On the evening of July 20, Lin Yuan, chairman of Shenzhen Linyuan Investment Management Co., Ltd., said in an exchange with investors that the current market is in the early stage of a bull market, and the more definite investment lines are securities firms, consumers and some companies with large market capitalization. For the recent rise of military industry and building materials, Lin Yuan believes that these industries also have opportunities, which belong to overfall and rebound, and it is too early to form a joint force to continue to rise.

In addition, for the current market, Lin Yuan repeatedly stressed that there are no overvalued industries and individual stocks, and the stocks bought at the beginning of the bull market will not hold people and will continue to hit new highs.

The following is the full text of Lin Yuan's speech:

The bull market is in its infancy, bullish on consumers and brokerages.

Question: what stage is the market at now? What is your favorite direction in the second half of the year?

Lin Yuan: the current market performance is in the early stage of the bull market. It is impossible to buy some industry leaders or some companies with large market capitalization within three months, and will continue to hit new highs, especially brokerages and some hot industries. Of course, the market will still have some ups and downs, because it is the early stage of the bull market.

We can't say clearly in the second half of the year. We all make some investment directions according to the current market conditions. What is more certain is that if it is a bull market, securities firms will be a hot, but also more optimistic about some large market capitalization, will not be marginalized companies. The bull market is rotated, but its main line continues the state of the end of the bear and the beginning of the bull.

Question: what is the main line of the market?

Lin Yuan: mouth-related industries (consumption), this is a main line, "Bear Bull transition" is this main line, then the bull market in the early stage to the bull market established, it is still the main line. The second is the brokerage, the bull market will bring the brokerage industry to improve the leading capacity, so the brokerage should also be a hot spot, will continue to rise.

Question: at present, the biggest problem of consumer stocks is that many people think that the stock price is too expensive to buy. For example, Maotai, do you think it is still worth buying? For example, some pharmaceutical stocks have also seen a pullback recently. what do you think of these main lines in the short term?

Lin Yuan: we have repeatedly stressed that it is the beginning of the bull market. I don't think it exists that the market is overvalued and the industry is overvalued. The trend of capital flow has been formed, so we believe that they will still be the main line in the future. As for why there are some companies with large market capitalization, mainly because there is a very large supply of new shares issued at present, most of these stocks are unknown companies and small and medium-sized stocks, while these companies with large market capitalization and monopoly characteristics are still scarce.

Question: we say that we hold large market capitalization varieties at the beginning of the bull market. Should we sell the leading stocks with large market capitalization and replace them with high quality small cap stocks in the middle of the bull market?

Lin Yuan: it is still early in the middle of the bull market, and now it is said that the bull market has not been decided yet. The bull market is mainly about holding, so you don't have to switch back and forth. The most important thing in a bull market is full positions, which are to be held.

Question: we often say that our market has long bulls and bears. Do you think this bull market will last for a long time?

Lin Yuan: it's hard to say at this time, but we believe it will reach a new record. If it doesn't reach a new high, it won't be called history.

Question: so today (20) strong military industry, building materials, cycle these industries, they also have the opportunity now?

Lin Yuan: there is also an opportunity to overfall and rebound. But it is not yet time to form a joint force to continue to rise in this position. We will not pay attention to these industries until the bull market is established.

Question: what is the most important thing for you in your investment?

Lin Yuan: it must be risk control. Risk control is the most important thing for us to invest, and there is nothing else to consider. Then risk control includes an understanding of the current market, that is, what to do at this time. What I have repeatedly stressed is that we are now in the early stages of a bull market and there are very few overvalued things. As for whether it is undervalued, I do not judge, but there are very few overvalued industries and individual stocks. This is the law of the world, and so is the A-share market. The mainstream plate will not be overvalued at the beginning of the bull market, and the probability of overvaluation is very small.

So what kind of products should be invested to control the risk?

The initial risk of a bull market is very large, to withstand fluctuations, many stocks have to continue to bottom out at the beginning of the bull market, and the final result will tell you whether you persist in happiness or pain, this is the risk. Investment should be mainstream, do not do marginalized industries, individual stocks, or imagine undervalued stocks, do not go against the market. Choose the main line at the beginning of the bull market, mouth-related industries and securities firms, these are the main lines of the market now, and these are the most important main lines in the main line. For example, if we say the main line is 100%, they may account for 100%.

Drug consumption is at the inflection point of the outbreak, especially optimistic about traditional Chinese medicine.

Question: medicine has risen too sharply this year, and now this position seems to be facing adjustment. What do you think of the pharmaceutical industry?

Lin Yuan: the pharmaceutical industry is also the main line, this industry is still relatively special, it may be the main line for the next 30 years. We believe that pharmaceuticals and securities firms are the only two industries with a huge gap between China and the world. Compared with China's real estate and banks, Chinese medicine is still a baby, a 6-year-old child at most. Most people think that medicine is expensive and the short-term increase is too big, but the macro inflection point of medicine is now, so it is not surprising that it is small. Just like when we were in Changhong, Sichuan, every family wanted to buy a TV. Do you think it should rise? When cars were becoming more and more popular, you always begged to buy them, and now it's the same with medicine.

Drug demand is breaking out (continuously), and our estimate of drug consumption is to double in three years, which is the inflection point. In terms of profitability, there is still a big gap between Chinese pharmaceutical companies and those leading pharmaceutical companies in the world.

Question: on the whole, you are optimistic about the logic of pharmaceutical stocks?

Lin Yuan: on the one hand, there is still a gap between our domestic pharmaceutical companies and those leading international pharmaceutical companies; on the other hand, our country has a large population base, and based on the expectation of an aging society, the demand for drugs will be very large. We have this estimate that 70% of companies in pharmaceutical consumption will double in three years.

Question: medicine is a big sector, there are many fine molecular industries, how would you choose?

Lin Yuan: on the whole, China's pharmaceutical companies are still far from real estate, banks and so on. Chinese pharmaceutical companies are still "babies" and are only 6 years old at most.

We are optimistic about chronic diseases, that is, high blood pressure, heart disease and diabetes, because these diseases are incurable. In addition, according to our statistics on the global pharmaceutical market, medical consumption of these three diseases has accounted for 70% of the overall level in the past 100 years.

Question: are you optimistic about the traditional Chinese medicine plate? What attitude?

Lin Yuan: the traditional Chinese medicine plate is optimistic that we are talking about three major diseases. in fact, they are all an auxiliary drug for his treatment of chronic diseases, so we can control the use of traditional Chinese medicine to recuperate later. I am very optimistic about the effect of traditional Chinese medicine in the treatment of complications, and my basic judgment is to be in the forefront of the world.

Question: like some tumor drugs, the market is also very big in the future.

Lin Yuan: at present, there are many drugs that can control people, just like chronic diseases. It seems that some diseases have been able to control people and cannot be completely cured. But tumors are very rare, such as breast cancer or cervical cancer, which can live for decades, but most cancers are incurable.

Question: what do you think of the chain drugstore industry?

Lin Yuan: I didn't observe the chain drugstore, because we still focus on some core things, and my attention is still on pharmaceutical manufacturing.

Question: "Collection" has always been the focus of the market. What do you think?

Lin Yuan: in the short term, the relevant pharmaceutical companies may have some impact, but I don't think the impact is significant. Because the "collection" can not affect the market demand, and the terminal demand is still expanding. The most afraid of buying a "dead doll" (consumer demand is shrinking) industries, such as manufacturing.

Under the registration system, we should cherish the scarce varieties and the bull market.

Question: now that the registration system has arrived, the number of new shares will continue to increase, and we will have more and more optional targets. Will it have any impact on your future investment?

Lin Yuan: it will not be affected. Our minds are very clear about how to deal with this matter, and now we are doing a market-wide observation, which is my personal summary. Basically, all the decent companies in China have gone public.

If there is no listing, chances are that it will not work. Maybe it's not listed, but it's really strong, because you don't want to go public, that's no problem. If he needs money at this time, he has to raise money to borrow money, and we don't take him as the object of study.

Question: in fact, you have played a lot of new third board selection layer of the company? Why are you so optimistic about the opportunity of the new third board?

Lin Yuan: I'm not optimistic. I'm just involved. We have been participating in offline playing since the end of 2016, not today, this is our basic judgment. In the worst-case scenario, I think if we lose 15% at most, if there is room for the rise, I think this gamble can be made, so we will continue to participate. I trust our basic judgment that a 15% drop won't affect me at all.

Question: are you optimistic about the insurance company?

Lin Yuan: I think the insurance is normal at present and has not been underestimated. Because there is not a big gap between China's insurance companies and foreign countries, we believe that China's insurance industry is just beginning. For example, I just said that medicine is 6 years old, insurance should be 15 to 20 years old, there is room.

Question: on the one hand, it will tell the difference between cheap and expensive, and on the other hand, it will say that the price-to-earnings ratio is not important, so how do you judge when a good company is cheap, when it is expensive, and what are the criteria?

Lin Yuan: I said expensive is expensive, I said cheap is cheap. If I'm going to sell it, it's too expensive.

Question: a friend asked about the future trend of the new energy vehicle sector. Are you optimistic about new energy vehicles?

Lin Yuan: I made a rough estimate. I said that the car may be a high point now. Through the observation around me, the desire of people who buy cars is not so strong. If we look at the urban rail transit, as well as the efficient commuting of all kinds of high-speed trains, there are fewer opportunities to use cars. although the market is very large, I believe that the current car ownership ratio in China may be a high point, or not far from the high. this is the end demand that we say investment is particular about. Your subway is so convenient, what did I go out to do, share a car, I don't have to mention a car even if I do it.

Question: will you do research before buying the target?

Lin Yuan: researching this kind of thing is not important to me. I know all the good companies in the country. This is decades of accumulation. Just go in the right direction. I am also afraid to transmit something incorrect to you now. As we all know, the life of most enterprises is very difficult now, there is no need to do research, and it may be even more difficult in the future. The development of the company is good or bad is reflected in the financial indicators, just look at the financial data.

In addition, this is different from the situation of investing in China in 2003 and 2004, when it was the same as today's pharmaceutical stocks, with full competition, and corporate profits are improving year by year, as long as they are bold. Now when it comes to oligopoly, there are already oligarchs in many industries, and they take everything.

Based on the time point of the next 15 to 20 years or even 30 years, the standard for us to buy the industry now is, is the demand for its terminals expanding? Is the track expanding? Nothing else will be considered, because the demand is very important.

Question: how should ordinary investors operate?

Lin Yuan: I am at the same level as ordinary investment. Professional knowledge is needed to judge whether a company is good or bad, how big the market space, and so on. For example, in the medical industry we are talking about, if you have not studied clinical medicine, it is full of nonsense. I'm looking at it myself and thinking about it. Because there are no oligarchs in the pharmaceutical industry, we will invest. In a good track, when there is a macro change in the industry, we should buy something that does not have a leader, but we are also looking at it step by step.

Our investment strategy is to buy out the whole industry and control the proportion of each specific investment target. Is to keep an eye on you on the track, and buy all the companies that are likely to become leaders.

Question: at present, what kind of advice do you most want to give to all ordinary investors?

Lin Yuan: I would like to ask you at this time to play down the "risk consideration" than the previous year, to seize the current good opportunity, there is a promising opportunity, cherish the bull market.