American economy in 2000
In 2000, the American economy reached its peak, and the bursting of the Internet bubble plunged the United States into recession. In order to save the American economy, Greenspan cut interest rates sharply again after 0 1 and 9. 1, which made the American interest rate fall to the lowest point in 45 years in 2003 and lingered at 1% for a year and a half, which caused the real estate bubble in the United States and planted the seeds of the subprime mortgage crisis. The real problem in the United States today is that a large number of manufacturing and service industries have moved to China and India in the past 20 years. After the internet and communication bubbles, the innovation in the United States has not kept up, and no large emerging industries have been formed for the time being. However, real estate and finance can only prosper temporarily at low interest rates and cannot support the whole country as a leading industry for a long time. Nowadays, the balance sheets of American government and households are over-indebted, so it is necessary to "deleverage" to reduce the debt ratio. More importantly, the hollowing out of industry has damaged the regular profits and losses of enterprises and families. If the financial turmoil is a revision of the balance sheet, then the decline in consumption is a revision of the income statement of enterprises and families. Unless the United States forms a new large-scale industry in a short time, this modification will be a long process. In retrospect, Greenspan was just unlucky. If the innovation of the United States had not kept up in recent years, the world would have been another evolution.
200 1 year
China joined the WTO on 200 1.
200 1 After China's accession to the WTO, the productivity has been greatly released, and the popularization of Internet communication technology has benefited China greatly in undertaking the global manufacturing transfer. Due to the quasi-linked form of RMB and USD [1] (note: RMB fluctuates to a certain extent against USD, but the nature is still linked exchange rate), when the export industry accounts for an increasing proportion of GDP, the three major policy objectives are the "Mundell Triangle" theory [2] (note: the independence of monetary policy, the free flow of capital and the stability of exchange rate. After 2005, the expectation of RMB appreciation has gradually become global common sense. With the lessons of Japanese history, coupled with the low interest rate and depreciation pressure of the US dollar, global capital wants to enter China and share the growth of China. With the rapid growth of exports, more performance is the skyrocketing foreign exchange reserves. After so much money entered China, the main outlets were real estate and stock market, which formed a perfect bubble in China. If the above reasons bring about an increase in the amount of money, then the national self-confidence and pride brought by the Olympic Games will bring about the formation of a currency multiplier, and the result of multiplying the two is human madness. History is always strikingly similar. The pain of China today is a compulsory course in the process of moving towards a market economy, just as most Hong Kong people will no longer overdraw their houses and stocks after 1997. As the former governor of the Bank of Japan said, it is difficult to completely avoid the Japanese economic bubble of 1985- 1989 even if it is reinterpreted.
Compared with the United States, China's fundamentals are much better. First of all, the debt ratio between the government and households is not high, especially the household part. The high savings rate makes a lot of cash on the balance sheet, and when winter comes, there will be cash for the winter. More importantly, China is still the most competitive manufacturing region in the world, which means that China's future income statement is still the strongest.
Back to A shares and H shares, we think that China stock market will form an important bottom in 2009. Our task today is to find enterprises in China that can represent China in global competition in the next ten to twenty years. The essence of investment is to allocate capital. We allocate capital to the most competitive and efficient enterprises, thus promoting social development. Nature's spring, summer, autumn and winter go hand in hand. Every severe winter will eliminate those unhealthy and unfit species, and a stronger new seedling will be born around every fallen tree-natural selection is the eternal driving force to promote natural and social progress. Who are the future Wal-Mart, Toyota, Microsoft and Procter & Gamble in China ... Peter Lynch discovered many Tenbaggers[3] in his life. Who will be the company that we can earn ten times in the future?
Everyone will have several important opportunities and challenges in his life. How to deal with and face these important turning points will have a decisive impact on his life. Let's share Sir John Templeton's investment experience.
Bull market was born because of pessimism, grew up because of doubt, matured because of optimism, and died because of excitement and ecstasy. When extremely pessimistic, it is the best time to buy, and when extremely optimistic, it is the best time to sell. When the market is extremely depressed, don't waste time worrying about shrinking positions or increasing losses. Don't defend like everyone else in the market. Instead, you should attack and look for value stocks that have been shot by arrows.
On the eve of the liquidation of A-share trust on June 2, 2008, we raised several questions in our letter to investors: what kind of companies are worth holding for a long time, and what kind of companies can only be held in stages; Self-fear and greed, macroeconomics and inflation. By the end of 2008, we had found most of the answers. As for the other parts that are still confusing, we look forward to being verified when we meet with investment guru Buffett in 2009. We will spend our whole life perfecting our investment theory system.
A pure heart, honest with you.
Zhao Danyang, General Manager of Children's Heart
In 2003
Why is this happening?
Back in 2002, Hong Kong was still in the shadow of the 1997 financial turmoil, and the real estate and stock markets were very depressed. At that time, the Hang Seng Index was around 10000, and the H share index was around 2000. We established the China Growth Fund. At the beginning of 2003, based on the fundamentals of China, we thought that H shares were expected to challenge 10000 in the next few years (see relevant media reports), which was considered a joke by everyone.
In 2004
At the beginning of 2004, the mainland A-share market has fallen for nearly three years, and the systemic risks have been released. We cooperated with SZITIC to establish the first phase of China. On May 25th, 2005, the number of A shares was 65,438+0,060. Also based on China's strong fundamentals, we believe that the number of A shares will reach 3,000 to 5,000 in the next three to five years (see relevant media reports).
In 2006
At the end of 2006, in a letter to investors, we talked about "ample liquidity pushing the market to a higher position again and again." The most important thing for us in 2007 is risk control. At the right time, we will consider cashing in some stocks with high valuation. "Up to now, both H shares and A shares are beyond our understanding. We have made profits at H shares 10000 and A shares at 3500. Looking back, we were out prematurely. The top and bottom of the index are always a mystery. Today, as far as our investment ability is concerned, none of the investment targets meet our investment standards and have sufficient margin of safety. In the future, the strength of the market may last for a long time. After careful consideration and communication with the two trust companies, all the trusts for which Innocent is a consultant will be liquidated as soon as possible. Return the investment funds to investors, so that investors can freely grasp future investment opportunities.
Looking back on the past five years, none of our investors lost money. Hong Kong is a hedge fund, and our investment reference is not an index. Our goal is simple, to achieve long-term high and high. To make an inappropriate analogy, I hope that the end of each year will have a positive return compared with the previous year. In the long run, this is a very challenging investment task. On the premise of avoiding risks, we can achieve certain positive returns. As for the amount of return, it can only be decided by God with a grateful attitude. When the Hong Kong Fund was established in 2003, the first part of our brochure wrote:
The Philosophy of Investment ―― The Art of Survival
The advantage of the fund is not reflected in how much money a stock earns over a period of time, but in its ability to continuously control risks. The quantitative degree of risk is a sign to measure the degree of specialization of fund managers. In the investment world, "surviving" is always the first. But for professional investment, it is meaningless to discuss risk measurement unilaterally.
The core of investment is to determine the symmetry of risk and return. Any risky assets can be invested, as long as there is enough income compensation. The core purpose of investment research is to find the symmetrical relationship between risk and return. Around this symmetrical relationship, it can be extended to all fields of investment: risk and pricing of stocks, risk and compensation of insurance assets, pricing of mortgage bonds, pricing of derivatives such as futures and options, etc.
One of the main purposes of professional investment is to find the deviation of this risk-return relationship. When the market causes asymmetric pricing relationship between risk and return to our research object for various reasons, it is our opportunity to get higher than the average profit of the market.
The most common example
The most common example, looking for stocks with lower than the market average price-earnings ratio-protecting trading positions according to the average price-earnings ratio level, is the simplest way to apply this principle. But as a fund, as a professional investor, we need to consider from a larger scope:
1. Is the overall average P/E ratio of this market reasonable at present?
2. Is the price-earnings ratio of the company's stock reasonable?
3. Is the P/E ratio sufficient to reflect the company's inherent risks?
4. Is there a better way to measure risk return?
We will always adhere to our philosophy of existence.
In 2007
Pure heart will understand better: what kind of company is worth holding for a long time, and what kind of company can only be held in stages; Self-fear and greed, macroeconomics and inflation. We need to spend our whole life perfecting our investment theory system.
A pure heart, honest with you.
Zhao Danyang, General Manager of Children's Heart
the year of 2008
On the eve of the establishment of our trust plan in 2008, I discussed with several friends such issues as when the rose of time will bloom, the confusion of value investment, what kind of companies are worth holding for a long time, and what kind of companies can only be held in stages; Self-fear and greed, macroeconomics and inflation. By the end of 2008, we had found most of the answers. For other confusing parts, I look forward to discussing verification with my friends in 2009. We will spend our whole life perfecting our investment theory system.
In 2009
In 2009, we proved our method with practice, and also had new puzzles. Being a good investor is something we have to work hard all our lives. We still firmly believe that 10 will outperform the market.