Chapter 177: Board the ship heading for a new cycle
"The stocks you have screened out are still too few. Let me tell you now, you should write them down first and then screen them slowly," Li Feng said to Lin Menghan who was operating a laptop.
"Energy, including oil, coal, and natural gas; precious metals, including gold, silver, and platinum; non-ferrous metals, including lithium, vanadium, copper, iron, tin, phosphorus, potassium, tungsten, aluminum, nickel, indium, lead, zinc, magnesium, molybdenum, antimony, cobalt, germanium, and titanium..."
"Oh, I forgot one sector, the shipping sector, which includes container shipping, oil shipping, dry bulk, special transport, and shipbuilding."
"Why is there a shipping sector?" Zhao Xinyue interrupted, "Aren't they manufacturing?"
"It's manufacturing, but it's also an industry with a 20-year cycle. In fact, shipping and the nonferrous metals sector are closely related," Li Feng continued, explaining, "Their logic is that excessive money supply, the advent of hyperinflation, rising resource prices, skyrocketing freight rates, and increased demand for shipbuilding..."
Li Feng spoke a lot based on his memory, which made Lin Menghan feel dizzy. This knowledge had touched her blind spot in cognition.
She glanced at Zhao Xinyue, who was coaxing the child with a leisurely look on her face, and her eyes turned to Li Feng involuntarily.
Professionals should do professional things. Since Li Feng has already figured out how to deal with this major inflation cycle, why don’t I take a ride and copy his homework?
Anyway, he is not an outsider.
Thinking of this, she felt relieved, a hint of charm appeared on her face, and she said, "Li Feng, please tell me in detail, I don't quite understand."
Li Feng looked at her slightly red cheeks, his heart moved, and he blurted out, "That's easy, I'll teach you."
"The oil and gas sector is easy to talk about, namely PetroChina, Sinopec, and CNOOC. The precious metals sector includes Shandong Gold and China National Gold. As for non-ferrous metals, our top choice is internationally priced copper..."
Just when he said this, Zhao Xinyue suddenly interrupted and said:
"Li Feng, you still dare to buy PetroChina? Don't you know that the joke about being stuck at 48 yuan in 2007 has been told for over a decade... And, haven't you read the news? Now the price of oil has reached negative! This means you're losing money on every barrel you sell. It's a losing business."
"Why not buy it? The last time China Petroleum rose to 48 yuan, it was not because of its good business, but because of the arrival of a major inflation cycle, which caused oil prices to soar and profits to increase significantly. This time the inflation cycle is coming again, maybe we can turn the tables and become the master..." Li Feng explained.
"The achievements and brilliance that many companies, including individuals, have achieved are not solely due to their own hard work, but are overwhelmingly due to the development of the times. They are standing on the shoulders of giants, choosing the right industry at the right time, and becoming the darlings of the times."
"Even Warren Buffett, the richest man in the United States, achieved such brilliant investment returns not only because of his superior investment methods, but also because he was born during the golden age of American development. During that era, from the end of World War II to 2000, the United States directly became the world's leading power."
"When the great rivers flow, the smaller ones overflow. A strong nation will naturally create vast wealth, giving rise to countless great companies, and enabling investors to achieve impressive results."
"So, when we select stocks, we must be optimistic about the overall macro trend and follow the trend. This way, we will get twice the result with half the effort. If you go against the trend, no matter how brilliant your stock trading method is, you will get half the result with twice the effort!"
"Also, the current negative oil prices are only temporary due to the financial panic. You have to trust common sense. Oil is the lifeblood of industry. Will everyone stop using it in the future? Impossible. Oil is not only used to refine diesel and gasoline, but also to produce various plastics, chemical fibers and other products. We can no longer live without it..."
"I read an article saying that it's because the epidemic broke out abroad and couldn't be controlled, which led to an economic crisis," Zhao Xinyue argued.
"Can't control the epidemic? That's because they haven't lost enough lives. How did they manage to control the great plagues of the Middle Ages? It's not that they're unaware or lack the means, but that they don't take it seriously... So, whether the epidemic worsens or lessens in the future, the ultimate goal is to continue developing the economy and improving the quality of life of the people. This is the cornerstone of our enduring success."
As Li Feng spoke, he looked at the lake outside the window. There, a gust of wind blew, and the two wooden boats swayed rapidly. Those who were not on the boats shouted, and those who were already on the boats celebrated.
Isn’t it the same with stock trading?
At this moment of great inflation cycle, only by boarding the three big ships of energy, resources and shipping can we successfully reach the other side of victory in the huge waves of inflation.
Choice is greater than effort.
If you choose the wrong method or even enter an old cycle industry, when the flood comes, it will be extremely difficult to escape with your life by hiding in a house, a manufacturing workshop, or a bank or insurance company.
At this time, Zhao Xinyue asked again: "There are thousands of stocks in the two markets. Can't other stocks be used? Why do you have to choose these few categories?"
"This is due to the different transmission of inflation and the ability to pass on inflation costs," Li Feng continued.
"When hyperinflation hits, all commodities will see price increases, but some companies are able to easily and aggressively pass the costs on to third parties. Resource-based companies are a typical example, and manufacturing companies are the hardest hit. On the one hand, inflation drives up energy and material prices, while on the other hand, they also face fierce market competition and increased labor costs caused by their own inflation..."
"In this process, manufacturing companies are being squeezed from both ends, or even three sides. Companies with good management and strong competitiveness can pass on the costs to consumers, while other companies with average competitiveness can only survive. We must not choose these companies."
"Inflation is actually a tax on all currency holders. The over-issuance of the US dollar is the result of the US leveraging its status as the world's currency to tax dollar holders around the world. The over-issuance of the US dollar is not a US problem, but a problem for other countries."
"This race against inflation happens every once in a while, and we're always running hard. We must be vigilant and strive to outrun inflation every time, otherwise we'll be the ones being harvested."
“It’s a never-ending game.”
Li Feng said a lot and expressed a lot of emotion.
To a certain extent, aren't we just a drop in the ocean, battling inflation day and night? Time and time again, without stopping.
I passed this time, but what about next time? And the time after that?
On this constantly shuffling card table, once you are born, you are at the table and can never get off.
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