The Xinpu Method: Ride the Donkey, Watch for the Horse

"Value investing is alive — it is constantly iterating. Even from Graham to Buffett, it has been in continuous evolution." — Gui Jiang

After managing one of China's most demanding mandates, Gui Jiang founded an investment firm applying Graham–Buffett principles to China's domestic market, with four original contributions.

1. A quality-and-price screen as a first filter. From thousands of listed companies, a screen combining return on equity (quality) and price-to-book (price) narrows the field to a few hundred. Research teams then cover these for years, mapping each company's "red" zones (overvalued, avoid) and "green" zones (undervalued, accumulate), so decisions are pre-considered rather than emotional reactions to price moves.
2. A red-light / green-light system. When several measures — dividend yield, earnings multiple, price-to-book, cash-flow yield — all turn attractive at once, a position is started or added. When they turn expensive, it is trimmed. The discipline is to keep rotating from dear to cheap.
3. "Ride the donkey, watch for the horse." Most of the portfolio stays in steady, cash-generative businesses offering modest but reliable returns ("donkeys"). A reserve is kept for the rare crisis when excellent businesses become cheap ("horses"), which may appear only once or twice a decade. The rule: never be fully invested in horses, never sit entirely in cash.
4. A social-ecology screen. Gui Jiang's most distinctive idea: a business that extracts too much from the surrounding society will eventually face a regulatory or social correction. He reportedly reduced exposure to property developers while their reported results were still strong, reasoning that the strain on ordinary households was unsustainable.

Illustrative example: preparing for winter

During several difficult years for China's market, the firm reportedly produced positive returns each year, having rotated out of expensive momentum stocks near the peak and into undervalued shares. As Gui Jiang put it: while others were enjoying summer, he had already prepared for winter. The discipline of pre-set zones, not a forecast, drove the positioning.