Republic of China: Ace Pilot

Chapter 165, page 164: The Most Valuable Piece of Paper, Graham and Fisher
Those caught in the middle of it all can't see through the fog that obscures the future.

This was true in Indiana, and it was also true for brokerage firm owner Severley.

Only Fang Wen, who truly came from the future, knows what the trump card is.

He won't explain; he'll just do it.

Therefore, under Fang Wen's insistence, Severe produced a roster of companies listed on the New York Stock Exchange.

In the days before computers, all stocks listed on the New York Stock Exchange could be found here.

Fang Wen took the thick book and started flipping through it.

There were many companies listed above that he had never heard of; they were probably all failures that had disappeared into history, and perhaps a very few that would change their names in the future.

There were also some that he remembered.

If Fang Wen has any recollection of this, it means that this company survived World War II and will grow and thrive in the decades to come.

You will absolutely not fall into the bankruptcy trap.

"Give me paper and a pen," Fang Wen said, looking at the company's roster.

Severley handed Fang Wen the paper and pen on the table, but he did not approve of Fang Wen's behavior.

“Mr. Fang, you should buy into companies that everyone approves of, instead of choosing a bunch of garbage.”

Fang Wen was too lazy to reply to him, so he wrote down the names one by one on a piece of paper.

General Electric, or GE for short, is a must-have company.

Coca-Cola, which is the future Coca-Cola.

It's already available for sale in Shanghai.

However, the current Chinese name is "可口露" (Kěkǒulù), and it is produced by Shanghai Watsons Soft Drink Company.

Happy Water has been a global bestseller for nearly a century; investing in it is definitely a wise choice.

After recording only two entries, Fang Wen felt confident of victory.

He continued flipping through the pages.

Procter & Gamble.

The name now translates to: Proctor and Gamble Joint Company.

It means a company started by two people, mostly used by husband and wife or brothers who are partners.

But in the future, it will also be called Procter & Gamble.

It may seem insignificant now, but it will become an international giant in the future.

It is now a small business that sells candles and soap.

Similar to Procter & Gamble is IBM.

IBM's business scope, as listed in the directory of publicly traded companies, is the manufacture of tabulating machines and slide rules.

Fang Wen copied down the company names that were the same as those in his memory.

Not many, but not few either.

Many more companies are not yet listed on the NYSE, or they only started developing after World War II.

Looking at the list he had copied down, Fang Wen suddenly thought of another question.

He knew perfectly well that Roosevelt's series of economic stimulus policies after taking office this year would be directly reflected in the stock market.

Many companies will benefit greatly from this.

The devaluation of the US dollar due to its departure from the gold standard, and the monetary easing caused by the printing of large amounts of money, led to a rise in stock prices.

But all of this takes time, and the price movements of each stock on the list will not be exactly the same.

How should I invest? Which stock should I buy first? If it surges, should I exit temporarily and buy back after it pulls back? If it continues to fall after I buy, how should I average down? With so many stocks, should I create an investment portfolio?

As a future novice investor in the stock market, Fang Wen has figured things out through his own experience of failure.

He is not good at investing, nor does he have the patience for long-term investment operations.

That's why financial brokerage firms exist in this world, allowing professionals to do what they're good at.

Fang Wen looked up at Severley.

He secretly denied it to himself.

This person is not suitable.

Are there any better candidates?

I think so.

Fang Wen recalled an investment seminar he had attended, where analysts from securities companies spoke passionately about value investing and growth investing.

The text repeatedly cites two investment masters from the same period: Graham and Fisher.

Fang Wen still remembers that in those lectures, it was mentioned that Graham was Buffett's mentor, and Fisher also had a great influence on Buffett.

Judging from Buffett's age, these two might have already been engaged in investment careers in this era.

Fang Wen folded and put away the slip of paper containing the secrets to wealth, then asked Severley, "Do you know Graham and Fisher?"

Severley thought for a moment: "I know a lousy guy named Graham. His joint account has lost seventy percent in the last few years. If that's the person you're looking for, I suggest you give up on this idea."

“What is a joint account?” Fang Wen asked.

Severley explained: "It's a private syndicated investment scheme where a securities account is opened in the name of the operator, who signs a separate risk and equity contract with the investors, operates the account, and ultimately shares the investment returns according to the agreement."

Fang Wen nodded. In order to get more information about Graham, he said, "Severe, tell me where Graham is, and I will buy Boeing stock as you said."

Severley grinned triumphantly: "Deal. You'll thank me for this decision."

Fang Wen and his group left the Severe Brokerage Firm, where they opened an account, bought several hundred dollars' worth of Boeing stock, and also learned of Graham's whereabouts.

Professional investors like Graham didn't need to operate on Wall Street to attract clients like brokerage firms did; his clients were acquaintances who believed in his investment philosophy.

Therefore, his office is located near his home, making it convenient for him to live and work.

Fang Wen and his group got into a Chevron sedan and drove to their destination.

The car left Wall Street, went up Broadway, passed the Empire State Building which had only been built two years prior, and found the Beresford Apartments next to the American Museum of Natural History.

According to Severley, he only went there once, in 1928.

It's probably on the 18th floor of the Beresford apartment building, but I'm not sure which specific apartment.

Fang Wen looked up.

(Beresford, New York)

This apartment building is more like an ancient castle.

The layout of the buildings inside is probably quite complex; we'll have to go inside to find out.

He drove to the parking lot outside Beresford and the four of them went into the main building.

The main building is indeed eighteen stories high.

In the main lobby, Indiana chatted with the residents and learned about the situation.

"Follow me, there's an elevator over there that goes straight to the 18th floor."

Everyone followed Indiana into the elevator and arrived at the 18th floor, just as a wealthy lady with a small dog came out of her room.

Fang Wen politely asked, "Excuse me, does Graham live here?"

Upon hearing the name, the lady immediately began to chatter: "Graham? He's no longer here. I rented his house five years ago, only to find out the following year that he was on the verge of bankruptcy. The current lease is one I renegotiated with the landlord."

"Do you know where he lives now?" Fang Wen pressed. "Who are you? If you're his creditor, I won't tell you," the wealthy woman said warily.

“Of course not a creditor. I’m from the East, I run an airline, and I’m here to discuss investment,” Fang Wen replied.

The lady relaxed: "I am Mrs. Marcus from Neiman Marcus Department Store in Dallas. I hope to have business cooperation in the future. Graham has just had bad luck, but he is a good man. I hope you can reach an investment agreement with him, which should be very important to him. He should be living in El Dorado now."

The lady was a kind person and talked a lot.

El Dorado is Spanish for "Golden Land".

But this golden kingdom is a legend of the Maya people of South America.

It is a term created during the Age of Exploration and Colonialism in South America.

But in El Dorado, New York, it is a twin building.

Fang Wen and his group went downstairs and drove up Eighth Avenue. At the intersection of 91st Street, they arrived at El Dorado.

Knowing only about architecture is not enough to find Graham.

Going upstairs one by one to ask is also impractical.

Fortunately, the building has a building manager who registers residents' information.

Indiana took out a five-dollar bill and waved it in front of the administrator.

"I'm looking for someone named Graham."

Without hesitation, the administrator took out the resident registration book and carefully looked through it.

He actually found it.

After paying $5, Indiana returned and led everyone upstairs.

The door opened after a knock.

A man in pajamas with disheveled hair opened the door.

His face was very pale, the kind of pale that comes from not being exposed to the sun for a long time, and he had his hands in his pockets.

"You are?"

“We’re looking for Graham,” Indiana asked.

“That’s me.” The man nodded.

"My name is Fang Wen, and I come from the East. I've come specifically to visit you and would like to discuss some investment matters."

Fang Wen got straight to the point, stating his intentions directly. He was not American and did not understand the local customs and social etiquette, so speaking directly might be more effective.

Upon hearing that it was related to investment, the man immediately relaxed and opened the door to let the four of them in.

After leading the four to the living room, Graham said, "Please wait a moment, I need to change. I'm home alone, so if you'd like some coffee, please help yourselves; the coffee machine is in the living room."

With that, he went back to his bedroom to change his clothes.

In American-style communication, there's no room for formalities. Indiana simply turns on the coffee machine, grinds the coffee, and brews it.

Fang Wen looked around at the room's layout.

There was a small study next to the living room. He went into the study and saw a stack of manuscripts on the desk.

The title is "Security Analysis".

Turns out, the investment bible I bought for tens of dollars in the future is still unfinished here.

After Indiana finished brewing the coffee, Graham also came out of the room.

Dressed in a neat suit, Graham asked, "What kind of investment are you looking to discuss?"

Fang Wen didn't answer immediately, but said to Indiana, "Could you please give us both a cup? Mine should have sugar, Graham, do you want some sugar?"

“I don’t want to,” Graham replied.

At this point, Fang Wencai got to the point.

He took out the piece of paper with the company name written on it and unfolded it in front of Graham.

“I have some investment goals, but I don’t have time to track them for a long time. My idea is to build an investment portfolio and then find a professional to manage it for me.”

Graham's attention was mostly on that piece of paper.

He couldn't understand and couldn't help but ask, "What criteria did you use to select these companies? Some I think are good, some seem dangerous, and some are even completely worthless from my perspective."

"You think it has absolutely no value?" Fang Wen asked in surprise.

"Yes." This investment expert, after five years of economic crisis, felt a sense of rebirth.

He longed to share his theories with others, and the person standing in front of him was exactly that person.

Then he launched into a long, rambling monologue.

"I believe investors should look for stocks whose market price is lower than their intrinsic value when buying them, thus creating a protective layer against potential future uncertainties and mistakes. Thorough analysis and valuation must be conducted before making investment decisions to ensure that even in the worst-case scenario, significant losses will not be incurred. By my standards, current assets should ideally exceed current liabilities by more than twice, and the share price should be less than two-thirds of the net current asset value per share."

Fang Wen felt as if he had returned to the future and was listening to lectures by securities analysts.

But this time, he knew that the person in front of him had found his own true meaning of investment from the huge losses of the Great Depression, and would lead to the world's richest investor in the future.

Therefore, he is trustworthy.

After Graham finished speaking, Fang Wen shared his thoughts.

"I know that the joint investment account you and Newman set up has suffered huge losses, but that doesn't diminish my confidence in your abilities. My idea is that you create an investment portfolio from the stocks listed on this paper, which will be managed exclusively for me. In return, 1. I will acquire your debts and the joint account and repay them on your behalf. 2. There will be an annual dividend opportunity, with you and Newman receiving 20% ​​of the investment returns as management fees. 3. I will also continuously invest funds in the dedicated account each year and add new investment targets."

Graham looked at Fang Wen in surprise.

How could there be such a generous person in this world?

By acquiring his own debts and troubled joint accounts, he resolved a major problem that had plagued him for more than five years.

They will continue to invest funds, allowing themselves and Newman to continue investing, and will receive a 20% share of the investment.

The terms are so generous it's unbelievable.

But he still held firm to his principles.

"I'm willing, but on that piece of paper, I will only choose the stocks that I think are valuable."

Fang Wen nodded. "No problem. Besides that, I wanted to ask you about someone, Fisher. Do you know him?"

“I don’t know him.” Graham replied without hesitation. As an investor, he didn’t have a wide social circle, and he didn’t even know his opponent.

"Okay, I need to go back and prepare, find a lawyer to draft the contract, and then discuss how to resolve your issue. Wait for me for two days."

Fang Wen got up and said goodbye to Graham.

After leaving the building, Fang Wen felt that the investment strategy was not yet perfect.

He has the best investment targets.

There are also the best investment experts.

But this investment expert is only good at finding value in companies that already exist.

We also need another growth investment expert from a professional investment firm, and that would be Fisher.

This person should also be in New York.

Since it's difficult to find through normal channels, let's try another method.

He looked toward Indiana.

“Indiana, I need you to do something.”

Indiana nodded: “Going to see Fisher, right? I understand. I have some friends in New York who can help. Oh, and a lawyer too. I can find a reliable lawyer to draft the investment agreement. You have to understand one thing in America: choosing a reliable lawyer is a lifelong commitment.”

(End of this chapter)