Learn from Duan Yongping: The Essence of Investment and 10 Golden Rules

E段永平 is a legendary investor and entrepreneur known as “China’s Buffett.” His investment philosophy and practical rules offer deep insights to many investors. By exploring his success trajectory and investment strategies, you can find a path to success in the market.

From Merchant to Investor: The Career Transformation of E段永平

E段永平’s story begins with extraordinary entrepreneurial spirit. In 1988, at just 28 years old, he took over a struggling electronics factory and rapidly grew its annual output to about 10 billion yuan within a few years. During this period, he became known for producing the “Little Tyrant Learning Machine,” showcasing his management skills.

In 1995, E段永平 left Yihua Group and founded BBK Electronics. The company dominated the market with a range of consumer electronics including learning machines, VCDs, MP3 players, and mobile phones. It secured the CCTV “Top Brand” advertising slot for two consecutive years, growing into an industry giant.

His 1999 decision led to the creation of a major smartphone brand. E段永平 split BBK into three divisions—education electronics, telecommunications, and visual electronics—and eventually evolved into the global brands OPPO and vivo.

In 2001, at age 40, E段永平 faced another turning point. He stepped back from management, moved to the United States, and committed fully to investing. This decision transformed him into a renowned investor.

Five Iconic Investment Cases Practiced by E段永平

NetEase: Bold Investment at the Bottom

In 2001, NetEase’s stock plummeted to around $0.8 per share due to litigation issues. Despite widespread fear, E段永平 invested about $2 million. Within months, the stock rebounded sharply, and over three years, his investment returned over 68 times. This marked his starting point in investing.

Apple: The Pinnacle of Long-Term Holding

In 2011, when Apple’s market cap fell below $300 billion, E段永平 significantly increased his holdings. His judgment proved correct, and Apple’s stock multiplied several times, becoming his main holding. By late 2024, the value of his Apple holdings in the H&H investment account reached $10.233 billion, accounting for 70.50% of his portfolio. He has held these shares for over 14 years without selling.

Kweichou Moutai: Recognized as a “Long-Term Bond”

E段永平 views Kweichou Moutai not just as a stock but as a “long-term bond.” He believes that if there are no better investment opportunities, surplus funds are safest in Moutai. He has invested almost entirely in Moutai through RMB accounts, expecting over ten years that its returns will surpass traditional assets like bank deposits. He trusts Moutai’s intrinsic value and maintains a long-term hold, unaffected by price fluctuations.

Pinduoduo: Capturing Opportunities During Declines

In August 2024, when Pinduoduo’s interim results fell short of market expectations and its stock declined, E段永平 actively built his position. Using put options and other strategies, according to SEC 13F filings, in Q3 2024, H&H added 3.8 million shares, elevating Pinduoduo to the fifth-largest holding.

Tencent: Persistent Averaging Down

Between 2022 and 2023, during Tencent’s downturn, E段永平 repeatedly bought Tencent ADRs. In November 2023, he purchased 200,000 shares at about $41 per share (roughly $8.2 million), and through daily selling of 1,000 Tencent put options, he gradually expanded his position. He currently considers the current price a good buying opportunity relative to the company’s fundamentals.

Ten Golden Rules of Investment Practiced by E段永平

1. Fish Where the Fish Are

A famous quote by Charlie Munger emphasizes choosing profitable markets. While China A-shares stagnated around 3,000 points for over a decade, US stocks rose for 20 consecutive years. E段永平’s shift to US stocks exemplifies the importance of selecting the right market.

2. Choose Stocks Short-Term, Hold Long-Term

Find good companies and let time work for you. Buffett says, “If you can’t hold a stock for 10 years, don’t hold it for 10 seconds.” E段永平’s Apple holdings and Moutai investments reflect this philosophy.

3. Buying Stocks Is Like Acquiring a Business

Invest in companies with good products, strong business models, and visionary management. Even if Tencent or Tesla temporarily decline, their intrinsic value remains unchanged.

4. Unwavering Conviction Is Essential

Believe wholeheartedly and remain unaffected by external influences. For example, in his two accounts, E段永平 held Apple for 14 years in his value investing account, while his speculative account yielded only modest returns.

5. There Are No Shortcuts in Investing

If you believe in shortcuts, you’ll spend 20 years searching for them. Speculation is essentially like coin flipping, with about a 55-45 success rate.

6. Minimize Investment Decisions

Making 20 decisions a year guarantees failure. Twenty investment decisions in a lifetime are enough; frequent buying and selling are not aligned with value investing.

7. Review Strategies When Not Profitable

Just as a thief keeps practicing theft after being caught, obsessively trying to improve speculative methods after failures won’t lead to true success.

8. Buy When No One Is Watching, Sell When Popular

When NetEase traded at $0.8 per share, E段永平 said, “Why is it brave to sell something worth 10 yuan for 1 yuan?” At that time, NetEase had 4 yuan in cash per share.

9. A-shares Are Not for Speculation

True profits in A-shares come from value investing. E段永平’s investment in Kweichou Moutai has never been sold in over a decade.

10. Human Nature Remains Unchanged

E段永平 states, “You will become the person you want to be.” Speculators stay speculators; value investors become value investors. His opportunity to dine with Buffett came because they share the same value investing philosophy.

Lessons from E段永平’s Investment Life

E段永平 is not just a successful investor but a rare figure who transitioned from entrepreneur to investor. His philosophy emphasizes understanding a company’s intrinsic value and building long-term partnerships, rather than chasing short-term gains.

His 14-year holding of Apple, unwavering belief in Moutai, and calm judgment during market chaos are the sources of his success. In an era of uncertainty, learning from E段永平’s rules and examples provides an invaluable compass for individual investors.