Looking back at the 1970s, the macro "great stagflation" was a lingering haze of the market, but at that time, the investment community produced a large number of stars and handed over "great achievements": from 1970 to 1976, Buffett, Templeton and Johnnev outperformed the market by 188%, 88% and 22%, respectively. How on earth did these investment stars win in the 1970s? What are the implications for the present? This paper focuses on the investment experiences and cases of Buffett and Peter Lynch in the 1970s, in order to smooth out some anxiety and add some inspiration for the current "stagflation expectation".

Three macro configurations:1) during stagflation, both men bought raw material aluminum companies.In the 1970s, the peak of American historical industry, the high prosperity of raw materials. Buffett holds about 8% of his position$Caesar Aluminum (KALU.US) $Profit 600%; in 1977 Peter Lynch judged that the aluminum price inflection point appeared, threw the growth buying cycle, and added it.$Alcoa (AA.US) $.

2) in 1977, Peter Lynch bought oil.Oil was the best track in the 1970s, but the market worried that oil prices were falling and the recession only gave oil companies 5-6 times valuations, but actual oil prices and oil company performance continued to exceed expectations. Peter Lynch bought Unocal Oil and$Shell PLC (SHEL.US) $Get a high return.

3) in 1981, two people made big bets on big finance when interest rates rose.In the early 1980s, interest rates soared, the economy went into recession, and stock market earnings were double-valued. Buffett heavy position insurance industry; in March 1980, Peter Lynch bet 25% of his position on insurance, and then moved to regional small and medium-sized banks in the second half of the year. Both achieved high double-digit returns.

Four classic timing: 1) in 1969, the "water collection" led to a recession, the superimposed market valuation was extremely high, and Buffett temporarily "retired".Similar to the mid-1930s bubble, the Fed collected water to fight inflation, while the valuation of the S & P 500 rose from a low of 8.9 times to a postwar high of 23.7 times. Buffett could hardly find cigarette butts valued at less than 10 times (3.8%, compared with 73.7% after the 74 crash), so he was tempted to quit.

2) in 1973, Buffett copied the bottom of the Washington Post, but could not avoid the valuation of systematic killing.It was extremely volatile in 1973, when the oil crisis led to the collapse of the "Beautiful 50" and the index valuation fell from 20 times to less than 10 times. Buffett was not plain sailing at the bottom of the Washington Post, which was 10-15 times "relatively cheap", but the valuation continued to fall to about five times until the "continuous cash buyback + 76-year profit inflection point" made a huge profit.

3) in 1977, market valuations were generally low, and Buffett and Peter Lynch took their time to copy the bottom.After the two oil crises, 76% of the companies in the market were valued at less than 10 times. Buffett copied the bottom of the GEICO to increase financial leverage; Peter Lynch heavily increased his position in the stock market after taking office: "stocks of good companies valued at 3-6 times will hardly lose money."

4) in 1981, Peter Lynch bet that interest rates fell and bottomed out on government bonds and cars.Paul Volcker "shock therapy" the market panic, Peter Lynch believes that long-term interest rates will return to normal levels, "once interest rates are reduced, holding stocks and long-term treasury bonds will make a lot of money" and use 11% of the money to buy car stocks.

In addition, Templeton has benefited from a similar experience:1) the investment style changed from undervaluation to growth investment; 2) the pattern of stagflation in the 1970s was judged accurately, and the country was allocated to Allin Japan, which won the strongest beta.

History shines into the present, what are the implications of "winning in 70s": 1) when the macro cycle begins to turn violently, attach importance to Beta's judgment.The cycle of weakening volatility used to be ignored by the market, but now it needs to be reemphasized, as Buffett, Peter Lynch and Templeton did at that time, to guard against the systematic killing of valuation "black swans" and seize bottom opportunities.2) there is the possibility of "killing valuation" in the inflationary environment, but it is still growing through stagflation.With the rapid growth of corporate nominal profits under the transmission of inflation, investment masters generally shifted from undervaluation to growth strategies in the 1970s; low valuations can be defended but do not have to be superstitious.3) do not insist on a single style, cycle, banking, growth follow the macro-rotational configuration.In the 1970s, Buffett and Peter Lynch bet on inflation and interest rates, allocating raw materials, oil, insurance and banks. When macro fluctuations rise, it is more appropriate to move in response to the times.

Risk tips: escalation of conflict between Russia and Ukraine, higher-than-expected interest rate hikes overseas, and higher-than-expected spread of the epidemic