I finally understood Buffett: true value investing isn't about buying stocks, but about studying companies.

I've read Buffett's books many times.  
"If you can't hold a stock for ten years, don't hold it for even ten minutes."  
"Never invest in a company you don't understand."  
"When others are greedy, I'm fearful; when others are fearful, I'm greedy."  

I could almost recite these quotes by heart.  
But it wasn't until several years into the stock market that I realized I had merely memorized them—never truly grasped their meaning.

What really made me understand Buffett wasn't reading his books, but experiencing the market firsthand.

I once failed to hold onto a truly great company.  

Last year, I bought a stock—"Xin Yisheng"- . A stock related to the optical module industry 

The reason was simple: it had surged before, then gone through a deep correction. From a technical chart perspective, it had fallen to a relatively low level, appearing like a promising opportunity.

So I bought.

But after purchasing, the stock kept falling.  
I began doubting my judgment.  
Later, it rebounded slightly, so I sold.  
Then I bought again, only to sell once more.  
In just a short period, I entered and exited three times.

Eventually, the entire AI industry chain exploded, and Xin Yisheng shot up, becoming one of the market’s brightest stars.

Many people would say, "You just didn’t hold on long enough."  
But looking back now, what I truly failed to hold on to wasn’t the stock—it was my understanding.

At that time, I didn’t know why it was rising.  
I didn’t understand why optical modules were important.  
I didn’t grasp how AI computing power could drive the entire supply chain.  
And I certainly didn’t know where its real competitive advantages lay.

So when the price dropped, I had no reason to keep holding.

Later, I started studying industries, not just stocks.

Xin Yisheng didn’t make me a better trader.  
But it led me to study the entire AI industry chain—from GPUs to the CUDA ecosystem, from HBM to CoWoS advanced packaging, from switches to optical modules.

Gradually, I realized an industry is far more complex than any single stock.  
Supply chains, business models, competitive landscapes, moats, growth potential…  
Every new insight made me realize how shallow my previous understanding of investing had been.

It felt as though studying an industry was nearly equivalent to completing an entire undergraduate degree.

That’s when I finally understood why Buffett reads every day.  
Before, I thought reading was just a habit.  
Later, I realized it was actually his work.

Because true investing isn’t about watching stock prices daily—it’s about continuously researching companies.

Now I finally get why Buffett studies only a few companies each year.  

In the past, I always worried about missing opportunities.  
Today AI rises.  
Tomorrow robotics surges.  
The next day, biotech takes off.  
The market offers new hot topics every day.  
So we chase blindly, like headless flies.

But later I realized this isn’t investing—it’s anxiety.

There are too many industries in the world.  
No one can fully understand them all.  
True outstanding investors don’t study a thousand companies—they thoroughly understand dozens.  

They’re willing to spend months or even years understanding an industry,  
understanding why a company makes money,  
and whether it can continue making money over the next decade.

This is what Buffett calls the "circle of competence."

A circle of competence isn’t about knowing more and more—it’s about knowing exactly what you truly understand and what you don’t.

Finally, I realized that the prerequisite for long-term holding isn’t patience—it’s understanding.

Previously, I believed long-term holding required immense willpower.  
But now I see that’s not true.  
What truly enables someone to hold a company isn’t temperament—it’s comprehension.

If you don't understand a company's business model, its competitive moat, or its future growth logic, every time the stock price drops, you'll start doubting yourself.  
Because all you can see is the price.  

But after I began studying the AI industry chain and revisited NVIDIA, my perspective changed completely.  

I now know why it makes money.  
I understand why the CUDA ecosystem matters.  
I grasp its position in AI infrastructure.  
I recognize which competitive advantages are truly hard to replicate.  

So when the stock price corrects, I don’t panic immediately.  
Instead, I first ask myself:  
Has the company’s core logic changed?  
If not, then the decline is merely a price fluctuation—not a loss of value.  

I’ve finally realized that the prerequisite for long-term holding isn’t endurance—it’s understanding.  

Value investing isn’t about buying something and doing nothing.  

In the past, I thought value investing meant buying a company and just letting it sit.  
Later, I realized that was my biggest misunderstanding.  

Companies grow.  
Industries evolve.  
Technology advances.  
New competitors emerge constantly.  

A company’s moat doesn’t last forever.  

True value investing isn’t about stopping thinking—it’s about continuously validating your judgments.  

Today, I study AI.  
Tomorrow, I’ll study innovative drugs.  
In the future, perhaps robotics, energy, or other industries.  

Growth changes.  
Markets change.  
Companies change.  

The only constant is our commitment to continuous learning, ongoing research, and expanding our circle of competence.  

Final thoughts:  

Before, I wanted the market to tell me what to buy.  
Now, I prefer my research to tell me why I should buy.  

Because I’ve finally understood that true long-term compounding isn’t just about wealth—it’s also about cognition.  

Stocks are merely vehicles for wealth growth.  
But continuous learning is the real moat behind all successful investing.

 

My investment Research Framework 

（How I Research a Stock Before I Invest）