Rebirth: The Financial Giant

At this moment, at the site of the annual general meeting of shareholders, the question-and-answer session is still going on, and Lu Ming has already answered the questions of 11 people.

So far, 14 questions have been asked, and the others have been answered by Gao Hua, Ge Feng and others.

After a while, the staff presiding over the meeting selected the next questioner, an investor from China. After taking the microphone, they said a few words of thanks.

Then, the investor began to ask questions formally: ...Mr. Lu, we found that the US stock market, taking the Dow Jones index as an example, the Dow has reached more than 26,000 points again, and it is time to choose a direction when it is about to hit a new high. Do you think the U.S. stock market will successfully break through the bulls this time? Or will the bears go? And will our A shares be impacted? Thank you!”

Lu Ming took a bottle of water brought to him by a staff lady, opened it and took a few sips before saying, Since it's about the US stock market, you have to correct it first, you're still following our big A's rules. If you want to discuss bulls and bears in the market, how do you define a bear market or a bull market? If you don’t give me a definition, what is the concept of bull and bear?

Such a description is not correct, especially the description of U.S. stocks almost does not have the so-called bull and bear concept. A more professional description should say that the volatility of the market will increase? Or is the market in a stage of relatively stable returns ?

If you look at the U.S. stock market over a hundred years, its average rate of return is all positive. In other words, it has been in a bull market for a hundred years. If a market responds effectively, it will always be a bull market in theory, and it will always be a bull market. will provide a rate of return.”

When we are discussing the market, we are more concerned about whether its returns in recent years are at a high level or a low level. What is the average return of U.S. stocks? That is, the economic potential provided by the world gives U.S. stocks a boost. The rate of return is about 14%.”

Then for our big A...

Having said this, Lu Ming paused for a moment, thought for a while and said with a smile: The problem with our big A is the index. Our Shanghai index does not reflect our rate of return.

When these words were spoken, there was a slight burst of laughter from the investors off the field. They misunderstood and thought that Lu Ming's words were mocking Big A for not providing a rate of return.

Lu Ming continued in an orderly manner: ...If you say that the Shanghai index does not rise for ten years, it is said that the domestic capital market has not performed well. This is actually another mistake. The US stock market is the survival of the fittest. Excluded, so its index weight has been adjusted to fully reflect the market.”

Among the 20,000 attendees at the scene, Lao Yang was also present. He also prepared a question, but it is hard to say whether this year's shareholders meeting will be selected. Anyway, the question is prepared first.

When Lao Yang heard Lu Ming's words, he immediately thought of the Tiansheng Shanghai 50 Index and Tiansheng Shenzhen 100 Index compiled by Tiansheng Capital's own company. Perhaps these two indexes really fully reflect the big A-share market.

Because the two major indexes compiled by Tiansheng Capital themselves are equivalent to adjusting in the overall market of Big A, and they are also the same as the US stock market.

The result is also very obvious. The Tiansheng 50 Index is often benchmarked with the Shanghai Stock Exchange 50 Index, but the constituent stocks of the two are quite different. For example, the Tiansheng 50 Index does not have so many bank stocks or securities stocks. From the first trading day of this year to the close of the previous trading day, the Shanghai 50 Index has increased by +28%, while the Tiansheng Shanghai 50 Index has increased by +47%, significantly outperforming the benchmark index.

Similarly, the Tiansheng Shenzhen 100 Index and the Shenzhen 100 Index are the same. In recent years, the Tiansheng Shenzhen 100 Index has increased by +67% until the close of the previous trading day, while the Shenzhen 100 Index has increased by +38% in the same period. Significantly outperformed the benchmark index.

At the same time, Lu Ming continued to answer the question of the questioner: For US stocks, after the financial crisis in 2008, what kind of state did you find the average value of? Is the rate of return in the next two to three years? Very high, it can be around +40%. You will find that the more crisis and the worse, the better the rate of return in the next two to three years, and whether it is the stock market, the rate of return of all assets is good, why is this?

Lu Ming asked himself: The answer is monetary phenomenon, that is to say, the bigger the crisis comes, the more money you print and the looser you are, the lower the cost of your capital, and the higher the return on assets, why? Because assets The rate of return will enjoy two things, the first is growth, the growth of corporate earnings is the so-called value part; the second is the valuation, if the looser is the greater the proportion of your valuation, the rate of return will of course be The higher it is, it’s easy to understand, because there is more money in the market and everyone is robbing assets.”

If two or three years from now, the Fed has to tighten, and if the economy can hold up when it comes to recycling, the rate of return will fall back to an average of about 14%, which is a relatively normal market, and if so, it The volatility will be very low, then the U.S. stock market has nothing to see, just hold it, you should eat and drink.”

Then we saw that the Fed tightened in 2013 and 2014, but you found that the return of the US stock market was basically stable at 14% at that time. What is the reason? That is because the implied growth of the North American economy gives the stock market return, That is, the return on the asset side is greater than the cost on the liability side.”

Having said this, Lu Ming's words changed abruptly: But if your economy can't support it and you have to recycle, then the market volatility will increase and the rate of return will decrease. The past 2018 is typical. You just said the Dow Jones, take the Dow for example...

Lu Ming paused his speech and operated the laptop on the desktop in front of him for a while. He opened the market software and switched to the Dow Jones index of the US stock market, the trend from January 2018 to the present, and then projected it to the giant screen behind him.

All the participants at the scene turned their attention to the giant screen, and Lu Ming's voice resounded throughout the audience: If you only look at the K line of the Dow from January last year to the present, it rose to 26,000 in January last year. It went up a little bit more, then it plummeted down, then it got up again, and it hit more than 26,000 points in October last year, then it plummeted again, and it has risen sharply since this spring, and now it is more than 26,000 points.”

So, if you just look at the K-line chart, it will be a big rise and a plunge! Alas, it seems to have pulled back and made a new high, but immediately crashed and crashed, and immediately pulled back... You will find that since 2018 It’s been almost a year and a half, and the average return on U.S. stocks during this time is almost zero.”

Lu Ming tapped a few times on the laptop keyboard, turned off the projection screen, then looked at the questioner and then looked around everyone and said, Why did the U.S. stock market go like this? The answer is that the old U.S. has been engaged in friction with us since 2018, but this is not the case. The essence of the slump is that North America will fight you when economic growth is not good enough, indicating that North American economic growth is no longer enough for the U.S. stock market to generate an annual rate of return of about 14%.”

Having said this, Lu Ming smiled lightly: It seems that we have been fighting with us for more than a year in the trade war with North America, and it is of no use. We have withstood it and did not collapse. What should the authorities do? So it is no surprise that the Fed will cut interest rates this year. This is our prediction. The exact time is hard to say, but it must be lowered. Only by lowering the monetary policy can the debt side offset the shortage of assets. , so as to form a basic equilibrium state in the market.”

Lu Ming is not afraid that these words will be heard by the policy makers of the beautiful country on the other side, because the general trend does not depend on personal will, not to mention that there will be a super black swan next year, and if it is not loose, it will explode in place.

After a moment's pause, Lu Ming added: Then, if there is a public crisis such as a war that affects the global scope, a major black swan event that impacts the world and the cost of capital is extremely low, then it may suddenly happen. Put all asset valuations and bubbles up quickly. At this time, your rate of return is not only normal, but also super high, just like after the 2008 crisis, because what you earn at this time is not value growth It is the money given by various countries for the valuation, so it is not a simple one-shot to say that the U.S. stock market will go bull or bear this year.”

After speaking, Lu Ming nodded and said no more. The question was answered, and the questioner was satisfied because Lu Ming answered in sufficient detail and professionalism.

...

(Ps: There is still an update today. This week, I have been numb by Big A, and I am confused and in a trance. I need to earn more and more royalties to increase my position. Next week, I will continue to fight Big A (stud.jpg), please subscribe Duck, I’m running out of money to increase the position, otherwise I can only go to take out to make money and increase the position. Oh, by the way, when it comes to food delivery, you have to reserve a few thousand yuan, because Meituan and Ele.me have to prepare their own cars. ...

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