Summary of my investment in 2021

2021 is a dream year for the capital market. In the domestic capital market, the infinite hope given to the Internet, education and traditional consumption of white horse stocks at the beginning of the year has been beaten in various policies and news. The U.S. stock market is also a magical year under the background that the domestic society in the United States is so torn, and the capital market, like an epidemic, has once again hit a record high.

For this year, some thoughts, gains and mistakes are simply summarized.

  • Choice is greater than effort

In last year's summary, I compared my own views in the two capital markets of China and the United States, and also explained why I focused my investment on the American capital market. At the end of last year, many friends around us were full of expectations for the domestic capital market and had high enthusiasm for China Stocks. However, few of them conducted detailed research and analysis on the company. Some American enterprises may sound strange, but their business is simple and clear, and their performance prediction is relatively easy, so they are a "place" suitable for lying flat. At the beginning of this year, US stocks once again stood at an all-time high, but there is no doubt that American companies in US stocks will still be my main battlefield. This view has not changed in the past 10 years, and it is estimated that it will be difficult to change in the next 3 or 5 years.

Although I once wanted to put part of my research focus back to studying domestic enterprises, it is true that with the existing investment research framework, it is extremely difficult to find suitable investment targets in China. While there has been a reasonable return, there are still many mistakes made this year. Here are the key points.

  • Wrong summary

Li Lu once said that in the process of value investment, one thing is very important, that is, intellectual honesty. The summary of mistakes is also a painful process, but if you think about it carefully, it is not necessarily a bad thing for some mistakes to happen early.

Mistake 1: Ray of the Education Unit

In the middle of this year, it was a particularly obvious investment mistake for Hong Kong stocks to step on the thunder. For ignoring the changes in the domestic regulatory environment, we only consider the problem from the perspective of market and demand, but ignore the lowest logic in the capital market. When the capital interests are blocked by force majeure, the logic of valuation often needs to be reconsidered comprehensively.

Value investment is the return on capital, but the premise is whether there is enough legal basis to guarantee the uncertain return in the future.

Mistake 2: Implicit mistake-it needs to be repeated to accumulate experience

Munger once mentioned to Berkshire Hathaway in its long and outstanding investment history that although there are not many investment mistakes that Berkshire can see, many investments that are understood, not grasped and potentially less profitable are investments that lose more. Munger's example includes Google, where GEICO spends a lot of money on advertising every year. Even with long-term research on Google, Berkshire has never bought Google stock.

The transformation of American power energy market began many years ago. China's electricity market also kicked off after the promulgation of Document No.9 in 2015. At that time, while paying attention to the reform of the domestic electricity market, In order to benchmark the future development of the domestic industry, I have done some research on this industry in the United States. Under the introduction of my friends, I have made a relatively in-depth research on an American company. This company can be called a good company in terms of business and corporate governance, but it has not started for a long time. In these 4 or 5 years, I missed a 10-fold share.

At the beginning of this year, a big bull stock, which was intended to focus on research, was interrupted by some daily temporary work. When the investment was deeply studied in the fourth quarter of this year, it paid more than 50% of the cost. Some simple opportunities that should have been seized were interrupted by urgent and unimportant things. This is really something that should not happen.

Objectively speaking, invisible mistakes actually cause much greater losses than explicit mistakes, but from a simple emotional point of view,It is true that explicit mistakes have a greater impact on emotions than implicit mistakes. I hope that through this way of summarizing words, we can correct the irrational factors brought by emotions for a long time.

  • Views on the next market(Knock on the key points)

"Are US stocks expensive? Is there already a huge bubble?" Will it collapse? ;

"What about future interest rate hikes and market shocks?"

These are the two questions I was asked most about the future of the US stock market at the end of the year


Q1 On the Crash Problem

Let's talk about the crash first. The crash that most people talk about is only the large fluctuation of the market. In the traditional financial concept, the definition of a bear market is only the retracement of the market exceeding 20%. From this perspective, in the past decade, the epidemic has caused US stocks to enter a short bear market. From the perspective of a single stock company, in our long-term observation and resumption of trading, it is normal for any company to fluctuate by 20% to 30% in a year without much change in its long-term fundamentals. However, in the medium and long term, such as 2, 3 years, or 5 years, the capital market as a whole still better reflects the changes in the fundamentals of the company. The American market as a whole is not cheap, and there are plenty of bubbles in some areas, but if we look at the index alone, it is not ridiculously expensive. We compare several typical companies at the micro level, which may make investors feel more intuitive.

For example, Apple$Apple(AAPL)$,With a market value of $3 trillion, The company with the highest market value in the world, However, the company's net profit in fiscal year 2021 has exceeded 100 billion US dollars, Considering the problems in its supply chain during this period, as well as the potential of payment and ecology, it is hard to say that such valuation is already a big bubble. The story of elephants dancing continues to be staged in the American capital market, and a new generation of excellent enterprises are constantly overcoming the problem of big enterprise diseases to a certain extent.

For example, AT & amp; T$AT&T Inc(T)$Traditional operators have paid dividends per share for decades and the dividends are increasing. At present, the dividend yield is 8%-10% (the stock price is 20-25 yuan/share, and the dividend income per share in the past 12 months is 2.08 yuan/share).

In, for example, Zoom$Zoom(ZM)$The leading company of video conferencing and the beneficiary stocks under the epidemic situation increased nearly 8 times during the epidemic period. It seems that the company's net profit increased by about 25 times and its free cash flow increased by more than 12 times in 2020. In 2021, after the epidemic gradually subsided and people gradually returned to their offices, the company still achieved double profit growth and more than 30% cash flow growth in the first three quarters of 2021 compared with the high performance benchmark in 2020. If the net profit is estimated to be about 1.3 billion according to the performance of this year, it is less than 50 times the current market value of 58 billion.

. . . . . . . . .

Of course, the target here is not necessarily the target of my investment, but only a part of our research object, and we will conduct more detailed investment research and analysis for each investment target. However, starting from these simple company cases and looking at the American capital market from the micro level, we still insist that there are still many profitable long-term investment opportunities in the American capital market, which may form more attractive long-term investment opportunities in an environment with increased short-term market volatility.


Q2 Fed raises interest rate, inflation problem

The impact of interest rate hikes on the future of the market is an important factor for many investors to worry about US stocks. In fact, raising interest rates may indeed bring great fluctuations to the capital market in the short term, but in the long run, I think the rate increase in the next 1 or 2 years may be extremely limited, which is mainly due to the huge debt problem in the United States. Excessive rate increase may lead to substantial bankruptcy of the US government.

Over the next five years, the US will need to repay about $16 trillion in debt principal, accounting for 60% of its debt principal. At present, the interest expenditure on national debt is about $300 billion a year, the total debt is nearly $3 billion, and the financing cost is about 1%. The interest cost of $16 trillion debt in five years is about 0.13%. If the overall financing level rises to 2%, then the US * *Interest expenses will reach a record $600 billion, accounting for nearly 20% of federal revenue, surpassing military expenditure and becoming the largest cost expenditure of American finance. Therefore, in my opinion, if we raise interest rates by 0.25% every time in the past, the US Federal Treasury Department can undertake 3-4 interest rate hikes. Therefore, in the future for a long time, the low interest rate environment will not be essentially reversed. But even if short-term interest rates rise from zero to 2%, the stock market is still attractive relative to the current potential of growth stocks.


  • Investment management-a new beginning of the unity of knowledge and practice

At the end of this year, I began to prepare my own private placement products. Due to the sharp drop in interest rates in the international market in recent years, the cost of investing in US stocks through cross-border income swap in China has been greatly reduced. Considering the problem of foreign exchange control, it has become more attractive to invest in US stocks through RMB private placement products than a few years ago. For me, I finally have a chance to make an institutional product. In addition to giving me a platform to practice the unity of knowledge and practice of investor education, asset management also has greater responsibilities for me because it starts to involve OPM (Other People's Money). Below, I will talk about some of my own thoughts on various conflicts of interest in this industry.

Fiduciary duty(fiduciary) is the moral cornerstone of the asset management industry. Investors entrust their personal wealth to fund managers, and managers have great trust in managers. Especially compared with other new private placements, our tolerance in closing positions, warning lines and positions is much greater, and the only investment rigidity condition we set is that we cannot add leverage. Such trust is not limited to professional ability, but also to our moral values. We are grateful for this. Of course, behind the great trust, we have made corresponding arrangements for the incentive system. At present, most funds in the market will charge a fixed management fee regardless of performance. Under this arrangement, fund managers and management companies will have relatively stable returns more or less. But for fund managers and fund managers like us, we hold a simple view. As managers, if customers don't make money, we can't get any income from the fund. Considering that our fund invests in overseas markets through the cross-border income swap service of brokers, which has certain rigid costs, for managers, we generally need to achieve an investment return of more than 2% before we can obtain income from fund operation and investment. This model basically applies the charging model adopted by Buffett when he was a partnership in his early days.

The way we invest and the framework of our research on the company are completely consistent with the content of our investment. We make a comprehensive judgment on the development history and corporate governance of the company around "good business" and "good will", and make a prudent judgment on the future, and thus give a reasonable valuation of the company. The evaluation cycle is usually 3 years, 5 years and 10 years.

Our ultimate goal is not to earn the highest return, but to have a good customer relationship and a lasting operation of the fund.

  • In 2021, the closing words

Hong Kong stocks, Chinese beggars, and many industries are already floor prices. If the bosses of listed companies are morally willing to take a responsible attitude towards minority shareholders, the high probability is completely bottomed out. However, there is no shortage of cheats in the Hong Kong stock market, but there are also some extremely attractive investment opportunities. I think in 2022, there will be some investment opportunities in Hong Kong stocks and Chinese beggars that are 3, 5 and 10 times a year. I am unlikely to be surprised, but this will not be my main course. These opportunities require extremely in-depth research and investment logic that is completely different from the market and conforms to simple common sense.

US stocks will still be my main battlefield, But for ordinary individual investors, To lower the expectation of short-term investment income, Be prepared for short-term fluctuations. For long-term investors, if the expected return is not high, US stocks are still a good choice for cost performance. For investors who are unwilling to study individual stocks, it is also a good choice to buy Vanguard's index ETF and then lie flat completely (this is also Buffett's long-term advice for ordinary investors).

The most important thing in investing is to make the right choice and lie flat.

# 闲聊几句

Disclaimer: The above content represents only the personal views of the poster and does not constitute investment advice on this platform.

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  • Big brother is very powerful, apply what you have learned
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  • In the new year, I wish my teacher good health and all the best, and my stock will turn 100 times.
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    • 金思汇闻
      Haha, thank you, the body is to be healthy, the investment can't be 100 times a year, and 100 times in 20 years is a more appropriate expectation, haha
      01-02
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  • There is no problem with the fundamentals of Hong Kong stocks and Chinese beggars. The problem is the game between China and the United States and the Accountability Act of Foreign Companies in the United States.
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  • After reading many articles of Big Brother, I feel that Big Brother is a person who is very deep and good at stock trading.
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    • 金思汇闻
      Thank you for your compliment. I just think from the perspective of long-term capital return of small and medium shareholders. Most of the problems are common sense, and there is really not much depth [happiness] [happiness]
      01-02
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  • The most important thing in investment is to make the right choice and then lie flat. Should this be Buffett's investment philosophy?
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  • I deeply believe that choice is greater than effort. Many people do nothing all their lives because of wrong choices.
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  • What do you think of zm
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    • 金思汇闻
      I haven't studied it carefully. It seems that the price is not expensive. I still need to take a closer look at the business
      01-02
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  • Yes

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  • How do bloggers study companies deeply? I find that as long as you study good companies, the profits are very high!
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    • 金思汇闻
      Frankly speaking, it is relatively easy to review, but it is difficult to make predictions within one's ability. Stock investment research, simply speaking, is to think about reasonable long-term return on capital from the standpoint of long-term minority shareholders. My investment method is open, and there are detailed descriptions in the course. You can look at the course introduction in WeChat official account. [Shake hands]
      01-01
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  • Buy Vanguard's index ETF this year, and then lie flat completely. Thanks to bloggers for their suggestions!
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    • 金思汇闻
      This is Buffett's suggestion, and I think it is also suitable for [smile], an ordinary investor who doesn't spend time doing individual stock research
      01-01
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  • Raising interest rates will definitely have a great impact on the market, and the stock market will definitely bear the brunt. However, enterprises with good performance can stand the test and finally return to their value. Market capital can recognize their performance development again. If they are optimistic for a long time, they don't care about short-term fluctuations!
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  • Life tells me that it is really a lucky thing to find mistakes early, and you can know how to deal with them in advance, so as not to find out that there are no rescue measures too late!
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  • That's right. Choice is greater than effort. If you choose Tesla Motors instead of China Stocks in 2021, this year's harvest will be very satisfactory!
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