Today I'm sharing my views on investing in the third category of assets (that can generate cash flow) to achieve a hundredfold return.

To obtain a hundredfold return from this type of asset, there is a very clear logical line—returning to the most core characteristic of its asset property: it can generate cash flow.

We can clearly see its basic logic using arithmetic that even elementary school students can understand.

If an asset can generate 100 yuan of free cash flow each year and can continue to do so for 40 years, then even without calculating its asset value, just looking at the free cash flow it can generate over the next 40 years can yield 4000 yuan.

If the market price of this asset is only 40 yuan now, then obviously, as an investor, I would spend 40 yuan to buy this asset, and 40 years later, just from its cash returns, I can achieve a hundredfold return. If I also account for its asset value, my returns would be even more considerable.

Therefore, the key point and the most crucial part of investing in this type of asset is all around the discounted total of future free cash flow generated by this asset for evaluation and judgment.

In this regard, several predecessors have set clear examples for us, which I have also shared in my previous articles.

Chronologically, they are: Philip A. Fisher, Warren Buffett, and Charlie Munger.

In Fisher's era, the concept of "buying stocks is buying companies" was not as clear as it was for Buffett and Duan Yongping. However, his lifelong philosophy was to buy good companies, holding them as long as they do not deteriorate, which is essentially the same logic. His investment philosophy later became one of the important sources for Buffett's thinking.

The two most famous classic investment cases of a hundredfold return in Fisher's life are Texas Instruments and Motorola.

For Texas Instruments, he bought it in 1953 and held it until 2004. Over these 51 years, Texas Instruments brought him returns of over 1500 times.

For Motorola, he bought it in 1957 and held it until 1996. Over these 39 years, Motorola brought him returns of over 200 times.

We are even more familiar with the cases of Buffett and Munger.

The Washington Post, American Express, See's Candies, Berkshire Hathaway, Hershey, these are classic investments of the two predecessors that have achieved returns reaching or exceeding a hundredfold.

If we count some other investments that did not reach a hundredfold but exceeded thirtyfold, there are even more, such as Costco, Coca-Cola, and so on.

In fact, Duan Yongping is also very impressive, such as his investment in NetEase. However, his investment timeline and cases are still too short compared to the above masters, so I have not listed him here.

The reason these predecessors were able to achieve these returns from these assets fundamentally goes back to the business fundamentals, evaluating whether a company can continue to be profitable, can continue to generate ample free cash flow, and sustain growth for decades based on its business model and corporate culture.

Then, based on this, they simply buy heavily when the market severely undervalues their worth.

Afterward, as long as the fundamentals of these assets do not change, and there are no better alternatives found, and their prices are not excessively high, these predecessors will continuously hold, letting the power of compound interest work over time.

We often say there are many good stocks in the US market, but the A-shares also have companies that have brought investors a hundredfold return since their listing through cash dividends (and reinvestment) plus stock price appreciation.

Gree Electric, Fuyao Glass, Luzhou Laojiao, Yili Group, Yunnan Baiyao, Shanxi Fenjiu, Kweichow Moutai, Wanhua Chemical, Pianzihuang...

are all typical cases in the A-shares.

(Note: I’m listing these A-share stocks not to suggest investing in them, nor do I believe they will provide hundredfold returns in the future; I am merely reviewing historical data for illustrative purposes.)

However, whenever these stocks are mentioned, public commentary is rarely judged from the perspective of corporate culture, business model, or free cash flow, but rather from "sexiness," "trends," and other eye-catching, traffic-boosting angles.

Is such eye-catching and traffic-boosting judgment really investing?

Since there is such a clear standard and logic, why can't the vast majority of us achieve this?

One reason is that the vast majority of us only want to get rich overnight, not gradually accumulate wealth;

The second, and more important reason: understanding a company, its corporate culture, business model, and future free cash flow is incredibly difficult—just like Duan Yongping said, understanding a business is akin to completing a university degree.

It's so difficult; how many people are willing to invest effort and time in this?

Therefore, in the end, the vast majority of people just want to take shortcuts, avoiding hard work, and engage in gambling while dressing it up as investment.

Thus, can the majority of ordinary people achieve this and gain a hundredfold return from such assets?

It is also unlikely.

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