During May Day, the world's headlines may have been occupied by three old men, namely: Buffett , Munger and Trump !
The annual Berkshire shareholders were held recently. At the meeting, Berkshire released its first quarter report. According to media reports, Buffett and Munger answered questions from 50 investors together, and devout investors around the world listened. Previously, the United States released its recent economic data, with its unemployment rate hitting a 50-year low, and GDP growth in the first quarter rose from 2.2% to 3.2%. Trump even said on Twitter that the best has not arrived yet.
is boosted by various positive factors. During the domestic long holiday, global equity assets showed resilience. The US "VIX Volatility" index is at a six-month low, reaching 12.87, indicating that risk aversion sentiment has dropped to a six-month low. Nasdaq and S&P 500 both rose sharply after the release of US economic data. The Hang Seng Index and Taiwan stock markets performed strongly. Even when the external adjustments were made, the two major stock markets still performed well, with the increase in the period being 1.29% and 1.17% respectively.
So, will the A-share market be stimulated by the external market and stage a "burst before the festival and surge after the festival" market?
After all, in January this year, market sentiment was also sluggish due to frequent performance thunders, but after the news in February was flat, the market quickly became bullish. The same is true in April this year, so the market also has expectations of a strengthening market in May. But judging from the variables that affect the market, although the situation in January and February is similar to that now, it has also undergone many changes. The market may rebound, but the probability of a continuous systematic surge like in February may not be too high, and more likely it is structural opportunities.
Judging from the performance of A shares after May 1st, it has achieved a rise for four consecutive years:
2015, the market fell on May 1st Labor Day, followed by the market starting from May 8th, from 4099 points to 5178 points, up a total of 1079 points;
2016, the market fell on May 1st Labor Day, followed by the market opening from May 12th month. It started to rise, from 2781 points to 3140 points, a total of 359 points;
In 2017, the market fell on May 1st Labor Day, and then the market started to rise from May 11th, from 3016 points to 3305 points, a total of 289 points;
In 2018, the market fell on May 1st Labor Day, and then the market started to rise from May 3rd, from 2929 to 3219 points, a total of 290 points.
World to watch the "First Quarter Answer" of the Three Old Man
The May Day holiday, two things are very important: one thing affects investors' confidence, and the other thing affects investors' philosophy. The former is the first-quarter US economic data handed over by Trump, and the other is the investment sermons of two investment "leaders" Buffett and Munger at the Berkshire shareholders' meeting.
From the first thing to do, the economic data of the United States can be described as "explosive". The GDP growth rate in the first quarter rose from 2.2% in the fourth quarter of last year to 3.2%, and U.S. consumption expenditure increased by 0.9% month-on-month in March, the largest increase in the past decade. At the same time, the US job market is in a state of full employment, and the US non-farm employment data in April exceeded expectations. The U.S. non-farm employment increased by 263,000 in April, significantly higher than expected, with the unemployment rate falling to its lowest since 1969. The U.S. non-farm employment population in March was revised from +196,000 to +189,000, and from +33,000 to +56,000 in February. Non-agricultural data boosted US stocks , Nasdaq rose 1.58% on May 3, and S&P also rose 0.96%.
Trump quoted Gallup poll on May 2 as saying: "56% of Americans rated their financial situation as good or good. This is the highest number since 2002 and has risen 10 percentage points since 2016." He also said on Twitter that the best has not come yet.
Even Warren Buffett, the stock god who is holding a shareholders' meeting, admitted in an interview with the US media on May 3 that the US economy is "very strange" now, which has long exceeded the content taught in any economics textbook he has read, and is unforeseen by any textbook. Buffett said that the unemployment rate in the United States is so low, but inflation and interest rates have not risen accordingly, and the US government is still increasing fiscal spending and government deficits.
At the same time, Buffett and Munger also delivered the first quarter answers. Berkshire's total profit in the first quarter was US$21.66 billion, up from a net loss of US$1.14 billion in the same period of 2018; a net loss of US$0.46 in the same period of 2018. Operating profit was US$5.56 billion, a year-on-year increase of 5%. At the same time, the two elderly people also answered 50 sharp questions from investors at the shareholders' meeting. Analyze Berkshire's investment projects layer by layer and spread the investment methods step by step.
The same as in February and May, the same as in different
, can undoubtedly provide a stable environment for the rebound of the A-share market. This is the biggest similarity between the end of January, the beginning of February and now. At the end of last year, the peripheral market also had a downturn for a period of time, but they all stabilized and rebounded in January this year and continued to rebound until the end of February. After that, the external market also had a slight ups and downs, but since April, the US stock market still hit a new rebound high, the S&P and Nasdaq hit a record high during the May Day period, and , Hong Kong stocks, and Taiwan stocks also showed a strong long atmosphere. On the day the Federal Reserve announced that it would not cut interest rates, US stocks plunged, but Hong Kong stocks still closed strongly.
is followed by performance mine explosion period. In January, the performance forecast of small and medium-sized entrepreneurs once made the market miserable, and their popularity dropped to freezing point. However, after the mines, market sentiment quickly rebounded, and February also ushered in a big rebound. At the end of April, performance mines reappeared, and Ofilm, , Kangmei Pharmaceutical, , etc. refreshed the three views of the stock market, and the popularity of the stock market also dropped sharply. This background is very similar to January.
However, it's more different.
firstly has different valuations. In January, the valuation of the entire market was at least 20% discount compared with the current one. At that time, the positions of major sectors were relatively low.
In addition, the chip structure is also different. After the index hit a new low, the Shanghai Stock Exchange 50 slowly rebounded, basically blocking the market's decline. The northbound funds dominated all this. Now the Shanghai Stock Exchange 50 rebounded to a certain level of profit space. Foreign capital has taken profit, and other popular theme stocks have also risen relatively largely, and the market needs new hot spots.
In addition, as stock index futures loosen, market trading variables have also changed significantly. After the social financial investment in January reached a huge amount, the monetary policy in April entered an observation period, which is also an important reason for the market's adjustment before the holiday. Compared with January, the US stock market has seen a large increase, so the valuation advantage of US stocks is also disappearing. Data from Guojin Securities shows that as of the end of April, the valuations of S&P 500 index and Nasdaq index were 19.1 times and 34.5 times respectively, higher than the historical average level since 2010. Since 2010, the median valuation of the S&P 500 and Nasdaq indexes have been 17.8 times and 30.3 times respectively.
Of course, there are also some positive changes, that is, there may be a possibility of inflation expectations falling. During the domestic long holiday, ICE Brent Oil price performance was -1.23%, which has fallen slightly for two consecutive weeks, with the latest price being US$70.78 per barrel. The increase in U.S. oil production has partially offset the impact of U.S. sanctions imposed on Iran and Venezuela and the Middle East-led OPEC cuts oil supply since January. Analysts believe that although oil prices rose sharply in the first few months of this year, the US shale oil revolution has led to a sharp increase in production, and oil prices may have a ceiling.
In addition, there is another stock trend during the holidays that may also lead to a decline in inflation expectations. Beyond Meat, known as the "first stock of artificial meat", recently officially landed on the Nasdaq in the United States. The company not only received investment from well-known figures such as Bill Gates and , but also achieved an astonishing increase of 163% on the first day of its listing. The domestic inflation index is closely related to pork prices. Since the beginning of this year, pork prices have been rising due to African swine fever. But if healthier alternatives appear, pork demand may drop. Of course, this is just expectations, but expectations are constantly affecting the market and people's hearts.
Buffett's four major investment inspirations
No matter how the market goes, opportunities always exist. This kind of opportunity is divided into short-term opportunities and long-term opportunities. The four major investment inspirations given by Buffett's shareholders' meeting may solve the problem of length and short.
Revelation 1: Holding good companies for a long time
According to the information disclosed by Berkshire's shareholders' meeting, Buffett and Munger, they prefer long-term opportunities. Some investors may believe that this concept is not suitable for the A-share market, but it is not the case. In the past few decades, the growth rate of good companies has been amazing, such as Kweichow Moutai, Vanke A, Gree Electric Appliances, etc.
well-known strategy analyst Zhang Yidong said that the future bull market is a bull market for leading companies or core assets in various fields, which is becoming more and more similar to US stocks. Core assets lead the index, rather than rising.
Revelation 2: Investment index fund
Buffett is known for recommending investors to invest in index funds. When talking about the 335% return rate of the S&P 500 since the market bottomed in 2009, Buffett said: "Looking back on the bull market in the past 10 years, you will definitely be shocked." Buffett said that his successor may choose index funds instead of U.S. Treasury bonds. Although he also believes that such strategies may limit Berkshire's opportunities, such as those arise during and after the financial crisis. In September 2008, Berkshire invested $10 billion in Goldman Sachs' preferred stock, with a dividend of up to 10%.
For A-share investors, the risk of investing in ETF index funds is far smaller than the risk of investing in stocks , because you will never know how big the individual stock is and when it will explode.
Revelation 3: China still has great opportunities
At the shareholders' meeting, Buffett said: "China is a big market, we like big markets." Without China's new policy of expanding opening up, we were already in contact with China. Berkshire has done a lot in China, but has not done enough, and may make some major arrangements in the next 15 years. Munger said that the overall situation is improving, and it is very important for China and the United States to get along well, and it is actually stupid if they cannot get along well.
As we all know, Buffett has invested in PetroChina and BYD . He also said that he would invest in companies with ROEs above 20% for many years. There are also some such companies in the A-share market, and the future may be the direction of capital pursuit.
Revelation 4: Investment requires professionalism and patience, and also some luck
At this shareholders' meeting, Buffett and Munger told two stories respectively:
(1) Buffett told a story about his purchase of a company called Atled. The company has 98 shares and Buffett bought 1. Atled is a Louisiana duck club. The company bought some land and could then hunt ducks. But after someone fired a few shots into the ground, oil emerged. The company's stock also rose from $100 per share to $29,200. If the company's shares have not been sold until today, they may have been worth millions of dollars.
(2) Charlie Munger said that when he was very young and poor, he bought a stock, and the stock quickly rose 30 times, but he sold it when the stock rose 5 times. This was the stupidest decision of his life. The two stories of
are first emphasized. Only majors can be selected. Secondly, patience. If you don’t have patience, you will miss most of the subsequent gains; thirdly, luck. If you don’t have luck, you won’t shoot an oil field in one shot. This is also why individual investors are best at investing in index funds rather than individual stocks, because compared with professional investors, the biggest advantage of individual investors may be patience.
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