Today I will share my views on investing in the third type of assets (those that can generate cash flow) to achieve hundredfold returns.

The logic behind obtaining a hundredfold return from such assets is very clear — it all comes down to the core characteristic of the asset: it can generate cash flow.

We can easily see its basic logic with simple arithmetic that even elementary school students understand.

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

If the current market price of this asset is only 40 yuan, it is clear that as an investor, I can buy this asset for 40 yuan, and 40 years later I would receive a hundredfold return rate purely from its cash returns. If we also consider its asset value, my return would be even more substantial.

Therefore, the key and the utmost priority in investing in such assets revolves around the discounted total of future free cash flow generated by the asset.

In this regard, several senior masters have set clear examples for us, and I have shared them 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 clearly defined as it is with Buffett and Duan Yongping. However, his lifelong principle was to buy good companies and hold them as long as they do not deteriorate, which fundamentally conveys the same reasoning. His investment philosophy later also became one of the important sources for Buffett's principles.

Fisher's two most famous classic cases of achieving hundredfold investment returns are Texas Instruments and Motorola.

He purchased Texas Instruments in 1953 and held onto it until 2004. During these 51 years, Texas Instruments provided him returns of over 1500 times.

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

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

The Washington Post, American Express, See's Candies, Berkshire Hathaway, Hershey are all classic investment selections of the two predecessors that have achieved returns reaching or exceeding a hundred times.

If we also consider other investments that did not reach a hundred times but exceeded thirty times, there are many more, such as Costco, Coca-Cola, and so on.

In fact, Duan Yongping is also very impressive, for example, his investment in NetEase. However, his investment duration and examples are relatively short compared to the masters above, so I did not list him here.

The reason these predecessors were able to achieve such returns from these targets essentially reverts back to the fundamentals of the companies, judging their ability to sustain profits and generate rich free cash flow consistently for decades based on their business models and corporate cultures.

Then, based on this, they would make substantial purchases when the market severely undervalued them.

After that, as long as the fundamentals of these targets do not change, no better alternatives are found, and their prices are not absurdly high, these predecessors would hold onto them, allowing the power of time compounding to take effect.

We often say there are many good stocks in the U.S. market; in fact, the A-share market also has companies that have provided investors with hundredfold returns through cash dividends (reinvested) plus price increases since their listing.

Gree Electric Appliances, Fuyao Glass, Luzhou Laojiao, Yili, Yunnan Baiyao, Shanxi Fenjiu, Kweichow Moutai, Wanhua Chemical, Pian Zai Huang…

All these are typical examples in A-shares.

(Note: I am listing these A-share stocks not to suggest investing in them, nor to imply they will provide hundredfold returns in the future; this is merely a historical data review for illustration.)

However, whenever these stocks are mentioned, the public's commentary is rarely based on corporate culture, business models, and free cash flow, but rather from angles like "sexiness," "trends," and "buzz," which attract attention and generate traffic.

Is this attention-grabbing and traffic-generating judgment method really investment?

Since there are such clear standards and logic, why can the vast majority of us not achieve this?

First, most people only want to get rich overnight and do not wish to become wealthy gradually;

Second, and perhaps more importantly: understanding a company, knowing its corporate culture, business model, and comprehending its future free cash flow is incredibly difficult — as Duan Yongping said, understanding a business is akin to completing an undergraduate degree.

Given its difficulty, how many of the vast majority of people are willing to invest time and effort?

Therefore, in the end, most people seek shortcuts, which leads them to engage in activities that, while disguised as investing, are effectively gambling.

As a result, is it possible for most ordinary people to achieve this and gain hundredfold returns from such assets?

It is unlikely.

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