Chapter 318: Underestimation and Conservatism are the True Way
Tuesday, July 23, 2024
Jisilu temperature: 4.02 Shanghai Composite Index: 2960 points.
Reality is always more exciting than fiction.
Just over a month has passed, and the whole world seems to have changed.
Trump was assassinated, Biden dropped out of the race, and Harris planned to run for president.
Under the impact of this huge information, which is comparable to a war that determines the fate of a country, the prices of commodities in the world plummeted, dragging down every investor.
Behind this huge price fluctuation is a feast of capital.
In the past few days, many people, including me, have been very confused.
Because I can't see the way forward.
But in reality, the huge price fluctuations force us to make a choice.
Last night, I thought about it for a long time.
Gradually, a lot of information was sorted out.
As for the future, we can infer the unpredictable future from known and certain information, hoping that it will help with investment.
Certainty 1:
It can be said with certainty that the 2950 point level is a historically low level.
Therefore, at this point, we should not reduce our positions, but instead we should go against the trend and the huge uncertainty, increase our positions, or even go all in.
This requires both great courage and great discernment.
Certainty 2:
It can be said with certainty that no matter who is elected in the United States, interest rates will be cut.
Once the interest rate is cut, the interest rate gap between China and the United States will narrow.
At this time, driven by profit, many companies will convert their US dollars that are held outside into RMB and return them to China.
Even more, driven by profits, a lot of foreign financial capital will flow into China and buy up Chinese assets at the bottom.
This is also one of the reasons why our country has not carried out large-scale water release.
Because, under the current situation where the interest rate gap between China and the United States is large, if there is a large-scale money printing, it will be a large-scale capital outflow, that is, a large amount of capital will flow out to foreign accounts to take advantage of the interest rate gap.
Therefore, in the next six months, that is, in early 2025, my country should be able to get out of domestic deflation.
Because a large amount of US dollars will flow into the country and be converted into currency, and even in this wave, it will cause a certain amount of inflation.
This is also a condition for holding commodities at present.
Uncertainty 1: Oil prices.
It is obvious that higher oil prices are a result of the current game between China, the United States, Russia, and the Middle Eastern oil-producing countries.
The one who reaps the rewards is Europe.
If Trump comes to power, he wants to suppress oil prices by increasing oil production.
The first thing to be resolved is the domestic oil interest groups, as well as the players such as China, Russia, and the Middle East.
Beyond that, there are the issues of mining time and cost.
From now on, it will take at least a year for him to truly secure the presidency and then actually increase production to suppress oil prices.
In theory, there is still at least a year to observe the impact of Trump's policy direction and oil strategy on oil prices.
However, objectively, this has created certain uncertainties in the future major inflation cycle.
Therefore, it is necessary to sell a small portion at a high point and intervene in the smart car sector.
This has led to a three-pronged portfolio structure, primarily focused on commodities and shipping, supplemented by smart cars. (In this volatile environment, any changes in portfolio holdings can lead to significant uncertainty and even significant losses, so please proceed with caution.)
Uncertainty 2.
Changes in Sino-US relations and European and Middle Eastern policies.
It can be said with certainty that the trade war and even the chip war between China and the United States will continue. This is also the reason why there have been rumors in China in recent days that they are going to investigate the localization of chips in the automotive industry.
In the future, the confrontation between China and the United States will become more intense after Trump takes office, and even various accidents may occur.
You have to know that when he was in office before, he launched a trade war, a chip war, and a virus war. He is a madman, a madman with no bottom line.
In the Middle East, China and Russia have already drawn a bottom line in various declarations, which is to restore the 1967 China-Pakistan border.
This is something the US and Israel cannot accept.
Therefore, in the Middle East, the fighting will most likely continue.
In Europe, Trump declared that he wanted to end the Russo-Russian War, but this was based on the division of Ukraine and on Europe paying huge protection fees.
There is a high probability that the United States will end its battle in Europe and try to take risks in East Asia to open up a second battlefield.
But this is what we least want to see.
In fact, what ultimately causes stock prices to rise or fall is expectations, performance, or the macro trend.
And starting from this starting point, we look back.
But we found that no matter how we studied and analyzed in the past year,
Judging from the increase in individual stocks, it is even worse than holding on to the shipbuilding double fools.
It's really a great irony.
It seems that underestimation and conservatism are the real ways.
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