market folly

Li Lu of Himalaya Capital was recently interviewed by Chinese media Weekly on Stocks.  If you're unfamiliar, Lu is Charlie Munger's investment partner in China and Munger has invested in Lu's fund for quite some time.  Charlie Munger was also interviewed, and we posted that up separately.


Li Lu Interview With Weekly on Stocks (China)

Li Lu on Munger/Buffett: "And so it is precisely their indifferent attitude towards personal interests that they have achieved such a long term performance success."  "Everyone is envious of Berkshire but no one is willing to learn their indifference to personal interests."

Lu on his fund:  He charges no management fee and has a 6% hurdle, modeled after the original Buffett partnerships.

Lu on investing:  "The investment itself is a prediction.  The prediction is indeed the result of a comprehensive combination of capabilities.  How to perform is the extension of conduct, so one's character, knowledge, and mentality really affect the long-term results.  There is no doubt about this."

"If you do this simply for the purpose of making money, it is almost impossible to achieve extraordinary long-term performance."

"Instead the key is that the most important thing for investment is to invest in anything you know and to avoid anything you don't know."

On the ongoing evolution of China's market:  "Three transformations: indirect finance to direct finance, debt dominance to equity dominance, and policy finance to market finance.  Then the whole financial market is gradually transformed from a disordered state like a gambling house to a relatively long term rational and sound decision."

On good investor characteristics:  "An excellent investor indeed should be honest to knowledge but not to the opinions of others.  Indeed this is actually somewhat against the humanity for us as social animals.  Indeed it is like this for us it is very important whether our evidence and logic is correct than whether others agree with you is not so important... An excellent investor has somewhat anti-human characteristics."

"The most important part in investment is objectivity and reasonability.  And the second is a deep understanding of intellectual honesty... That is to know what you really understand."


Embedded below are the videos:

Video 1


Video 2



For more on Li Lu, be sure to also check out a previous Columbia Business School interview with Li Lu.

H/T to @TaoValue for posting the videos.