From 2021 to 2022: reversal, comprehension and outlook

Reversed 2021

Looking back on a year ago and looking forward to the economic and investment situation in 2021, optimism was flooded at all levels. At that time, economic activity recovered rapidly from the impact of the 2020 epidemic, and the uneven global recovery caused my country’s exports to soar, which promoted optimism about the economy. The stock market is booming, and both industry and finance are making money.

A year later, standing at the node of resigning from the old and welcoming the new, many industries and many people are more pessimistic. This rapid transition from optimism to pessimism is staggering, mainly due to multiple major “reversals” in 2021.

For example, at the level of the real economy, at the end of 2020, real estate is still in a good situation, and housing prices are rising. By the second half of 2021, the real estate industry, which occupies a large share of the economy, represented by “Hengda”, has become large indebted and problematic. The building materials, construction, engineering, and real estate intermediaries in the real estate industry chain are all troubled, and it will be a victory to survive this year.

For another example, the manufacturing industry, which was originally producing at full capacity, was frightened and sweated by the sudden “power outage”. Live broadcasts and short videos are emerging industries that have caught fire after the epidemic. Recently, illegal accounts have been rectified. At the end of the year, Wei Ya was fined 1.3 billion yuan, announcing the end of barbaric growth. Under the main theme of breaking monopoly and “interconnection”, the once-great Internet giants lined up to be fined, and it is not easy not to lay off employees.

After the reversal, the new year is sad. Due to the implementation of the “double reduction” in primary and secondary schools, the education and training industry was wiped out in 2021, and had to find the direction of “re-employment”, worrying about refunding parents and finding a way out for employees. Its tragic degree is just like the famous saying in the famous science fiction novel “Three-Body”: “What is it to do with you if you destroy you?”

The most magical scene about how to get through the difficult times took place on the forgotten LeTV official account. Its headline reads:

“LeEco has three happy events at the end of the year: salary increases, no layoffs, and support for three children. Without considering the impact of historical debt, LeEco’s latest operating data has achieved a balance between operating profit and cash flow, which is a result of LeEco’s thunderstorm. This is the first time.” Fans left a message in the comment area: “I have used LeEco for many years. It’s really good. I miss Lao Jia.” Lao Jia hasn’t come back yet, it went public in the United States 5 months ago.

LeTV TV actually survived. How did it survive? Very valuable for research. But in this winter, the more realistic expectation is that companies that have encountered temporary difficulties will survive, and there will be fewer “new” veterans.

Doing business is not easy under any circumstances. Complaining is useless, and the pain of transformation and reform must be borne. Where is the new economic growth momentum at the macro level, and what can be done to make money at the micro level? These two eternal issues are extremely urgent in 2021.

The above is about industrial economy and industry. In the financial market, because of the economic reversal, 2021 is a very difficult year to make money.

In terms of asset classes, in the stock market, most people are taking back their profits in 2020, and it is not easy not to lose money. Although the Shanghai Composite Index was basically flat in 2021, the optimism at the beginning of 2021 has disappeared after June. It is not uncommon for star stocks to fall by 30% and 50%. Taking medicine and drinking are not effective, and the fast-changing coal and other upstream sectors have experienced huge fluctuations. They are coming and going fast, and opportunities are difficult to grasp. Only new energy still stands out.

Hong Kong stocks suffered a big bear, the Hang Seng Index fell 15% across the board, valuations reached historical lows, and new stocks frequently broke. Investors in US stocks are mostly invested in the Internet and educators. They used to make a lot of money, but now they stepped on the thunder of the industry and fell into a situation where there is no target to invest.

In the field of equity investment in the primary market, the previously popular Internet and education funds do not know where to go, and the track is gone. I was given a big lesson about industry policy risks, but the tuition fees were too high.

In the commodity sector, mainstream economists believed that inflation was temporary in the first half of the year. Since then, copper prices, coal, energy, raw material prices, and U.S. inflation have continued to rise. The inflation theory is temporarily reversed. Commodity futures prices are rising, which is turbulent to watch, but trying to make money is like a fire.

In other alternative investment areas, after Bitcoin hit a new high of $60,000 in May, China completely banned Bitcoin mining and Bitcoin and other digital currency transactions. The digital currency industry that once earned money every day was wiped out.

From 2021 to 2022: reversal, comprehension and outlookImportant insights

In 2021, the dramatic great grief, great joy, and great reversal will just complete a cycle of reincarnation. If you don’t let the insights of 2021 have a deep pain and let it have more meaning to inspire the future, I am sorry for the roller coaster of the past year. The most important insight in 2021 is also a deeper understanding of the “cycle”.

The cycle is like the “fate” and “fortune” of metaphysics, grasping the cycle, and going smoothly; against the cycle, the man’s arm acts as a car. I remember studying in middle school, saying that there has been an economic crisis every 7 or 8 years since the birth of the capitalist world. Zhou Jintao, the famous cycle king of the stock market, passed away: Life is a Kangbo, and reincarnation is eternity.

What is behind the cycle? It is not a zodiac or zodiac name. Behind these reversals in 2021, there is an invisible big hand dominating, an ultimate law that has been in effect in the Chinese market for 40 years since the reform and opening up-my country’s economy and finance are dominated by policies.

The path for the resumption of this law in 2021 is:

In the first quarter, in the face of the real threat of overheating and asset price bubbles, policies were decisively introduced, counter-cyclical adjustments, monetary policy tightened, and industrial policies increased;

In the second quarter, various policies were implemented layer by layer;

By the third and fourth quarters, the policy and drug effects were completely released and the economy was down.

Today, the time has come for many economists to call for policy relaxation.

“As soon as it is released, it will be messy, and as soon as it is collected, it will die” is a sentence often mentioned more than ten years ago. After so many years, the level of social governance has greatly improved, and this sentence is still fulfilled.

The time point for this round of counter-cyclical adjustment is very in place. Take the real estate price that the public is most concerned about as an example. If you miss the timing of regulation in the first quarter, under the global currency release and inflation expectations, let the market freely play for a few months, and the current housing prices will rise to a higher level, as in 2015. -The price increase cycle in 2016 is the same. The effect of regulation is immediate and very good.

If the intensity of regulation is appropriate, what we see today is a stable housing price and a stable real estate industry.Unexpectedly, overcorrection, excessive force, banks halted mortgages on a large scale, real estate transactions have reached a freezing point, superimposed on the impact of the epidemic and extreme weather, and the industry is in full trouble.

Any industry and any investment need to improve the ability to grasp policy risks and policy opportunities. The experience of 2021 has provided us with an excellent learning opportunity on how to deeply understand national policies from a global perspective, and follow the trend. The policy does not only consider the economy as a variable. When to issue a policy is not a simple economic issue, but the result of a combination of social, political, and international situations. The Didi listing incident, overseas listing VIE issues, Internet anti-monopoly, “double reduction”, “centralized procurement” in the medical industry, and the prohibition of digital currency all have such backgrounds.

Secondly, it is necessary to judge the length and depth of periodic fluctuations. From the second half of 2020 to the beginning of 2021 is an economic upswing cycle, and from the beginning of 2021 to the present is a down cycle. Up to now, many policies are being relaxed again, which means that next year will usher in an upward cycle. The time span of China’s cycle transformation is shorter than expected. The rapid cyclical changes have caused reversals and difficulties in 2021.

If you compare the cycles of China and the United States, you will find many differences. Sometimes the two are just the opposite. When one is tightening, the other is relaxing. The United States has been screaming for a year, and is still struggling when to raise interest rates, while China has cut its RRR twice in 2021. It is now discussing economic stability and risk prevention. This kind of “one loose and one tight” situation in China and the United States has occasionally appeared in the past.

Intuitively speaking, there may be more cycles in China than in the United States. The economic volatility of the United States is greater than that of China. For example, inflation in the United States is now close to 7%, but it has not raised interest rates yet. Historically, in the 45 years from the late 1970s to the present, the Fed has only had 7 interest rate hike cycles, the shortest 11 months and the longest 48 months. There are four cycles from tight to tight and from tight to loose. The five-year period is much longer than China’s cycle.

There are reasons for the different positions of the division of labor between China and the United States in the global industrial chain, the different thinking and starting points of China and the United States for macro-control, and the different national conditions of the two countries. China pursues “stability” and has a low tolerance for “instability”, and the fluctuation range is small. Just like China and the United States have adopted different anti-epidemic policies.Arranging enterprise production and making financial investment requires predicting the economic cycle. In the context of economic globalization, it is necessary to have a clear understanding of the differences between China and the global economic cycle and follow the trend.

Finally, return to the understanding of investment. Frequent cycle changes require deeper endurance. The first connotation of endurance: stay awake when optimistic, and don’t blindly expand the results. Only in this way can there be room to cope with the difficulties that are inevitably determined by the cycle. Policies and cycles are force majeure, and companies and investors can only adapt. The battlefield situation is changing rapidly. A good general needs to analyze the future according to the three possibilities of optimism, pessimism, and neutrality. Each may look at three more steps, line up troops, and judge what to do if it is right and what to do if it is wrong. It is difficult for most people to look at one step, and they have never thought about the second step, let alone the third step.

The second connotation of endurance is the ability not to shoot. Make more moves in good times, and run quickly against the wind. Don’t participate in things that have a low chance of winning. In January 2020, I wrote an article looking forward to 2020, and proposed several trading opportunities with higher odds, which were verified. At the beginning of 2021, readers left a message and asked: Is there a clear forecast like 2020? I was not sure. I only wrote “Investment Next Year, Five Mysteries”, which raised five very important questions without clear answers. For example, it was thought that China’s economy would enjoy a booming first half of the year, but it was impossible to judge the second half of the year.

Taking the stock market as an example again, I thought at that time: 2021 is definitely not as good as 2020, and we need to consider how to digest the risks of high-valued sectors. The unity of knowledge and action, I really endured it. In 2021, we insisted on a very low configuration. Starting from the second half of the year, my friends and I said, don’t buy the bottom and increase your position easily, and wait until January 2022. The current situation is clear, and the statements of the Central Economic Work Conference and the Central Bank are all stabilizing the word. The time to make a move is ripe.It doesn’t matter if you miss the standout of the Ningde era. It’s luck to gain, and it’s not uncommon to lose. There is a knife on the heart, you have to endure, you have to wait. Buddhism that is inaccurate is ruthless enough to see accurately.

From 2021 to 2022: reversal, comprehension and outlook


With regard to the monetary and fiscal policies in 2022, the loose tone will last for at least half a year. The question of “I was bitten by a snake once, I was afraid of well ropes for ten years” is, will the policy tone be reversed again in the second half of 2022? Personally think it is unlikely. At the meso-level industry, it is difficult to have such multiple pound bombs in 2021. All the benefits are good. At the same time, the 20th National Congress of the Communist Party of China will be held in the second half of 2022. The policy environment in 2022 is favorable and will be a year of smooth transition.

The stock market and the entire capital market will be better than in 2021. 2022 is a year of accumulating energy, and a year of preparing for a new round of sharp rise cycles. With this big judgment, the win rate of making money in 2022 is high, and the intensity of bargaining may be greater.

The risk lies in inflation and the trade-off of policies to control inflation and hedge against economic downturns. In fact, upstream industries that have the ability to raise prices will make a profit in 2021. Global inflation is soaring, liquor and mustard prices have increased, and downstream consumer product prices are inevitable, and all prices have risen to a higher level.

The following discusses several hot issues in specific investment directions for your reference.

With regard to the future development direction, Mr. Qin Shuo has an excellent discussion in the article “The End of One Era is the Beginning of Another Era”. These opportunities are the main line of China in the future. Find good investment targets and hold them firmly. Emerging economy, the old saying goes, mainly just a few: The first is new consumption, and the second is hard technology (biotechnology, chip semiconductors, materials, artificial intelligence and new generation information technology, new energy technology, etc.).

In the field of new consumption, domestic products are emerging. In all areas of eating, drinking and playing, a batch of new brands with century-old stores will be born that are equivalent to my country’s hard power and soft power, and are the same as McDonald’s, Coca-Cola, Starbucks, and Adidas founded by the Americans. In the past 2021, a large number of first-level equity investment capital has poured into these fields, and hi tea, beef noodles, and sweeping robots are all hotspots.

In the high-end consumer sector, as long as the new brand is of good quality, the price is not a problem, and the buyer is not bad for money. Why do people line up to buy LV? Buying Chinese own luxury goods is also fragrant. The Japanese high-end brand Desante acquired by Anta Sports has explosive growth in 2020 and 2021. The core reason is that it significantly exceeds the quality and price of Nike/Adidas. Nike/Adidas has entered ordinary households, and high-end people need more expensive and better products.

From a short period of time, these hotspots are highly volatile, with high risks and high returns. The frequent drop of Hong Kong stocks below the issue price is to correct the value of new economy companies. In 2021, the innovative drug sector in the secondary market experienced a 50% correction due to excessive valuations, but it did not change the growth of high-quality companies, and 2022 ushered in the opportunity of low absorption.

What needs to be reminded is that investing in innovative drugs is pure venture capital. Regardless of whether you invest in the secondary market or the primary equity, you must be mentally prepared to invest in innovative drugs: successful research and development of new drugs will earn dozens of times, and failures will instantly wipe out 50% and 60%. This is especially true in mature markets. For example, in 2020 and the first half of 2021, the vaccine stocks in Modena, because of innovative mRNA vaccines, have skyrocketed by more than 40 times from 2020 to August 2021. As soon as Merck and Pfizer’s new crown drugs were released, Modena’s stock price fell 52% from August to the present, while Pfizer’s stock price rose 40%.

If you are worried about the “centralized procurement” of the medical industry and the excessively high valuation of the secondary market, you can pay more attention to the early stage innovative medical projects in the primary equity investment market. To defeat the virus and treat diseases and save people depends entirely on the advancement of medical technology. The investment value of source innovation projects has not been affected too much by “centralized procurement”, and the valuation is lower than that of the secondary market, and the possibility of obtaining high returns is high.

In terms of equity investment, another hot spot in 2021-the shortage of chips has spawned the heat of investment in chip-related fields. The long-term direction is good, but the project is too expensive and prices will return. Now is the time to exit while it is hot, rather than entering the market at a high valuation.

The hottest hype in the A-share market is Metaverse. Unfortunately, 99% of Metaverse companies will inevitably fall back no matter how they rise. The Metaverse is the future, not the present. It is virtual reality/mixed reality related hardware technology, blockchain technology, and artificial intelligence technology that can grasp the core of Metaverse.Companies that master these core technologies will win in the long run. A large number of innovative companies will be short-lived, leaving only 1%.

With intensified monopoly, weak innovation, and strengthened supervision, in the Internet field, since 2013, the good days of domestic unicorns in batches no longer exist. This round of Internet feast brought about by the explosion of mobile Internet technology is over. The opportunity for future Internet investment lies in going overseas, copying the most advanced business models in Southeast Asia and Africa, and investing in blockchain and web3.0 (next generation Internet/Internet 3.0) in Europe and the United States.

The U.S. stock market will not collapse due to interest rate hikes. Big blue chips and technology stocks with customers all over the global market will have no problem. The impact of the rise and fall of US stocks on A shares is a short-term emotional impact. Domestic investors invest in US stocks, mostly buying Chinese concept stocks. Investing in concept stocks basically does not need to consider too much of the general trend of US stocks Beta, mainly depends on the performance of individual stocks Alpha. The key is to explore the fundamentals of which stocks can get out of the decline and return to high growth.

I believe that certain companies in the education and training industry that have been destroyed by the regiment may find new development directions through arduous transformation. Who can get out of the predicament depends on the founder of the company. In terms of people’s reliability, I would like to bet Mr. Yu Minhong from New Oriental, hoping that he will step out of a new world.

There are many opportunities in 2022. Three thousand weak water, only take one scoop.

The theme song of the 83rd edition of “The Legend of the Condor Heroes” sings: “Ask in the world, is this mountain the highest, or is there another place higher than the sky? In martial arts, I don’t know where the side is higher in the world, or the tricks are the same, but I know There is no better way to talk about love.”

When it comes to investment, I don’t know which opportunity is better. It all depends on how much risk you want to take, how many times the rewards are obtained, and how much planning you have made in the chess game. I know that those who hold the trick are those who watch the rise and fall of the world, watch more and do less, and focus on one or two opportunities for deep cultivation. Professionalism and focus cannot be better.

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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