Following over 40 years of growth since the reform and opening-up, China's economy has seen survival of the fittest across various industries. Truly outstanding companies have managed to endure through competition, demonstrating their long-term competitiveness. In 2016, the concept of "White Horse + Dragon Head" stocks was introduced, referring to high-performing blue-chip companies that are also leaders in their respective sectors, succinctly capturing the essence of these quality firms. The equity value of these industry leaders is expected to gain increasing recognition from capital over time. For investors, allocating to these high-quality leading enterprises directly, or indirectly through quality funds that hold them, increases the probability of successful investment outcomes.

The current economy is undergoing a transitional phase, where some traditional industries have lost their former prominence. It is essential to recognize the shifts brought about by this economic transformation, avoiding industries such as real estate and its related supply chains that are gradually being phased out. Instead, allocation should shift towards sectors that benefit from the economic transition, such as energy, resources, new energy, and technology. When investing in these areas, it remains crucial to select the "White Horse + Dragon Head" companies within each industry—the leading players—as their investment value is more pronounced.

In recent years, a value investing philosophy with Chinese characteristics has been developed, which integrates Warren Buffett's principles of value investing with the realities of the Chinese market, rather than merely copying them. Practice over the past year has shown this approach to be effective. Over the last decade, attendance at the Berkshire Hathaway annual shareholders meeting in Omaha has occurred seven times, aiming to use this global investment event to help investors embrace value investing principles and genuinely practice them, moving away from chasing trends and frequent trading. Warren Buffett has stated that value investing is the key to long-term investment success. Value investing is a universally applicable philosophy, relevant to the U.S. stock market as well as to the A-share and Hong Kong markets. However, the Chinese market has its own unique characteristics, such as a high proportion of retail investors, significant market volatility, and strong policy influences. Therefore, practicing value investing in the A-share market requires adaptation to local conditions: managing positions appropriately in response to substantial market fluctuations, reducing holdings when prices become excessively high, and having the courage to increase positions when prices fall significantly. Additionally, interpreting macroeconomic and industrial policies is essential. Only by doing so can value investing be effectively implemented.

Over the past 61 years, the investment legend Warren Buffett achieved approximately a 60,000-fold return through value investing, an unparalleled feat in investment history. Buffett has now stepped down, passing the reins to his successor, Greg Abel, though whether Abel can replicate Buffett's success remains uncertain. Until his retirement at the end of last year, Buffett achieved an annualized return of about 19.9% over 61 years, leveraging the power of compounding to generate the massive return. Buffett's success demonstrates that value investing is a powerful tool for long-term investment victory, although it does not guarantee strong short-term returns. In fact, there have been periods where Buffett's annualized returns lagged behind the S&P 500 index. However, over the full 61-year span, Berkshire Hathaway outperformed the S&P 500 by nearly 300 times, illustrating the power of compounding and the value of long-term investing.

After each Berkshire Hathaway annual meeting, participation in Sino-American investor gatherings provides a platform to share insights on value investing with global investors, including many from mainland China and the Chinese diaspora. This May, attendance at the 2026 Berkshire Hathaway shareholders meeting is planned once again. Although Buffett will not be presenting on stage this year, he is expected to attend the board meeting area. The primary purpose of attending these meetings is to encourage more investors to steadfastly adhere to value investing principles and genuinely embark on the path of value investing.

At its core, value investing involves selecting good industries and good companies, and then waiting for an attractive price. However, the shares of good industries and good companies are seldom cheap; when does an attractive price typically emerge? Generally, it arises during periods of market panic or when specific companies face significant short-term negative news. These are often times when investor confidence is at its weakest, even panicked. Therefore, successful value investing also requires emotional stability, mental fortitude, and a rational attitude. Sometimes, overcoming the inherent human weaknesses of greed and fear is even more critical. To excel in value investing, one must not only acquire professional knowledge but also cultivate a long-term perspective through practice, breaking the habit of constantly monitoring stock prices and chasing trends, thereby gradually moving towards a value investing approach.

Over the past 12 years, Qianhai开源 Fund has achieved substantial growth in assets under management, from inception to approximately 150 billion yuan. This growth is a result of accurate judgments made at critical market inflection points and the implementation of the value investing philosophy with Chinese characteristics. Notable examples include: In early 2014, the fund's advisor publicly stated in the media that the A-share market was poised for a major bull run, which commenced that July. In 2015, as the market accelerated rapidly, even prompting many investors to employ leverage, a public announcement was issued on May 21, 2015, highlighting market risks and strictly controlling fund product positions. This move effectively navigated the subsequent nine-month market crash, achieving timely position reduction at high levels—a classic case of practicing value investing with Chinese characteristics that maximized protection for fund holders and established the fund's reputation. During the market circuit breaker mechanism triggered in early 2016, when investor confidence was severely lacking, the assessment was that market risks had been sufficiently released, with the CSI 300 index's price-to-earnings ratio falling below 10 times, nearing a historical low of around 9 times. The fund's overall strategy shifted from defensive to fully offensive, accurately capturing the rally in blue-chip stocks after the 2016 Spring Festival. When the trade war emerged in 2018, an initial position reduction was undertaken for risk mitigation, followed by a comprehensive increase in holdings after the National Day holiday, under the strategy of "acting decisively once the situation clarifies," successfully seizing the opportunity to build positions at market bottom and achieving favorable investment returns. During recent years of market downturn, the fund utilized its own capital to accumulate approximately 580 million yuan in self-purchases of its funds, both boosting investor confidence and securing opportunities for bottom-fishing. These actions exemplify the application of the value investing philosophy with Chinese characteristics in investment practice.

Assessments of major market trends primarily focus on eight factors: policy direction, valuations, market sentiment, liquidity conditions, external factors, risk premiums, market themes, and fundamentals. A comprehensive evaluation of the market's current phase, combined with the actual position status, has enabled the successful capture of opportunities for building positions at market bottoms and realizing gains at market peaks.

Therefore, value investing with Chinese characteristics is a suitable investment methodology for various types of investors in the Chinese market. Regardless of the amount of capital, investors should study this approach. Given the unique characteristics of the Chinese market, if many investors persist in old habits—such as seeking tips, speculating on concepts, and chasing trends—they are likely to incur losses and potentially fall victim to market volatility. Particularly with the significant proportion of quantitative trading today, for investors to genuinely change their fate of losing money, it is imperative to persistently research good industries, good companies, and good funds from a fundamental perspective, achieving long-term sound returns through the practice of value investing with Chinese characteristics.