Solar Energy Case

Admittedly, Most of the discussion on climate change or environment until now has been on the moral and politic aspects of the issue. Some traditional energy industry, including coal-mining industry iron and steel plant was blamed by public in nowadays. People believe those energy industry has major responsibility of environmental pollution. In China, a well-know host censure the energy industry leaded the air-pollution and the greenhouse effect, and she claim that we should use and develop new energy, such as natural gas and nuclear energy.

If I were a CEO of a major corporation, I will develop the new energy, like solar energy. As a new energy, company will avoid the pressure from public opinion. No one want blame the new energy. On the contrary, people and government will encourage new energy company. Moreover, I will choose sunny place to run industry. Sunniness will good for solar energy collection. I believe that those two method will increase shareholders wealth effectively.  

In this given paragraph, I think Buffett want express that nobody can predict future and nobody can guarantee the price will go up or down. We only should make full prepared for the future and keep usual open-minded spirit. In additional, Buffett gives a vivid analogy that “if you want to shoot rare, fast-moving elephants, you should always carry a loaded gun.” The reason is very obvious, you can not forecast elephants’ activities, and you can not try to find elephants blindly. The only things you can guarantee that your gun is loaded. Therefore, if you find elephants, you can shoot a elephant immediately.

Interestingly, Buffett also mentioned that “expansion or acquisition opportunities…are most likely to pop up when conditions in the debt market are clearly oppressive” This principle is totally different from I thought. I think the opportunities should come up in optimistic market. That may be a reason that Buffett is mega millionaire, but I am still working for my homework.  

Honestly, it does make sense for me. Buffett means that anybody has no ability to forecast the trend of market in the future, and they just keep easy and prepare well. No finance theory gives this suggestion. I don’t believe Buffett in this advice. Buffett as a most successful investor, he must be have some method to forecast the future price, but he won’t tell us. He and his team must be have date about trend of market, like the price has 80% possibility go up or 20% possibility go down. However, Buffett didn’t mention that. That is a reason why he can find and hunt rare and quick elephant, but we just can hunt a normal and old one, even know elephant by photograph.

Anyway, no one can deny that preparatory work is crucial for each people, however that is not enough for each successful people.

I believe that everybody have chance to become successful people, but preparing well is very fundamental for every investor. If you can’t make sure the loaded gun, you can do nothing in next time.

I think the “one dollar premise” is very logical strategy in our current market. The “one dollar premise” means that each dollar of the retained earning should get at least one dollar profit in market value. Moreover, Buffett point out that “one dollar premise” is a quick test to measure a company’s efficiency and profitability. Any investor or company should guarantee that they can use each dollar to make at least one dollar’s value.