Singing about wine, **geometry? For example, A-shares, there is a lot of hardship in the past! The start of 2024 can be described as thrilling! I am full of positions in the market and know what stockholders are experiencing.
I have communicated with many friends in the industry and found a relatively common phenomenon:Path dependence, keep the same! But the objective reality has already changed dramatically, just like Jingdong Xu Lei said, this is not an economic downturn, but the end of an era and the beginning of a new era! A-shares have also changed, if we don't change ourselves, we will be changed by reality!
Since 2020, when the epidemic occurred, I have made significant adjustments to my investment framework and valuation system, and tried my best to adapt my investment decision-making framework to the changes in the market! Judging from the results, it has been profitable for the past 5 years, with an annualized rate of more than 15%; In the past 10 years, except for a small loss in 2018, the average positive income and annualized rate has also exceeded 15%. This may be due to the recognition of the great changes in the cornerstone of the market, which has helped me to cross the bull and bear for nearly ten years.
Change 1: the company's competitive landscape.
Private enterprises usually have higher operating efficiency, and state-owned enterprises are inefficient, and it can be applied everywhere. For this reason, in the era of globalization and peaceful common development, our private enterprises have shown great competitive advantages and given investors rich returns.
However, since 2018, Trump began to decouple and develop separately, and we have launched the internal and external dual circulation system, and everyone should know very well which one is the main cycle in the future! For internal circulation, who has a competitive advantage between private enterprises and state-owned enterprises and central enterprises? Isn't that self-evident?
To this end, I began 3-4 years ago to gradually transfer the first to resource-based and basic public facilities-based central state-owned enterprises. For the sake of balance, one-third of the outstanding private enterprises are retained. Looking back, this strategy has been basically correct for the past 2-3 years!
Change 2: Income structure.
I strongly agree with John Bogle's investment return formula, which is: return % = dividend yield + growth rate + PE change rate.
It can be seen that during the economic upswing, the income mainly comes from the company's high growth and the upward amplification of valuation, forming a Davis double-click; When the economy is in a downturn, the growth rate will be small or even shrinking, and the valuation will naturally be revised downward, forming a double kill. The certainty here is the dividend yield.
There is no doubt that we should know exactly where our economy is in the Compo cycle! For this reason, I have adjusted to a high dividend strategy since 21 years, that is, dividends first, growth second, from the effect point of view, the high dividend strategy has been more and more recognized by the market in the past two years!
Change 3: Valuation Basis.
During the period of economic prosperity and peaceful development, the valuation has given higher expectations for the future, and A-shares have generally given 30-40 times the PE of normal companies! Outrageous companies even gave 20-30pb! Do you still dare to start with 30-40pe now? Is it 15-20pe to be checked repeatedly? Basically, it is only for medium and high-quality companies that 8 12pe dare to take a look at it! Also, PB does not drop to 05~1.5 It's also hard to get started.
In other words, a sharp decline in valuations will be the new normal in the future, don't fantasize about valuations returning to that carnival moment! The sharp downward revision of valuations, economic cycles, geopolitics, etc. are important factors, which will not be detailed here, but everyone who understands them understands.
Change 4: Size ticket preference.
Many value investors are struggling to find the best companies to hold for the long term. Objectively speaking, this should be a good road, but its difficulty determines that 99% of the price will not be able to go through this road!
Thinking about the fact that many institutions and smart people are looking for such a remarkable target, how can a high-quality white horse in the spotlight be cheap? The theory of efficient markets is fully embodied in them! That's why they've been overpriced for so long.
On the other hand, A-shares are a market with many capitalizations, and you are fighting with small market capitalization companies. This leaves a relatively neglected group of companies, i.e., mid-market capitalization, medium-quality companies! Big institutions can't look down on it, and small funds don't move! Such a group of companies that have been left out in the cold can easily fail in the market and misprice!
Such a group of companies, there are hundreds of small companies in A-shares, the small ticket has been broken last year, and the big ticket has been broken in the year before last.
Change 5: High-quality asset attributes.
Five years ago, real estate may have been the best asset allocation, but after 2018, it feels like there is really nothing to allocate other than equity assets. **The risk is indeed not small, but compared to commodities, bonds and cash, I personally think that in the long run** equity assets are still better, and cash is the most risky! Although it seems that deflation is still going on, a sharp depreciation of the medium- and long-term ** currency may be inevitable! This one doesn't do more analysis. Of course** is also a good asset today, I originally planned to allocate it from 2018, but it is bad that it is not executed! But fortunately, the investment outperformed.
Prosperous pearls, troubled times, this is also one of the guiding directions of the industry's configuration.
Change Six: Draft Criteria.
Each of us will have our own criteria for stock selection, since last year, I have added a new standard beyond the fundamentals and funds, that is, the ability to go through the Kangbo cycle! It can be understood as a stress test of similar banks to the investment target.
I divide the risks into: economic recession, economic decoupling, economic depression, geopolitical war, turbulent waves five levels, I am gradually adjusting the target to adapt to the future four and five levels of potential targets, such as independent and controllable, strategic security, parallel substitution, drought and flood income, mandatory consumption and so on.
In view of the above-mentioned great changes in the A-share Hong Kong market, if adaptive adjustments can be made, I believe that they can outperform the market. But this does not change the general trend of the market, do not expect a big bull market, to significantly reduce the income expectations, less loss is to win, it is good to outperform bank deposits, and it is better to outperform M2 growth! If there is a higher luxury, it is very likely to form a backlash against the profits.
From the perspective of this year's prediction, adhere to the judgment made at the end of last year, that is, the small ticket is over, the excellent medium-capitalization company will continue, and the white horse high-quality company may re-usher in the white horse blue-chip layout opportunity after it is cleared within the year.