On July 15th, legendary investor Warren Buffett gave a rare media interview where he once again commented on the prevalence of speculation in the US stock market, the increasing difficulty of practicing value investing, and reiterated his "casino" analogy for the market. He stated that the current US stock market is dominated by a heavy speculative atmosphere and is increasingly led by short-term speculative trading rather than being grounded in long-term value investment.

Buffett had warned of the risk of a bubble in US stocks as early as January this year. In early May, during my eighth trip to the US to attend the Berkshire Hathaway (BRK.B) Annual Shareholders Meeting, Buffett noted in his opening remarks that the current US stock market is like having a casino next to a church. Because the casino is more attractive, many investors flock to the casino instead of the church. However, even as US stocks continued to climb, Buffett consistently reduced his holdings, lowering his stock allocation to below 40%. The cash on Berkshire Hathaway's books is nearing $400 billion, a record high. This cash is primarily allocated to US short-term Treasury bills, reflecting Buffett's consistent approach of pursuing certainty in performance rather than chasing bubbles.

In the short term, Buffett's investment performance has significantly lagged behind the S&P 500 Index and even more so the Nasdaq Index. However, over a longer timeframe, it is precisely Buffett's avoidance of chasing bubbles and his focus on performance certainty that has allowed him to avoid countless market crashes over the past 61 years. Notably, he sidestepped the bursting of the internet bubble in 2001 and the subprime mortgage crisis in 2008. This strategy has enabled Buffett to achieve an annualized return of 19.9% over 61 years, with cumulative returns reaching an astonishing 60,000 times. In other words, while his short-term performance may not stand out, his pursuit of certainty and avoidance of bubble-bursting risks make him unbeatable in the long run, creating an exceptionally rare investment track record.

Buffett has practiced value investing throughout his life and candidly admits that high-certainty, quality investment opportunities worth deploying capital into are becoming increasingly scarce. He emphasizes that investing requires patience and strict discipline. He stated that there are periods when golden opportunities are everywhere, so abundant it's almost unbelievable. But more often, you might go several years without finding a single suitable target, and finding one opportunity during such times would be considered extremely lucky. The latter scenario is the market's normal state. He added that humans are inherently prone to gambling; it's easier for people to become speculative gamblers than to cultivate genuine long-term investors.

Over the years, I have consistently promoted Buffett's value investing philosophy, hoping it can take root, sprout, and bear fruit in the A-share market. Based on the realities of the A-share market, I have proposed a theory of value investing with Chinese characteristics, which is now gaining wider acceptance. This involves managing portfolio allocation according to A-share market conditions: being willing to reduce positions and take profits in sectors or stocks that have risen excessively, and being bold in buying on dips for high-quality stocks that have declined significantly. The second aspect is that practicing value investing in the A-share market requires a deep understanding of policy. We should focus on sectors supported by policies and steer clear of sectors restricted by policies. For example, sectors like new energy in 2019 and semiconductors in recent years, which have policy support, have presented good investment opportunities. Conversely, sectors facing policy restrictions have experienced significant declines. In my third new book, "Value Investing," I systematically explain the theory of value investing with Chinese characteristics. I recently held press conferences in Shanghai and Beijing, receiving support from many investors.

In the interview, Buffett revealed that Berkshire Hathaway's recent significant investment in Alphabet, Google's parent company, was initiated by him personally, not by the new CEO, Greg Abel. This investment was first proposed by Buffett. Berkshire Hathaway's subsidiary, GEICO, was an early major client of Google's advertising business, a point he mentioned back in 2018. Buffett witnessed firsthand the strong profitability of its advertising business but was uncertain whether the company could maintain a leading position in the fast-evolving tech industry long-term, which is why he hesitated to invest. Since first disclosing holdings in Alphabet stock in the third quarter of 2025, Berkshire Hathaway has continued to increase its position.

Buffett said the core secret to investing, and even life, is finding businesses that can sustain high returns on capital over the long term. It is worth noting that although Apple was once Berkshire Hathaway's largest holding, Buffett has been consistently reducing the position, now by about two-thirds. Apple alone has contributed $150 billion in unrealized gains for Buffett, making it the most profitable company for him. Despite being a major holding, Apple is not among his most favored group of companies. Buffett stated that at least four or five companies in the portfolio hold higher priority in his mind than Apple. He believes that deploying AI requires massive capital investment, which is a core challenge shared by Alphabet and all its tech peers. Currently, Google and all its competitors must invest hundreds of billions of dollars, representing substantial real costs—this is the nature of competition in modern industries. In the early days of the computer software industry, such large-scale capital burning was unnecessary. Therefore, Buffett remains concerned about the heavy reliance on capital expenditure to generate demand for chips, computing power, etc., while AI applications struggle to materialize or have not yet truly taken off.

Considering the recent sharp declines in chip sector stocks across US, Japanese, and Korean markets, Buffett's concerns are not unfounded. Massive capital expenditure could gradually turn these tech giants into asset-heavy companies. Meanwhile, strong demand and rising chip prices have directly increased the cost of building large data centers. Recently, the US even filed lawsuits against chip companies like Samsung and Nvidia, arguing that their continuous price hikes have led to increased costs for end-consumer products like smartphones, fueling inflation and passing price increases onto consumers. If AI applications fail to materialize in the future, it could pose significant risks.

The Korean stock market recently experienced a frenzy of全民炒股, with AI-related chip stocks like Samsung and SK Hynix soaring. Recently, the Korean market entered a暴跌模式, falling 40% from its peak. As many Korean investors used leverage, a market downturn could trigger margin calls. This reminds us of the A-share market a decade ago, serving as a cautionary tale. Since May 20th, I have consistently advised adopting a three-step approach to address the potential risk of a tech bubble burst: First,坚决去杠杆; second, reduce positions, especially for tech stocks that have seen significant gains earlier, maintaining a reasonable allocation to be prepared for both offense and defense; third, achieve balanced allocation by investing in both tech and undervalued blue-chip stocks, including dividend stocks.

Buffett once said that a bubble is like a party, and no one wants to leave. Although everyone knows that after midnight, everything turns into mice and pumpkins, everyone wants to leave at 11:50 PM. Unfortunately, there is no clock in the room to tell you the time. This is a risk we must be aware of when investing in tech stocks. A Morgan Stanley executive humorously remarked that they advise clients to dance near the exit, which offers great insight. I have also consistently emphasized the need to take profits timely in overheated sectors. An A-share saying holds true: "Chasing rallies can ruin three years, buying the dip can enrich a lifetime." Though the phrasing is crude, the道理 is sound. Avoiding risks is more sustainable than chasing bubbles.

Buffett's recent interview offers fresh wisdom. Although the A-share market's slow bull trend likely hasn't ended due to short-term declines, the long-term slow and steady bull market may still continue. However, deleveraging and maintaining a lower position to迎接调整结束 are prerequisites for capturing the next round of opportunities. Otherwise, facing significant stock price declines, many investors may struggle to endure until the next tech market cycle arrives. Learning Buffett's value investing philosophy requires知行合一, putting it into practice. Investing is not a short-term game but a lifelong endeavor. Only by being a friend of time can one achieve compound growth and calmly navigate short-term market declines and volatility.