Shulou(Shulou.com)06/01 Report--

The more the stock market crash, the more important the opportunity.

The investment itself is very simple, it is to buy and sell, but it is very difficult to get the opportunity. The outcome of the investment depends on the insight into the industry and the general trend of the industry. It is also very difficult to buy and dare to take a heavy position. Investment is a very leeway thing, vision is very important, can see the huge direction of industrial development.

My 24-year career has taught me that often when there is a stock market crash, it is a major opportunity, both overseas and domestic. Generally speaking, there are big opportunities every few years, and the stock market is also divided into big years and small years. Stock market crashes are often big years. The more the stock market crashes, the bigger the year. We say that the Internet bubble is a big year, and the bursting of the Chinese stock bubble is a big year. The more such a stock crash, the more personal assets plummet, it often means a big historical opportunity.

There's always a chance. You say miss 200 times, 300 times, do you still have a chance? Yes! When Tencent appeared in front of us in 1996, we didn't notice it at all, which was wrong; in 2006, when Tencent's share price was 12 yuan, we bought almost a full position. Generally speaking, we have held it for 10 years now. Missed Tencent, will there be a chance in the future? In 2013, our entire assets doubled. Why? There happened to be a stock market crash in 2012. Overseas fund managers thought that relevant companies in China were counterfeiting and sold stocks one after another. We bought Qihoo 360, which was bought by the company with the highest short selling at that time. We bought it for 17 yuan. After the crisis of Chinese stocks, we sold it for about 100 yuan.

I like to share the case of Tencent with you. We follow the data closely. In 2011-2012, before Wechat came out, we judged that Tencent's game business might slow down, so we made the decision to sell at that time and learned the lesson of 2008. Later, when Wechat came out, we bought it again, which is why I said, "generally speaking," we have owned Tencent ever since.

There is a well-written article called "Ma Huateng taught us a lesson in finance". All of you here, would you like to communicate with the chairman? Will you trust him very much as first-hand information from the chairman of the board? I have invested by myself for so many years, in a bull market, what the chairman told you firsthand may make you a lot of money, and in a bear market, it may make you lose a lot of money. The better your relationship with the chairman, the worse you will die. For an investor, the financial crisis is not afraid, you dare to insist. But when a major shareholder or chairman of a company tells you that he is selling stocks, he should be vigilant. Many of my friends sold them in 2008, so why did they sell them in 2008? Because they were scared to death by the financial crisis, another point is that Ma Huateng himself is selling stocks. So we say that investment should actually be farther away than Ma Huateng in order to really earn this money. At that time, we agreed that the Internet industry would form a basic industry, just like electric power and petrochemical, and BAT would account for at least half of the industry. I have a friend who bought NetEase at that time. He said that he didn't have much money at that time, only 2 million US dollars. NetEase made him earn several times, Skyworth made him earn several times, and Apple made him earn several times, from 2 million US dollars to several billion US dollars.

The outcome of investment depends on the general trend.

I think if you have insight, one is the insight of long-term great social change, as well as the insight of the market, the direction of the industry, and the insight of the company. If you have such a long-term vision and enough patience, you can make a lot of money by your own wisdom. People who can hold still and enjoy huge profits are very rare in the world. Do you dare to hold on to a stock after 10 times? What about 100 times or 200 times? So when I missed Sina, Sohu, NetEase, when Tencent appeared in front of me, I didn't hesitate at all. I bought a lot of Tencent stocks overseas. I bought Tencent for about 70% of my position and have held it until now. So far, Tencent's return is about 56 times. There are many people in Shenzhen who only buy one stock, study a company thoroughly, and then make a lot of money, including Tencent gang, Maotai gang, and Vanke gang before. He will hold it for a long time and make a real value investment.

I would also like to share with you an example of industrial change. We can take a look at the examples of Li Ka-shing and Richard Li. We can say that Li Ka-shing is one of the greatest businessmen in China and even in the world. You can see that he sold Chinese assets two years ago. At that time, a professor said that Li Ka-shing would not let Li Ka-shing run away. Last year, Li Ka-shing began to take the company offshore. When we look at the current situation in Hong Kong, we can see how far-sighted Li Ka-shing is. As a matter of fact, being an investor is the same as being an entrepreneur, that is, the layout that can be bigger than who can see far ahead of time. As you can see, Li Ka-shing sees very far, and his industries are real estate and ports. Real estate is the interest class that has benefited most from the reform and opening up in the past 38 years, and it is also the class that has shared the big cake of China. There are many rich people in the real estate sector on the Forbes Rich list. Moreover, Li Ka-shing has a characteristic. His land in Beijing, Shanghai and Shenzhen are all the best. He also has ports. Yantian Port in Shenzhen is his. This best port is his and stable. Even these two industries do not have as many assets as his son does not make strategic mistakes. If his son didn't sell Tencent for $2.2 million two years later for 12.6 million (only six times the profit). If Li Zekai only needs to hold Tencent for 15 years, his assets can exceed his father's lifelong efforts.

In the past, many real estate business models were tens of thousands of families competing and sharing food, but the Internet was different, just one or two. In addition, you can look like self-driving, Google, because we have also bought companies like Google and Amazon overseas, our A-share market is very hot self-driving, the real self-driving is likely to succeed is Google, imagine that if Google's self-driving success is equivalent to Apple has changed the mobile phone industry, Apple has turned traditional manufacturing into a new business model. It eats more than 90% of the industry's profits. If Google can bring down the entire automobile industry and manufacturing industry and become self-driving, there are only a few companies in the world, such as Google, Tesla and Apple, assuming that these three companies dominate the world's automobile industry. You can imagine how big this company will be, so the current business model has been completely subverted. The business model of the past, such as American tobacco, monopolized 90% of the market. But it broke up in violation of the monopoly law, but it will be difficult to split up in the future, just like Tencent will get bigger and bigger. Now it is difficult to break up companies like Google and Tencent. The company will be bigger in the future. We should put money and wealth into such a business model.

In terms of allocation, if you want to allocate a large amount of stock assets, you will always think about the business model and the situation of the industry. We are talking about the ceiling of the industry, for example, the ceiling of the Google industry and the ceiling of the industry like Tencent. In addition, where is the moat in the business model? In recent years, the liquor crisis, many people think that anti-corruption is a great crisis to Maotai, in fact, the only profit in the liquor industry is Maotai. The companies that have really made a lot of money these years are companies with light assets, high profits and wide moats.

Overseas investment may fall by 92% in a day if it is wrong.

For us, generally speaking, all asset allocation should be invested in better industries. In fact, this table is also when I was studying CEIBS, when I was a professor of platform economics in 2009, he used 30 tables, and this is one of the tables. I made a lot of money at that time. This is the situation from 1992 to 2006. Generally speaking, the returns of soft drinks, pharmaceuticals and cosmetics are stable, and we can see that the valuations of consumer goods overseas are very high, and the valuations of stable companies are very high, so we say that if we want to configure, or put it in a good industry, in a good company. You must not speculate overseas. Speculation is a big problem. If you choose the wrong overseas investment, the penalty is very serious. if you choose the wrong enterprise overseas, it may drop by 92% in one day, and there will be nothing left, so you should be very cautious about investing overseas.

In terms of our current investment situation, there are two markets: the American market and the Chinese market. In the United States, it far exceeds China in terms of quantity and amount, and there are many other options, many good companies, and relatively cheap valuations, and there are still many in the United States. The Hong Kong market is now the cheapest market in the world. Of course, because many components of the Hong Kong market are mainland-related enterprises, the valuation is now the lowest, and generally speaking, there are some opportunities.

In fact, the core of asset allocation, I think, is overseas or global. In addition to real estate, if you invest most of your assets in stocks, you still have to choose companies with very solid fundamentals, which is a very important difference between investing at home and abroad. Many people go to Hong Kong to buy highly speculative stocks and are easily killed. We must not step on mines overseas, but we should mainly invest in blue chip stocks. Asset allocation is a very serious matter. Be sure to choose companies with solid fundamentals to invest overseas, so that your assets can continue to grow in value.

In addition, the domestic gem reached nearly 142 times last year, and there were three rounds of stock crashes. now the median is 86.8 times, the median of small and medium-sized boards is about 68 times, and the main board is 36 times, which is still very high. In addition, the A-share market, especially small companies, is favored, with high valuations and good liquidity, while Hong Kong stocks have very low valuations and poor liquidity. This is the result of the stock market crash. I think this will happen in China in the end. In fact, the new third board is already very obvious. 70% are illiquid. I think there will be such changes in the A-share market in the future.

Finally, do not borrow money to speculate in stocks. In fact, you only need to use your principal to make a forward-looking grasp, and the opportunity is not gone. As long as you are patient, there will be great opportunities every few years.

Interactive question and answer

Lu Xi (legendary chairman of Yingyang, Guangdong): ask three questions, when do you predict the next big year of the first Chinese market? Second, what do you think is the appropriate asset allocation ratio for an entrepreneur at home and abroad? Third, what is more appropriate to look at global investment?

Dan Bin: let me answer the second question first. I suggest putting half of the assets. In the next big year of the Chinese market, my personal understanding may not be correct for reference. I estimate that there may be a process of two or three or even three or four years, and there is another personal experience that I had in June last year. I went to Shanghai to have afternoon tea with a friend. I arrived an hour and a half early to wash my feet. The foot washer half washed his feet and half looked at the stock. At that time, I thought, the market must be coming to an end. He has spent all the money of the foot washer on the stock market. It takes a long time for the top energy to transfer to the bottom energy.

The country has invested 2.53 trillion, invested so much power, and is actually still rebounding very weakly. It will take several years for my personal judgment to shift from the top energy to the bottom energy. I personally judge that it may not be right, probably in 2018.

Third, the bigger the year, it is often accompanied by the changes of the industry, the changes of the industry, there may be an industry leading the social trend changes. If we can catch this industry, the return will be dozens or hundreds of times, and the more the stock market crash, the greater the return. In the several stock market crashes we have experienced, people are often more optimistic at the best part and afraid at the most pessimistic time. Often your wealth will have a new beginning and a new cycle at this opportunity. This is my personal judgment, and of course it is not necessarily right.

Question: what do you think of the recent stock market?

But Bin: the stock market I think there are two points, one is valuation, the other is the relationship between supply and demand, valuation according to the median valuation, gem is now 86.8 times, small and medium-sized board is 68 times, the main board is 36 times, the valuation is still very high. It can be said that it is one of the most valued markets in the world, and it will only rebound, not reverse. The relationship between supply and supply has been made very clear. In China's economy, enterprises are now highly indebted and highly leveraged, so they have to rely on continuous financing to solve China's high debt problem, so the capital market will definitely increase supply, with or without registration system. Why do so many entrepreneurs go to the new third board, the supply is endless, including the privatization of so many enterprises, including the privatization of many enterprises in Hong Kong, all want A-share listing, want a high valuation, regardless of whether there is a registration system or not, the supply is very large. 756 enterprises go to one company every day, almost finished in three years, but after that, there may also be a reversal in terms of supply relations. So I personally look at the rebound. Since I look at the rebound, after the rebound, I think it will hit a new low. Personally, I think it is not necessarily right.

Question: what is the next "Tencent"?

But Bin: a company like this may be an industrial change, a big industrial change. I think it may still need to be brewed. The next tuyere is an industry like VR. I personally think that for companies that have a breakthrough in the treatment of xxx, if they want to have such a company with breakthrough technology, they can conquer xxx, and the biopharmaceutical industry may have an opportunity.

Of course, in addition, I think it needs to look like, now in the US market is not at the highest point, usually the highest point when a company goes public, the valuation is very high, it is very difficult for you to buy a company with great potential, I think it may still need to wait and see, need to brew, there is no great opportunity to shine before people's eyes, I have not seen it yet.

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