🗣️ Investor Talk #32: Charlie Tian

CEO - GuruFocus

Welcome to Investor Talk — where we interview successful investors to uncover their journeys, strategies, and the lessons they've learned. Get inspired by real stories and gain valuable insights to sharpen your own investment approach.

Every interview follows the same set of sharp, insightful questions — such as “What is your investment strategy?”, “What are your highest conviction stocks?”, and “What’s the biggest investment mistake you’ve made?”

In this edition, we have the pleasure of interviewing:

Name: Charlie Tian
Age: 56
Residence/Country: United States
Invests since: 1998

𝗜𝗻𝘁𝗿𝗼𝗱𝘂𝗰𝘁𝗶𝗼𝗻
I was trained as a physicist but became attracted to the stock market during the dot-com bubble in the late 1990s. Making money in the stock market seemed easy, but then I lost almost all of it when the bubble burst a few years later. Fortunately, I didn’t have a lot of money invested. That’s when I realized I knew nothing about investing, so I began to learn. I read extensively and taught myself accounting. I absorbed everything I could about Warren Buffett and Peter Lynch, including their shareholder letters and those of other great investors (Gurus). That’s how I truly began my journey into investing.

In 2004, I launched the website GuruFocus.com, which led to a wealth of interactions with users. I learned even more from them. In 2007, I left my job as a scientist at a telecom company to work on GuruFocus full-time. This year marks the 20th anniversary of GuruFocus.com.

𝗪𝗵𝗮𝘁 𝗶𝘀 𝘆𝗼𝘂𝗿 𝗶𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 𝘀𝘁𝗿𝗮𝘁𝗲𝗴𝘆?
Only buy good companies! Good companies are those with predictable earnings, a high return on invested capital, and the ability to grow at a reasonable rate. I describe this strategy in detail in my book 'Invest Like a Guru', which is highly rated on Amazon.

𝗛𝗼𝘄 𝗺𝗮𝗻𝘆 𝘀𝘁𝗼𝗰𝗸𝘀 𝗮𝗿𝗲 𝗰𝘂𝗿𝗿𝗲𝗻𝘁𝗹𝘆 𝗵𝗲𝗹𝗱 𝗶𝗻 𝘆𝗼𝘂𝗿 𝗽𝗼𝗿𝘁𝗳𝗼𝗹𝗶𝗼?
I own about 30 stocks. I believe in maintaining a concentrated portfolio, and I think 15 would be ideal. However, since I run a fund, there is a diversification requirement.

𝗪𝗵𝗶𝗰𝗵 𝘀𝗲𝗰𝘁𝗼𝗿𝘀 𝗱𝗼 𝘆𝗼𝘂 𝗺𝗮𝗶𝗻𝗹𝘆 𝗳𝗼𝗰𝘂𝘀 𝗼𝗻?
I don’t focus on specific sectors. However, because I only invest in companies with predictable and consistent earnings, cyclical sectors like energy and heavy industrials don’t pass my screening criteria, so I don’t invest in them. My portfolio does include a number of tech stocks, primarily software companies.

𝗪𝗵𝗮𝘁 𝗮𝗿𝗲 𝘆𝗼𝘂𝗿 𝗵𝗶𝗴𝗵𝗲𝘀𝘁 𝗰𝗼𝗻𝘃𝗶𝗰𝘁𝗶𝗼𝗻 𝘀𝘁𝗼𝗰𝗸𝘀?
$MSFT - Microsoft
$BRK.B - Berkshire Hathaway
$BRO - Brown & Brown

Insurance company Brown & Brown have grown significantly, averaging 23% annual returns over 5 years, outperforming Google and Meta, and traded at a lower valuation than Microsoft.

𝗪𝗵𝗶𝗰𝗵 𝘀𝘁𝗼𝗰𝗸 𝗵𝗮𝘀 𝘁𝗵𝗲 𝗵𝗶𝗴𝗵𝗲𝘀𝘁 𝗿𝗲𝘁𝘂𝗿𝗻?
$BRK.B - Berkshire Hathaway. I have owned it for more than 15 years.

𝗪𝗵𝗮𝘁 𝗶𝘀 𝘁𝗵𝗲 𝗯𝗶𝗴𝗴𝗲𝘀𝘁 𝗶𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 𝗺𝗶𝘀𝘁𝗮𝗸𝗲 𝘆𝗼𝘂 𝗵𝗮𝘃𝗲 𝗺𝗮𝗱𝗲?
I’ve certainly made a lot of mistakes over the years. As I’ve learned from them, I’ve become more convinced of the strategy of only buying good companies. With a good company, you may lose money temporarily if you pay a high valuation, but the risk of permanent capital loss is small.

My most recent mistake was buying the Chinese online retailer Pinduoduo $PDD. The company was profitable, and its growth was tremendous. The valuation was much lower than that of companies with similar growth. However, after buying it, I realized I didn’t have enough confidence in Chinese companies. The regulations from both the Chinese government and the US government on Chinese online retailers were unpredictable, and the complexity of the US-China relationship didn’t help. After a while, I felt very uncomfortable and sold it at a loss.

The lesson I relearned from this is that I need to make sure I thoroughly assess my confidence level in a stock before investing.

𝗠𝘆 𝗳𝗮𝘃𝗼𝗿𝗶𝘁𝗲𝘀
Favorite book: Shoe Dog by Phil Knight
Favorite podcast: -
Favorite quote: "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." - Warren Buffett
Favorite FinX account: -

𝗪𝗵𝗲𝗿𝗲 𝗰𝗮𝗻 𝘄𝗲 𝗳𝗶𝗻𝗱 𝗺𝗼𝗿𝗲 𝗶𝗻𝗳𝗼 𝗮𝗯𝗼𝘂𝘁 𝘆𝗼𝘂?
You can find more info about my funds on GuruFocusETF.com

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