📖Li Lu
Value Discipline
Discipline in valuation determines investment success.
Never overpay for a security, no matter how exciting the story. The price you pay determines your return. Discipline in valuation is the foundation of investment success.
🏠 Everyday Analogy
📖 Core Interpretation
In Value Discipline, Li Lu focuses on the gap between price and value. Returns come from paying less than what a business is worth, not from guessing short-term market moves.
💎 Key Insight：The price paid is the most important variable.
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❓ Why It Matters
Ignoring valuation turns even good companies into poor investments. Overpaying compresses future returns and leaves little margin when assumptions are wrong.
🎯 How to Practice
Estimate intrinsic value with conservative assumptions, set clear buy ranges, and act only when price offers a meaningful discount with acceptable downside.
⚠️ Common Pitfalls
Confusing a low price with true cheapness
Using one metric without business context
Overly optimistic assumptions that erase margin of safety
📚 Case Studies
1
BYD Investment Amid Panic (2008)
During the global financial crisis, Li Lu invested in BYD after deep due diligence on technology, management, and unit economics, despite widespread pessimism on autos and China.
✨ Outcome：BYD became a multibagger over the following decade, validating his intellectually honest, evidence‑driven thesis.
2
BYD Early Investment (2004)
Li Lu’s Himalaya Capital invests in Chinese battery and handset maker BYD, recognizing its advantages in batteries, management quality, and long‑term EV potential.
✨ Outcome：Position held and increased; Berkshire Hathaway later invests in 2008, and BYD becomes a multibagger over the following decade.
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