Chapter 168 Winter sowing time is here again
"Xiaofeng, are you going home for the New Year?" Li Youjiang asked.
"I still have something to do, we'll talk later. Have you eaten?" Li Feng said to Lin Menghan who was lying on the bed feeding.
"Oh, I was just about to eat. Your mom and I were making dumplings."
"What's the filling?"
"Are you craving your favorite pork and green onion stuffing? How about I send some to you by express delivery?" Li Youjiang joked.
"A little bit, then send some by express, haha..."
"Don't laugh first. These days, I heard that Li Bin is taking out some online loans. You should get involved in that. It makes money quickly, but it will ruin your second half of life. I heard that you'll be blacklisted. Not to mention going out and taking the bus, even your children's schooling will be affected..." Li Youjiang advised.
"Taking online loans?"
Li Feng was speechless. It was true that a dragon gives birth to a dragon, a phoenix gives birth to a phoenix, and a mouse's son can dig holes.
Unexpectedly, Uncle Six's son Li Bin not only learned the skill of refusing to pay debts, but also developed it into a skill that he even took to the Internet to shirk his debts.
"Don't worry, Dad. I won't do anything that will destroy my family line."
"That's good, that's good. I'm relieved then. By the way, didn't you say you were dating a girlfriend? When are you going to bring her home so mom and dad can see her? You're not a child anymore, it's time to consider getting married."
"this…"
Li Feng looked at Lin Menghan awkwardly, but didn't know how to explain this.
Hearing the sound, Lin Menghan smiled and turned sideways to feed the child.
"Dad, it's okay. I'll hang up first." Li Feng hung up the phone.
Lin Menghan was standing by, feeding her baby while playing with her cell phone.
Suddenly, she saw a piece of stock market news and turned around and asked, "Li Feng, the new year is here again. Do you have any plans for this year's winter sowing?"
Time flies! Before I knew it, another year has passed.
Li Feng sighed, picked up the laptop beside him, and said, "It's almost ready. Do you want to listen?"
"Yeah, I do."
"Okay, then let's officially hold the 2019 investment strategy meeting at the confinement center," Li Feng said as he turned on his computer and opened a document he had prepared long ago. "As usual, let's look at the macroeconomic situation first."
"The Federal Reserve has recently undergone new changes. When it raised interest rates in December, it had already turned somewhat dovish. The Fed Chairman hinted that if necessary, it would adopt a moderate easing policy to support economic development. The Fed is a master of expectation management, a tactic it has used for decades. This change in tone requires special attention. Many professional research institutions have already predicted that the Fed will cut interest rates as early as the second half of next year."
"Furthermore, domestically, the Central Economic Work Conference that just concluded has set the tone for next year's economic policies. Macroeconomic policies will require 'counter-cyclical adjustments,' and monetary policy will shift from last year's neutral stance and efforts to manage the overall flow of funds to a moderate degree of looseness and tightness to maintain reasonable liquidity..."
"Overall, liquidity will be much looser next year, both domestically and internationally. This is the most important foundation for the stock market to perform well. Only when the water is deep can the fish grow big, and only when the big river has water can the small streams be full."
"In addition, there are a series of policies to support the stock market. We have talked about them before, so I won't talk about them again this time..."
After a pause, Li Feng turned another page and continued:
"Regarding the industry, it's particularly important to note that even in these difficult times, this year's Central Economic Work Conference hasn't relaxed regulations on the real estate market. Instead, it seems to have tightened them. It was once again mentioned that houses are for living in, not for speculation. Therefore, we should avoid real estate stocks and stocks in the real estate industry chain."
"Regarding the financial cycle, China has continuously implemented targeted reserve requirement ratio cuts, and interbank interest rates are actually falling. Therefore, you need to be cautious when investing in bank stocks. However, you might want to hold on to insurance stocks because the 750-day moving average of 10-year government bonds, which directly determines insurance returns, has been rising."
"You said before that what affects the returns of insurance stocks is not the expected yield of 10-year Treasury bonds? How come there is another one, the 750-day moving average of 10-year Treasury bonds? Which one is more accurate?" Lin Menghan has a good memory and remembered what Li Feng had emphasized before.
Upon hearing this, Li Feng pulled up a chart showing the 10-year Treasury bond yield and the 750-day average curve for the 10-year Treasury bond, and explained:
"Let's put it this way. The expected yield on the 10-year Treasury bond is a leading indicator. Only after this indicator has been rising for a period of time will the 750-day moving average curve of Treasury bonds rise, bringing actual performance to insurance companies."
"You could also say that 10-year Treasury bonds are like speculating on expectations, while the 750-day moving average of Treasury bonds is like speculating on performance. You see, interbank market interest rates are declining, but the 750-day moving average of 10-year Treasury bonds is still rising. So, insurance stocks, especially Ping An of China, are worth holding on to. And its current PE ratio is only 9.87, which isn't expensive."
"Where is Kweichow Moutai?" Lin Menghan asked the question that concerned her most.
"Kweichow Moutai?" Li Feng pondered for a moment, opened the K-line chart of Kweichow Moutai, and said,
"As you might expect, the liquor industry isn't facing any major problems right now. Kweichow Moutai's sharp year-on-year decline in the third quarter was intended to deliberately depress its performance and flatten its earnings curve. Kweichow Moutai's current PE ratio is 23 times, which is neither high nor low, and can only be considered reasonable. You can continue to hold onto some of it."
"Overall, next year's market opportunities are relatively large, but they are far less than those in early 2016 or the end of 2014. After all, those were the starting points of a major economic cycle, while now is a small trough after the upward trend of the economic cycle. We should be optimistic and have expectations, but we should not expect too much."
After a pause, Li Feng continued:
"Combining the index with the current level of around 2,500 points, it is very low. There is limited room for further decline, but more room for upward movement. The risk-reward ratio is very high. In addition, the valuation of bank stocks is not high. China Merchants Bank's price-to-earnings ratio is less than 8 times, while other major banks are around 6 times."
Lin Menghan thought for a moment and then asked, "So, how do you want to allocate your positions in 2019?"
"Position? I need to think about this carefully..." Li Feng fell into deep thought.
After a long while, he said, "I plan to allocate 30% of my holdings to Ping An of China, 20% to Kweichow Moutai, and the rest to convertible bonds."
"Convertible bonds? Why allocate so many convertible bonds?" Lin Menghan asked.
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