One picture to understand: Comparison of 20-year returns of the top S&P stocks in the US! (Revelation of Long term Value Investment) In fact, Buffett's "value investing" is not strictly a value investment, but a special investment strategy. There are generally two types of active investment strategies, namely purchasing value stocks and growth stocks. Academic indicators for evaluating value stocks include price to earnings ratio, price to book ratio, dividend yield, etc., while indicators for judging growth stocks include profit growth rate, sales growth rate, etc. Value investing emphasizes measuring whether the present is cheap based on past financial data, while growth stock investing emphasizes predicting prospects using past financial data. Of course, most investment strategies are not pure value or pure growth, but a combination of both, while also considering volatility. Buffett himself said that "his strategy is a combination of Graham and Fisher, but mainly Graham" - in fact, it emphasizes both affordability and growth, with affordability being more important. Buffett's famous "moat" theory is actually the concept of growth stocks, emphasizing the certainty that monopolistic positions, brands, intellectual property, and other factors bring to a company's future growth. The problem with many 'value investors' is that in the past, they emphasized buying good companies and didn't care about whether the companies were cheap. For example, Maotai is definitely a good enterprise. Arguing with someone about whether Maotai is a good enterprise is purely a waste of time. However, whether Maotai's stock price is expensive or not requires analysis. Buying at a high point, not to mention losing money, but definitely not making a big profit within a few years. When testing (simulating) various investment strategies in academia, whether it is value investing, growth stock investing, low volatility investing, or various mixed investments, it is difficult to achieve the same long-term return rate as Buffett (annualized over 20%). The main difference between Buffett and most academic testing strategies lies in "concentrated investment". When testing an investment strategy in academia, such as value leader growth low volatility mixed investment: Firstly, select the top 20% of companies in the stock market - this can prevent small businesses from having too little trading volume, unable to promote their strategies, or being affected by extreme values, Secondly, classify these hundreds of enterprises by industry and select the leading stocks with the highest sales revenue in each industry (for example, enterprises with sales exceeding 50% of the industry average) Next, select the top 50% of leading stocks with the lowest P/E ratio, then choose the 50% with the fastest average profit growth rate over the past 5 years, and finally select the 50% with the lowest annualized volatility over the past 5 years. Select around 20 stocks based on past stock market data and simulate their returns. However, in reality, Buffett's investments in the secondary market typically involve a maximum of five stocks, which contradicts most simulated investment strategies and financial fundamentals such as risk diversification. So, when summarizing Buffett's value investing strategy, Li Lu mentioned that Buffett's innovation lies in emphasizing the "ability circle". That is to say, Buffett not only invests based on financial statements, but also has a deep understanding of the business of the relevant companies, and when the companies are low-priced, he feels heavy and concentrated in investing. Here is a question, or rather a key point, that famous investors like Buffett have two advantages that retail investors cannot compare to: From his earliest investments, Buffett had access to the management of companies, many of whom were his friends. Therefore, Buffett's understanding of the real business of these companies far exceeds that of ordinary retail investors. (For example, Li Lu met BYD founder Wang Chuanfu and greatly admired his craftsmanship spirit.) Buffett started doing business from a very young age, so he has a intuitive and intuitive understanding of the business world, knowing which businesses are good and which are bad, rather than relying solely on financial statements and PPTs like most investors, including institutional investors, to judge a company. (For example, Lin Yuan in China has also done a lot of business and was one of the earliest private enterprise owners to participate in Beijing's land ranking, so he basically doesn't touch real estate.) Most people should first learn to find value stocks - low-priced stocks - when it comes to Buffett's value investing approach, but in reality, everyone is looking for high growth stocks. In a situation where the stock price is significantly overvalued and the price continues to decline, persisting in holding becomes a 'passive value investment' If one insists on investing in value that ordinary people can grasp, and their personality (cognition) can tolerate investment fluctuations, simply investing in BTC, even if they cannot obtain an annualized return of more than 50%, it is easy to obtain a return of around 20-30% - this can definitely outperform first tier city housing prices.