During the Mid-Autumn Festival holiday, the U.S. stock market rebounded last Friday, especially with a sharp rise in the chip sector, laying a solid foundation for the A-share market to open after the double holiday. Coupled with the significant adjustment before the holiday, the market is expected to usher in a rebound after the holiday. Of course, as the National Day long holiday approaches, market trading may be less active, and turnover may shrink to some extent. Overall, the market experienced a correction in the third quarter, especially the sharp drop in July, which fully released risks. Many tech stocks surged significantly last year and then plunged in July, consistent with my previous judgment. When I attended the Berkshire Hathaway (NYSE: BRK.B) shareholders meeting in the U.S. in May, Buffett's cautious attitude toward the tech bubble left a deep impression on me. He vividly compared the current U.S. stock market to a casino next to a church. Because the casino is more attractive, many people left the church for the casino, and the market is filled with speculation. He likened the formation of a bubble to a dance party, saying that people drink champagne and dance, and no one wants to leave early. Although everyone knows that after midnight, everything will turn into mice and pumpkins, people want to leave at 11:50 PM. Unfortunately, there is no clock in the room to tell you what time it is. This is Buffett's brilliant metaphor for the formation of a bubble, vividly describing people's current mentality—both wanting to embrace the bubble and fearing its burst. After I returned to China, I continuously warned everyone about risks and advised dancing closest to the door. Sure enough, in July, the tech stock bubble deflated with a sharp decline. If everyone had followed the three-step strategy I proposed at the time, it would have been better. Step one: resolutely deleverage; step two: reasonably reduce positions; step three: do not bet on a single sector—hold tech in one hand and dividend stocks in the other. In fact, when tech stocks crashed in July, dividend stocks rebounded. Then in August, the market basically saw a rebound, but after that rebound, it bottomed again. The real rebound may not officially begin until the fourth quarter. From a policy perspective, policy support for this market remains unchanged. High-level meetings have repeatedly mentioned the need to enhance the internal stability of the capital market and boost confidence. In response to the current insufficient domestic demand, fiscal and monetary policy support may be increased in the fourth quarter, and more proactive fiscal policies may be introduced. Although the Federal Reserve raised interest rates once in September, and futures markets now expect another rate hike at the Fed's meeting at the end of October, these will not change the overall tone of the People's Bank of China's monetary policy of maintaining low interest rates and ample liquidity. We will not follow rate hikes and will maintain the independence of monetary policy. The impact of Fed rate hikes on China's capital market is not significant. Many people become overly pessimistic when the market declines, even shouting "the bear is here," worrying about another sharp drop in tech stocks. I think there is no need to be too pessimistic. Munger once humorously said that investing is actually very simple: buy stocks from desperate people and sell them to excited people. Right now, precisely because many people are very pessimistic about the future, this is exactly a characteristic of the market at a low point. At high points, it is completely different—everyone is very optimistic, and many even shout "charge." At that time, when everyone is shouting "charge," it is time to overcome greed and decisively reduce positions to avoid risks. When everyone is pessimistic at low points, it is time to overcome fear, and instead, one should be more optimistic. This can be seen as contrarian investing. Value investing is counterintuitive, and this contrarian approach better reflects the market's own characteristics. Doing value investing is easier said than done; overcoming human greed and fear is itself very difficult. When you can truly overcome your inner greed and fear, as Buffett says—be fearful when others are greedy and greedy when others are fearful—you are already halfway to success. In fact, investing is largely a test of mindset. We are currently in the midst of a global AI technology revolution, and the development of this AI technology industry is unquestionable. On the evening of September 21, last Monday, I had a live dialogue with the famous Professor Li Jinming. We deeply explored the current market situation and the prospects of the AI technology revolution. Through a live dialogue of over an hour, we basically reached a consensus that the current development trend of AI technology is unstoppable and will profoundly change every aspect of our work and life. But tech stocks can also fall significantly after being overhyped, just like what happened this year, but now is not the time for the tech bubble to burst. In fact, U.S. stocks remain strong. As I told everyone before, one criterion for judging when this tech bubble will burst is to watch the performance of U.S. stocks. If U.S. stocks are well, it's a sunny day; if U.S. stocks crash, then be careful. In fact, recently the Nasdaq and the other two major indices hit record highs again, and U.S. stocks are still in a strong consolidation, with no signs of a major drop, which also lays the foundation for the A-share rebound in the fourth quarter. Although the total market value of AI tech leaders is astonishingly large, because they have entered the main upward wave of earnings, the huge earnings base makes their P/E ratios not too high—in fact, much lower than many A-share tech stocks. Because many A-share tech stocks have not delivered much in earnings, their valuations appear high instead. In the fourth quarter, the tech stock market may see significant divergence. Tech stocks that can truly secure orders and deliver earnings may see opportunities, while theme stocks and concept stocks without earnings support, or those that cannot get orders and have no visible prospects, may struggle to rise. Recently, Tesla's robot Optimus V3 under Musk has begun placing orders in the Yangtze River Delta and other regions, increasing component procurement, which indicates that Optimus V3 has completed its finalization and is getting closer to mass production, possibly making its official debut in the fourth quarter. If Optimus V3 officially debuts in the fourth quarter, it could bring a relatively large upward wave in the humanoid robot sector. Among the six major industries I proposed at the beginning of last year, chips and computing power were the first to enter the main upward wave of earnings and were the most outstanding sectors in the first half of this year. It is expected that in the fourth quarter, they may still be the leading sectors that rebound first. In addition, other industries such as humanoid robots, solid-state batteries, innovative drugs, and commercial aerospace may also have rotation opportunities. However, from the perspective of the sequence of earnings realization, some industries may need to wait until next year or the year after for opportunities, so everyone can wait patiently. The fourth quarter is the traditional consumption peak season, and consumer blue-chip stocks may see some rebound opportunities, but it will be difficult for them to sustain performance because overall consumption growth is still not high. Real estate, under the influence of the 828 real estate new policy and rumors of fiscal interest subsidies for mortgages, saw a significant rebound, but the real estate market as a whole is still in a period of adjustment. The effects of this policy also need further observation. For now, the real estate sector can be watched, but it is difficult to see a main upward wave in earnings, so investment should still be cautious. Overall, we are not pessimistic about the fourth quarter market, and a new wave of rebound is imminent. It is unlikely that tech stocks will be the sole standout; the fourth quarter will be more about sector rotation. Investors must adhere to several principles in investment. First, resolutely do not use leverage. Buffett said that once you use leverage, time is no longer your friend but your enemy. Second, maintain an appropriate position—neither empty nor fully invested, but at a moderate level. Third, diversify allocations and do not bet on a single sector, so you can attack and defend. If you seize this rebound in the fourth quarter, you may achieve a beautiful turnaround, but you also need to be aware of market volatility risks and invest rationally. MACD golden cross signals have formed, and these stocks are performing well! Sina statement: This news is reprinted from Sina's cooperative media. Sina publishes this article for the purpose of conveying more information and does not mean it agrees with its views or confirms its description. The article content is for reference only and does not constitute investment advice. Investors operate at their own risk based on this information.
Comments