its founder and CEO and think Zoom’s culture is great, but I can’t figure out its moat (or its business model isn’t strong). Without a strong moat, I won’t invest heavily.
5. I still think Tesla’s future is a tough business, not a very good business model, although what they’ve achieved is remarkable.
6. Intuitively, the car (including electric vehicle) business is unlikely to have a particularly good business model. It’s hard to predict which companies will survive in ten years.
7. Most people are overly optimistic about fully autonomous driving. It might take at least 20 years for autonomous driving to match human recognition of various road conditions. In 20 years, it might only be various levels of assisted driving. Assisted driving is very useful.
8. I spent some time understanding VR in its early years and visited several university labs. My intuition is that this product’s popularity might be like 3D movies.

A few years have passed, and my initial feeling hasn’t changed.

9. Many companies fail due to debt, especially when making mistakes. Many don’t realize it in time and borrow a lot to amplify their mistakes, losing the chance to recover. The real estate industry has many such examples.

06 Understanding Investment and Value Investment

1. Most people tend to focus on "doing things right" in investments, leading to short-term performance traps.

Even great companies can make mistakes in "doing the right things" because "doing things right" often requires a process.

Long-term investment means believing that companies capable of consistently "doing the right things" will eventually "do things right."

2. Not doing things you don’t understand (circle of competence) is necessary for judging a company’s intrinsic value (not sufficient).
3. My investment philosophy can be summarized as: buying stocks means buying companies, buying companies means buying their future discounted cash flows.

That’s my belief, or something I inherently believe in, unaffected by any external influences.

4. Investment indeed is buying future discounted cash flows, and the biggest guarantee for future cash flows is the "business model." The strongest part of the business model is the "moat."
5. Things that can raise prices indicate a "moat." Recognizing this takes talent.
6. Whether an investment is a good price should be viewed from the future.
7. Many people want to invest because they think investment money is easier or quicker to earn. As someone with experience in both running enterprises and investing, I personally find running enterprises easier.

Although there is no fundamental difference between the two, running enterprises is usually in familiar fields, reducing mistakes, while investment always faces new things and uncertainties.

Moreover, investors can easily become speculators, taking undue risks, while it takes much longer for speculators to become genuine investors.

8. I asked Buffett what not to do in investment, and he told me: don’t short, don’t borrow, and most importantly, don’t do things you don’t understand.

Over the years, I’ve lost hundreds of millions of dollars by violating Buffett’s teachings, and I’ve made big money only in areas I truly understood.

9. If you immediately enter the investment industry, the most important thing is to be conservative! Don’t let a mistake ruin you. The only thing I can guarantee is that you will make mistakes.
10. The proportion of people suitable for investment is probably very small. Maybe because investment principles are too simple, and simple things are often the hardest.

By the way, what is the "simple" investment principle: when you buy a stock, you’re buying the company! Simple, right? Hard, right?

11. The "moat" is an important tool (not the only one) for judging a company’s intrinsic value. Corporate culture is an essential part of the "moat." It’s hard to imagine a company with a strong moat without a strong corporate culture.
12. Facing market fluctuations "rationally" and carefully examining each of your investment reasons and their changes is very important.
13. Without goals, keeping money in hand is better than losing it through reckless investments. If you invest recklessly whenever you have money, you will eventually lose big. If there are suitable stocks, buy them; if not, hold onto your money. Keeping eggs in one basket can make you more careful.
14. Anyone buying must understand what they are doing; otherwise, they won’t sleep well.
15. Value investing cares only about whether it’s cheap, not about others' opinions. Find good companies you understand and don’t worry too much about other things. What happens in Greece has little to do with us, right?
16. Great companies should be held onto! Once you sell a great company, it’s hard to buy back, and holding cash might lead to investing in less good businesses, causing double losses.
17. Since buying a company is based on a good business model or corporate culture, if you think these aspects have unrepairable long-term issues, consider exiting.
18. PE (Price-Earnings Ratio) is historical data that helps you understand the company’s past but can’t decide whether to invest in the company’s future.
19. "Prefer vague accuracy over precise inaccuracy." This phrase is often misinterpreted. It means "Prefer vague correctness over precise incorrectness."
20. I don’t know what idle money means. I think everyone must define it themselves. If you can’t define it, you probably don’t have idle money.
21. People claiming to time the market usually don’t fare well in the long run.
22. Persisting in charting will likely help you avoid big bull markets.
23. Bitcoin doesn’t generate cash flow and can’t be evaluated, so it falls under "don’t understand, don’t touch." Similarly, I won’t invest in famous paintings, stamps, antiques, tulips... Things you use don’t count as investments, though they might make money.
24. There are no special coping methods for "ordinary people." From an investment perspective, if you have idle money, buy good companies and hold them.

All financial crises will pass, and humanity will always find a way to solve problems until we can’t, which won’t matter much by then.

25. When confused, try looking further ahead? Looking ten years ahead is often easier than one to two years. One to two years is easier than one to two days.

For example, in investment, it’s easy to know some companies won’t do well in ten years. So why buy them now? Avoid these companies, and your choices will be fewer, but you’ll feel more secure.

26. If you always adhere to "don’t do what you don’t understand," you will make fewer mistakes. Over time, your results will naturally be much better than doing things you don’t understand. This falls under "doing the right things."

Reference:

1. "After reading 50 thoughts from Duan Yongping in 10 years, I finally know why he is so good," Zhou Zuo Luo;
2. "A comprehensive view of Duan Yongping's 2022 shared essence: I believe in what I see and understand. When you are confused about the present, try looking further into the future...," Smart Investors;
3. "Duan Yongping: Understanding the complex with simplicity," Geshang Wealth.