Chinese New Year's Eve is approaching, and the "Chinese New Year's Eve Dinner" at the end of the year is the highlight of the family reunion to welcome the New Year, and the selection of dishes usually follows ancient and modern customs and traditions, and these traditional must-eat dishes often contain various "auspicious meanings". The festive season is approaching, we might as well expand our thinking, and maybe we can also give some new inspiration to investment.
There is a saying in the north that "if you don't eat dumplings, you won't be counted as a New Year". The dumplings on Chinese New Year's Eve are a major feast that cannot be replaced by any mountain and sea delicacies, and because they resemble ingots, they have the auspicious meaning of "attracting wealth and entering treasures". In the process of long-term value preservation and appreciation of the asset allocation portfolio, equity assets play a pivotal role as "hard-core" assets.
As the "barometer" of the domestic economy, A-shares not only represent the financing needs of the real economy, but also an important way for investors to share the dividends of economic growth.
One of the long-term returns** of equity assets is the profit growth of the enterprise, and the long-term income of high-quality enterprises is usually relatively substantial. However, one of the important characteristics of equity assets is that they have high volatility. Looking back on 2023, the A** field will continue to be sluggish, and it will be much more difficult to obtain profits than in previous years.
However, we need to be soberly aware that China's economy is still in a critical period of economic recovery, transformation and upgrading. In addition, after nearly two years of adjustment, the valuation of the A** market has significantly improved the cost performance of long-term investment. As shown in the chart below, most of the historical percentiles of the P/E ratios of the market's major broad-based indices are below 20% in the past 10 years, and most of the historical percentiles in the past 10 years are below 3%, especially in the ChiNext index.
In the face of A-shares, which are currently valued at the bottom of the area, the attractiveness of equity asset allocation has increased significantly. However, the market is still facing uncertain risks, and it is more important to pay attention to strategies when investing, such as focusing on dividend low-volatility assets with more risk-resistant profitability and more cost-effective valuations.
In many parts of China, a well-cooked chicken must be on the table of traditional Chinese New Year dishes, meaning "plan", and the investment in the Year of the Dragon in 2024 must be "flexible and plan". In recent years, more and more people have gradually understood the global diversified allocation of household assets, and Hong Kong stocks, US stocks and other targets have become more and more known.
From a long-term perspective, although equity assets are one of the most important sources of income from asset allocation, due to their high volatility attributes, it is difficult for investment to ensure that the income target can be reached every year.
So,Rational asset allocation is the core of long-term investment. In order to have a more comfortable investment experience in equity asset investment and avoid panic and irrational operations, it is necessary to establish a multi-asset and diversified investment portfolio.
The low or even negative correlation between multi-asset and cross-regional assets allows us to further broaden the returns of our portfolios when there is a lack of overall opportunities in the A** market, thereby helping to reduce portfolio volatility and drawdowns and obtain a better investment experience.
The chart below is an example of the historical return performance of each asset representative indexAs the asset classes in the portfolio increase, portfolio returns are enhanced and income volatility is flattened.
As the saying goes, "no fish, no feast", delicious and diverse fish is a must-have "hard dish" on the New Year's dinner table in many regions, indicating that there are more than one year of good intentions, with fish as the basic core, the grade of other dishes has been improved.
In asset allocation, relatively low-volatility assets are indispensable, such as fixed-income assets with relatively smaller volatility as anchors for risk buffers, so as to better use small ** to lay out high-volatility equity assets. When there is a relatively large adjustment in the equity market, it is easier to balance the fixed income assets represented by bonds or improve the stability of the portfolio as a whole.
Judging from the income performance of various types of financial assets in China in the past 10 years, the performance of major types of assets varies greatly. Although equity assets have performed well in individual years, they have not been sustainable enough. In contrast, the CSI Total Bond Index has the demeanor of a long-distance runner who moves forward in small steps, and the cost-effectiveness of bond asset allocation has gradually become more and more valued in recent years.
In terms of participation, it is difficult for individual investors to directly participate in bond trading, so indirect investment through bonds** may be a more noteworthy method.
Chinese New Year's Eve is approaching, and thousands of lights are reunited. Finally, I wish you and your family to share this warm moment of reunion, and invest in the new year, and have more than enough to celebrate!