The Casino Next to the Church: Three Talks From a 2026 Value Investing Conference in Taiwan

Translated from the original Traditional Chinese post. Read the Chinese original →

On July 18, 2026, the 雷浩斯 Value Investing Conference (雷浩斯 is a Taiwanese value-investing author) was held at Zhongshan Hall in Taipei: three talks in one day, from method to market to life, strung together into one complete value investing system. This post condenses the three talks into six themes, using tables wherever a table will do, so they are easy to look up and apply.

Three Talks, One Through-Line

The three talks look separate, but the through-line is a single sentence: don't try to predict which day the market turns; identify where you are standing in the market right now.

1. The Investing Flywheel: Four Elements Interlocking Into a System

He breaks beating the market into four elements. The point is not how strong any single element is, but that all four are in place at the same time and mesh with each other, like a flywheel that takes less effort the faster it spins. He stressed that this method needs no trading room, no wall of screens and no algorithm. All his performance has been done by placing orders from one phone.

2. Davis Double Play vs. Double Kill (Flywheel Element ①)

雷浩斯 contrasted Wiwynn and King Slide, and he has personally traded both. Wiwynn: bought at NT$800–1,000 and sold at NT$1,700, then traded again, for a total gain of 6x. King Slide: bought at NT$400, sold at NT$600, got off after making only 50%, and it then shot straight up to 8,655. Same capital, same opportunity cost, yet one made 6x and the other missed 20x. Where does the gap come from? The side-by-side financial statements that follow are an answer to exactly that question. Both are good companies, and Wiwynn's numbers are even prettier, yet the returns are worlds apart.

The key is the Davis Double Play: earnings improvement changes the market's perception, so EPS growth and P/E expansion happen at the same time and the two forces multiply. King Slide's gross margin is nearly 78%, it is relatively small, and its revenue doubled, so its P/E went from 30 to 71x and the rally was fiercer. Wiwynn's gross margin is down to 7.55%, and its P/E has stayed pinned in the teens for a long time, so however high its EPS goes, the rise is muted. The market's perception of high gross margin sets the valuation ceiling: once revenue grows, a very high gross margin translates directly into startling EPS, which then pushes the P/E higher. The reverse is the Davis Double Kill: momo.com Inc.'s P/E ran to about 100x during the pandemic; afterward, even with revenue still growing, EPS was revised down from its 2021 peak and the P/E was ground down from 100 to the low 20s, with the stock falling from a high of about NT$2,190 to about NT$250 recently, only about 10% of the peak. Slowing growth combined with a high P/E is the breeding ground for a double kill.

Another lesson 雷浩斯 admitted to: in his early first book he also misjudged, wanting to wait for a drop below a certain price before buying, and that price never came back.

3. Concentrated Investing (Flywheel Element ②): A Math Problem, Not a Risk Preference

The difference between concentration and diversification is essentially math. Spread across hundreds of stocks, a big gain in any one contributes little to the whole; concentrated in a few well-chosen positions, the contribution is enormous. Munger often criticized over-diversification, and Buffett's excess returns also came largely from heavy concentration. Concentration is not gambling; it is assessing the odds and computing expected value. The point is not the single probability of winning this time, but multiplying the probability of winning by the possible gain, set against the probability of losing times the possible loss, to get the long-run weighted return (the expected value). As long as the expected value is high enough, no single win or loss decides success or failure. Go find the scarce positions with the highest potential profit and the lowest risk. Good positions are scarce by nature, so concentration is a result rather than a posture.

This concentration logic breaks into three steps. Step 1, Research: from a pile of companies, screen out the scarce ones with the highest potential profit and lowest risk. Step 2, Verification: use the actual changes in monthly revenue and EPS to turn the fundamental inference that this company will grow into visible, substantive evidence. Step 3, Concentration: precisely because good positions that pass both of the first two gates are extremely rare, capital naturally gathers in a handful of names. So concentration is the inevitable result of layer-by-layer screening, not a posture of heavy bets decided from the start.

In practice, 雷浩斯 advises starting with a small position. Once you hold it, the owner's mindset and the endowment effect push you to track monthly revenue and EPS seriously, and you add as the evidence strengthens. As for valuation, his standard is this: if you need to open Excel to work out the margin of safety, it isn't cheap enough; a truly cheap position is one you can tell is a bargain by mental math.

He also used AI live to break down Phison's (Pua Khein-Seng) financial statements, to demonstrate that if you understand a company you can derive its statements:

He repeatedly stated that the point is not that Phison will go up, but the method: in industries like memory, with an enormous supply-demand gap, look at leading evidence such as inventory rather than current-period profit (profit is a lagging indicator); R&D expense should be treated as capital expenditure. Foreign institutions classify Phison as a third-tier maker and it is listed on the OTC market (TPEx), so when a peer such as SK hynix breaks down, it tends to be sold first, creating a perception discount.

He strung the industry reasoning into one chain: AI training → AI inference → spillover into AI storage (memory). The Davis Double Play is most likely to happen at the node with an enormous supply-demand gap, and right now the bottleneck is exactly memory. So what to watch in the financial statements is not current-period profit but total inventory: the more inventory, the bigger the arsenal already stocked for future revenue.

What you can truly copy directly is his four-part AI valuation incantation method: ① Role setting: ask the AI to play a professional foreign-institution analyst; ② Extract the baseline: feed it 2025 EPS and Q1 2026 EPS; ③ Variable reasoning: use inventory going from NT$30 billion to NT$70 billion to estimate full-year 2026 profit; ④ Extreme stress test: assume inventory reaches NT$140 billion in December 2026, and derive 2027 EPS. The point was never what number the AI computes, but whether you can feed it the right baseline and ask it about the right variables.

Finding good companies and concentrating correctly completes only the first half of the flywheel. The second half is don't lose money: keep what you've earned. 雷浩斯 breaks it into three lines of defense:

• Defense 1, dynamic adjustment: when returns hit a new high and reach the satisfaction point you set in advance, decisively sell one-third, and buy back on a pullback. If concentration makes your mindset waver, use the simplest approach of selling half to lock in profits, which he calls the sleep-well method.
• Defense 2, asset solidification: take part of the windfall straight out of the stock market and move it into physical assets like real estate, using fixed assets to resist downside risk and forcibly lock the wealth in. This is also why the biggest losses often come right after the biggest gains: people tend to enlarge their positions when they are earning the most and most relaxed, and give it all back at once.
• Defense 3, alpha defense: keep up with the market when it rises and avoid the big drops when it falls; winning by just a little each year over the long run makes compounding very considerable. Also watch the extremes of market opinion: when extreme overvaluation erases the margin of safety, leave decisively and avoid a systemic crash.

4. Four Warning Signs of an Overheated Market

The second talk opened with Buffett's line, welcome to the casino next to the church, and summarized the current overheating of the Taiwan stock market as four warning signs: not predicting when it crashes, only identifying the state of overheating.

He also used three historical comparisons to show that bubbles don't repeat, but they rhyme:

On luck, 雷浩斯's view is this: luck is good and bad, and evens out over the long run, more clearly the longer you survive, so making big money over the long term is never luck, but doing certain things right.

5. Hidden Masters: The Structural Edge of the Individual Investor

The methodological core of the second talk is that individual investors have a whole set of hidden advantages over institutions:

The tax item is most striking when you compound it: at the same rate of return, the individual gets the full 1.20ⁿ, while the institution, after the tax takes its bite, is left with 1.16ⁿ. After twenty years, the gap in asset size is nearly 2 times. This structural edge is not an abstract benefit; it compounds.

Two rules of thumb follow:

• Life-cycle investing: when young you can (cautiously) use leverage, because you can afford to lose and time is on your side; but he stressed that this means making the right moves, not going all in.
• Look at IRR, not at beating the market in a single year: guest James (founder of 富同投資) said his annualized return over 16 years is about 12.5% including dividends, and that he has lagged the market the past two years by avoiding the runaway stocks, but what he looks at is the internal rate of return on his whole asset base (counting his day-job income as well).

The three lines of defense of don't lose money were covered earlier (dynamic adjustment, asset solidification, alpha defense). Here is a very down-to-earth addition: use administrative friction to block impulses. Deliberately don't set up pre-registered transfer accounts, so that moving money means wiring it at a bank counter, and spread living expenses across different banks; the more hassle it is, the less likely your hands itch to move money and place reckless orders. He also cited Howard Marks: the key to beating the market is not losing when it falls. Keep up on the way up and avoid the drops on the way down, and winning by just one or two percentage points a year over the long run makes compounding very considerable.

Finally, he gathered the conditions of Taiwan's hidden masters into three pillars: keeping your wealth under wraps (no need to raise outside money, no AUM pressure), pursuing absolute return (not comparing with others, only with your own goals), and antifragility (you won't be liquidated in extreme markets), with a base of sound financial leverage plus value investing. He also called out the most common mistaken question: How much cash are you holding right now? Copying someone else's positions without self-assessment is where risk begins.

6. Compounding Over the Years: The Long-Termism of Buffett and Munger

The third talk stretched the view from a single quarter or a single year to one person's whole life. After Munger lost his wife in 2010, he kept himself energetic with a standing breakfast at the Los Angeles Country Club at 7:30 every Tuesday morning with six business partners. In the last six-plus months before his death, he made his final big move: starting in May 2023 he bought two coal stocks, Consol Energy and Alpha Metallurgical Resources (before that he had stayed away from coal for nearly sixty years), and by the time he died his paper profit was over US$50 million. Six days before his death, he was still buying Alpha. Even more astonishing, one or two weeks before the end he was still asking whether Moore's law applies in the age of artificial intelligence. Learning until the last moment is not an adjective; it is literal.

Buffett took over Berkshire in 1965 and has kept a top public record for sixty years. The day he took control the stock was US$18, and now one share is over US$730,000 (July 2026). Seth Klarman pointed out that what truly deserves admiration is not performance but character, and it is layered: at the top is the engine of the mind, never-resting curiosity and consistent insight; in the middle are the gears of execution, focus and hard work; and at the very bottom is the core foundation, humility, integrity, a character unaffected by wealth and success, and an optimistic belief. The function of the foundation is to make sure the whole system doesn't collapse under extreme long-term stress.

On this basis 雷浩斯 distinguishes two kinds of people:

His conclusion: Buffett and Munger let knowledge, judgment, character and friendship compound together over a long stretch of years. What compounds is never only money, but also character and relationships.

Finally he split compounding into two kinds, the best wrap-up of the whole event: financial compounding, capital plus time, which produced a sixty-year public track record that cannot be replicated, something probably only Buffett could do in history; and cognitive and character compounding, continuous learning plus time, which yields growth in wisdom and graceful aging, and that is something each of us can do.

He also gave a personal version of the flywheel: observe new patterns → expand your circle of competence → deepen intuition → become a better investor, then go back to observing. It echoes the investing flywheel of the first talk, head to tail. Value investors tend to live long, and the late years of Buffett and Munger are in effect a blueprint drawn for everyone of how to age gracefully with enormous wealth.

How the Method Lands: Some Practical Details

Beyond the big framework, 雷浩斯 also covered some very practical details: how to do the math in your head, how to sell at highs, how to write a trading journal, and how to think about risk.

Doing the math in your head, in practice: screen first, then list indicators company by company. 雷浩斯's approach is to first screen out a list using indicators like ROE, then find each company's own leading indicator and list them out, because the key numbers to watch differ from company to company; anything you can't work out in your head, give up on.

Discipline for selling at highs. List the overheating signals and tick them off one by one (this year: TSMC's P/E breaking through 30x, unrestricted-purpose funds borrowed dry in May 2026, frenzied buying of actively managed ETFs); and add two psychological principles: don't compare your performance with others, and treat the leaders as prodigies of the present and the future rather than dismissing them with survivorship bias, thereby holding on to your own principles.

The trading journal. 雷浩斯 and his conversation guest James (founder of 富同投資, with a background in mechanical engineering and a master's in business administration at National Cheng Kung University) both stressed the trading journal. The event cited Ray Dalio's Principles on presenting the situation: use voice input to record in full the circumstances at the time, the difficulties you ran into, and why you decided as you did. The longer the time span, the more useful it is: the next time a similar event comes up, flip back through the journal to compare the same situation and see how you faced and handled it back then, so your future self has a chance to reuse the same method. He drew the whole thing as a closed loop: self-test → discover your strengths and weaknesses → write them into the journal → strategy evolves, then back to the next self-test. Investing is a journey inward.

On how to define risk, James gave an example: in a small log-cabin waffle shop in Tainan, on a workday, he saw three middle-aged people in their forties who were not at work but were chatting about camping while day trading. Spending even working hours watching the screen to day trade is itself one of the signs of an overheated market. James said that when he talks about risk, the first thing he thinks of is the risk of gambling away your whole life.

Summary of the Three Talks: Actionable Points

• Systems beat inspiration: the value of the four flywheel elements lies in having them all in place at once and not making rookie mistakes.
• Identifying your position matters more than predicting the time: use the overheating signs and the Davis Double Play / Double Kill to judge which square you are standing in, then adjust your positions accordingly.
• Compounding is not only money: mental math beats over-modeling, a circle of competence beats volume of information, administrative friction beats willpower, and the long term beats a one-time windfall.

My Takeaways

Before going, I thought this would be a "hot stock tips" gathering, with 雷浩斯 telling us which stocks would rise and which industry would take off. After the three talks it turned out to be nothing of the sort. From start to finish he talked about a system: how the four flywheel elements mesh, how to tell which square you are standing in when the market is overheated, and what exactly compounds once the timeline is stretched to a lifetime. That gap was my biggest gain: I came wanting to take away answers, and what I brought home was a framework for judgment.

As an ER physician, I found this framework surprisingly familiar. "Systems beat inspiration" is almost the spirit of emergency medicine: what really separates people is never one flash of brilliance, but not making a rookie mistake at any step. The three lines of defense of "don't lose money" are a lot like the order in which we stabilize a patient: first, don't let the most serious thing happen. Especially the line that the biggest losses often come right after the biggest gains, which made my heart jump when I heard it, because clinically the most dangerous moment is often the moment you feel everything is going well and start to relax.

Among the investing concepts, the ones that inspired me most were "identifying your position matters more than predicting the time" and expected-value thinking. I used to be unable to resist guessing the top and guessing the reversal; this time I finally understood that the point is not predicting which day it crashes, but honestly admitting where in the market you are standing right now. That is really the same ability as judging which stage of the disease curve a patient is in. And the idea that experts never look at a single win rate, only expected value, is simply the underlying logic of clinical decision-making: isn't what we do every day multiplying probability by severity of consequence and choosing the path that pays off best in the long run?

My most direct takeaways are two. One is that 雷浩斯 places orders from one phone, with no wall of screens, and still compounds over the long term, which hit me hard as a reminder that tools and volume of information were never the key; judgment and discipline are. The other is presenting the situation and the trading journal: write down in full the circumstances at the time, the difficulties you met and why you decided as you did, and leave it for your future self to compare against. That is almost the same as our case reviews and M&M discussions. When I get home, I plan to use it for both investing and clinical work, so that every decision becomes an asset my future self can compound.

A Few Necessary Notes

This post is a summary of the talks, not investment advice; the stocks mentioned (Wiwynn, King Slide, Phison and others) are examples of methodology, not recommendations. Investing carries risk; use your own judgment.

The cover image is an AI-generated illustration, not a real scene.