In this exchange, Wu Renhao had clear logic and frequent golden sentences, had profound insights on investment, and gave a positive answer to the reasons for joining Gao Yi.

In Wu Renhao's view, the current market adjustment is still in the normal range that can be expected. The risk in the future is precisely not to lie on the short-lived and accidental "success" of the past year, but to make the investment layout more humbly and rationally.

Early in his career, Wu Renhao faced the test of a long bear market and the financial crisis, so he was particularly impressed by the risks in the capital markets. "the smallest A-share pullback was in 2014 and 2017, followed by 2015 and 2018. The really dangerous market just looks particularly calm. If you want to make money, first try not to lose money; if you want to live a long time, do not 'die' quickly. "

It is understood that Wu Renhao is the only fund manager invited to join after the establishment of Gao Yi's initial investment team. With 20 years of investment experience, he was the equity investment director of China International Capital Corporation Asset Management Department before joining Gao Yi assets.

Wu Renhao, who has been in China's A-share, Hong Kong and US stock markets for many years, has rich investment practice and experience, and has managed a portfolio of more than US $10 billion.

Wonderful ideas:

Us bond yields rise and the market adjusts, but we will not panic. When a car leaves the basement and climbs to the ground, it is the most irresponsible choice to abandon the car and run away when it meets a speed bumper.

A more efficient capital market will not be won twice in a row in the same place in the same way.

Every withdrawal is unpleasant, but trying to escape each withdrawal is more of a wish than an achievable goal.

We all know what happened in 2015 and 2018 after the smallest A-share pullback was in 2014 and 2017. The really dangerous market just looks particularly calm.

In my cognitive framework, I don't spend too much time on the color of the horse. I care more about the price and speed of the horse.

If you want to make money, first try not to lose money; if you want to live a long time, do not "die" quickly.

Don't lie on the short and occasional "successes" of the past year, but be more modest and rational in investing this year.

The form of value creation of enterprises usually comes from continuous growth, but the loss of growth and the simple so-called undervaluation multiple is not the only form of value investment.

Growth should be transformed into value, and value comes from continuous growth. Excellent enterprises all have a good business model, a good management team and a good internal governance structure.

In the investment, we emphasize that wide coverage is the premise, and deep excavation is the goal. Select the richest mines from a broader perspective and dig deep into the excellent companies that are competitive in the global market.

As long as we can find an excellent company and a reasonable price, position management is not the only means for us to manage risk.

The key to the long-term development of a thing is its mechanism. The growth of investors is a process that needs to be polished constantly.

Market adjustment can be expected, the operation will not panic, stock selection will be more stringent

问：What do you think of the current market adjustment?

Wu Renhao:The current market adjustment is actually a relatively normal and predictable situation. But expectations lie in two aspects:

First, historically, when the market has just emerged from a crisis, there will be sharp fluctuations caused by the recovery of earnings and falling valuations.

Second, in the context of economic recovery, the market is likely to occur from the extreme differentiation of style and industry performance in the past year to convergence, and it is also the most important driving force behind the current adjustment.

Therefore, I think the current market adjustment is still within the normal range that can be expected, and the more essential risk that investors will face in the future is precisely how to jump out of the successful but relatively narrow experience of the past year or two and make investment layout in a more normal economic context in the future from a more objective perspective.

问：What do you think of the impact of rising US bond yields on the future? How does this affect your follow-up operations?

Wu Renhao:In terms of level, the recent US 10-year Treasury yield is basically close to its pre-epidemic level. The epidemic has been significantly alleviated from the large-scale shock to now, and it is a normal process for all kinds of assets to reprice and return to the level before the epidemic.

But in terms of speed, it has indeed achieved a "frightening" effect, and this time the rate of rise in US bond yields is indeed the first in many years. The good news is that such a shock has not happened before.

In fact, during the last recovery from the global financial crisis, there was a similar rate of "shock" in 2013 and 2015: interest rates were not only rising, but also rising rapidly.

In such a "frightening" process, in fact, the current market performance is similar to that at that time, that is, all kinds of assets are "spooked" in the short term, because we need a period of time to distinguish whether such a rise in interest rates is an economic recovery, a benign demand-driven rise, or because later in the cycle, the monetary authorities have to use such policy tools to mitigate the impact of economic overheating.

Judging from the current situation, we tend to think that the current rise in US bond interest rates belongs to the former because of a demand-driven scenario similar to that in 2013.

So, in the subsequent operation:

First, we will not panic. When the car leaves the basement and climbs to the ground, it is the most irresponsible choice to abandon the car and run away when it meets a speed bumper. We will continue to observe the economic situation to see the speed of economic recovery and the impact of this recovery, which has the same logic as the previous cycle, but at a different speed, on global supply and demand, inflation and other factors.

Second, we will be more stringent in practice. A more efficient capital market will not be won twice in a row in the same place in the same way. In fact, we are prepared for this year's market environment is very different from last year, from a more stringent valuation point of view to look at more able to exceed expectations of growth.

The correct investment attitude is to deal with the areas that should be avoided and embraced.

问：Investors are very worried about the current pullback. How should they view the pullback?

Wu Renhao:Every pullback is unpleasant, but historically, trying to avoid every pullback is more of a wish than an achievable goal. I think what we should really be wary of is not the withdrawal itself, but the biggest reason for the withdrawal and the factors that will continue to extend this year.

On this issue, we must make correct ideological preparations. In practice, it is necessary to objectively and rationally examine which areas have just begun the process of mean return, and which areas have just opened the curtain of investment in the new economic cycle.

Only by dealing with the areas to be avoided and the areas to be embraced at the same time is the right investment attitude this year without panic.

问：Although the group assets have fallen sharply recently, the valuation is not cheap. How should we judge the investment strategy in the follow-up?

Wu Renhao:We will not build our active management ability on the basis of decisions already made by others and simply agree with or disagree with it, which in itself is incorrect. So we will not decide the choice of investment by the label of hugging or not huddling.

The standard action that we will repeat over and over again is what we think of the medium-and long-term growth of an asset and whether the current valuation level can lead to a satisfactory return, not because everyone's actions in turn affect my actions.

The degree of institutionalization of the A-share market still has a long way to go, and we will eventually get used to being like the US market, where more than 90 per cent of free float shares of good companies are held by institutional investors. But we can neither expect the process itself to bring a sustained return on investment year after year, nor should it be the original intention of our investment. In the process of institutional dynamic evolution, we can strive to achieve the benefits that the concept can bring only if we continue to make a good match between the valuation level and growth of each target.

More concerned about the price and speed of the "horse", the value comes from continuous growth.

问：The long-term return on investment comes from the value creation of high-quality enterprises. How to define high-quality enterprises?

Wu Renhao:On the surface, high-quality enterprises often show that they can maintain long-term high-speed income growth, continuous improvement of profit margins, and continuous improvement of operating quality in terms of cash flow and balance sheet. in order to create sustainable value for shareholders.

From the connotation point of view, these excellent enterprises all have a good business model, a good management team and a good internal governance structure. the connotation of high-quality enterprises can be shown as the appearance of external long-term sustained rapid growth and continuous improvement of management quality.

问：How to treat the two investment styles of growth and value?

Wu Renhao:As for growth and value, we think that, as Buffett once mentioned in Berkshire's annual report, growth itself is an important element of value composition. We believe that the usual form of value creation is continuous growth, and the so-called low valuation without growth is not the only form of value investment. What we pursue is the undervalued high-quality assets, not the simple pursuit of undervalued multiples, so growth should be transformed into value, and value comes from continuous growth.

问：Do you think the white horse stock is undervalued at present?

Wu Renhao:I think I should first study what are "white horses". In my cognitive framework, I don't spend too much time on the color of the horse. I care more about the price and speed of the horse.

If the stock returns in the past year mainly come from the improvement in valuation, this kind of "white horse" may not be a "white horse", but a "white elephant", which is more difficult for us to afford.

The really dangerous market just looks calm.

问：How do you control the withdrawal in the process of investment? Will some key indicators be tracked?

Wu Renhao:No matter whether the market returns are good or bad, a pullback during the year is a risk that investment must bear. Just like running a business, this is the main business cost of investing in this business. You must manage the cost well, but you can't do the business well by eliminating the cost.

Looking back on the context of A shares over the past decade, based on the CSI 800 Index, the average annual pullback is more than 20%. But what is interesting is that during this period, A shares withdrew the smallest year, precisely in 2014 and 2017. Everyone knows what happened in 2015 and 2018. So historically speaking, the really dangerous market is precisely one that looks particularly calm and full moon, but the crisis is brewing.

In this sense, we will do our part as a veteran, be less driven by instinctive greed and fear, and make every move rationally on an inevitable bumpy investment.

问：Are there any personal preferences in the industry?

Wu Renhao:We believe that the most fundamental source of long-term return on investment is to continue to find high-quality enterprises. in this sense, which industries have the basic conditions for the birth of these excellent enterprises are worthy of our attention. We put more emphasis on finding quality companies in areas of opportunity, rather than simply thinking that the choice of a track determines our source of value creation for 3 years, 5 years or more.

If we unify the Chinese and American markets, there are still many areas within our cognitive framework that are worthy of long-term research. For example, a new type of business infrastructure that uses Internet technology to create value for society and transform it into shareholder value at the same time. For example, China may be creating the strongest manufacturing system since human globalization, and is constantly iterating towards advanced manufacturing.

The comparative advantages of China and the United States are different, each focusing on huge industries such as pharmaceutical consumption, highly differentiated sub-areas and companies, these areas are worthy of our continuous long-term investment.

In the process of being close to each other, the per capita income level of China and the United States is still quite different, which determines the difference in the development stage of the industrial structure between China and the United States. From the horizontal comparison of the overall level of industrial development and comparative advantages, we believe that China's consumer industry, regardless of penetration or richness, there is still a lot of room for excavation, there are more opportunities for vigorous growth.

In the short term this year, we think that the overall recovery of the global economy will also be reflected in some companies with both growth and cyclical value.

问：What is your favorite "new infrastructure"?

Wu Renhao:When it comes to infrastructure, the first thing that comes to mind is railways and highways. Now we are rapidly entering the information age, and there may be more room for efficiency improvement.

In the information age, many companies use Internet technology, just as after we already have enough muscles and bones, the next step is how to use more sensitive nerves and smarter brains. How to process the data generated from social and economic activities to get an organization that is more meaningful to the whole society and continues to create value for shareholders and users.

We believe that the inherent nature and source of value of these companies is how they can use a variety of general technologies, including the Internet, to elevate what they do to the infrastructure that creates value for society and users as a whole. only when they create value for society can they have a further basis for creating value for shareholders. Defining them as infrastructure is not only an affirmation of them, but also a higher requirement for them.

Wide coverage and deep mining of excellent enterprises, positions are not the only means to manage risks

问：How to take into account both wide coverage and deep excavation in investment?

Wu Renhao:We emphasize that wide coverage is the premise, deep excavation is the goal, and wide coverage is not multi-coverage. In our actual practice, we do not have to look at more industries, but hope to give full play to the experience we have accumulated in looking at Chinese assets in the past. And the experience accumulated in the process of looking at American assets, using the perspective of the evolution of the global industry to understand the evolution logic of the industry and the relative level of corporate competitiveness.

The purpose of wide coverage is not to cover more, but to select the richest mines from a broader perspective based on past experience, and on this basis to dig deeper, to find companies that are not only competitive in a single industry in a single country, but also a group of excellent companies that have unique value in the industry all over the world.

问：How to balance the allocation opportunities of countries and industries?

Wu Renhao:Our original intention is to explore the industries with the most comparative advantages and the most competitive high-quality enterprises. What we do not want is that in the end, our result is too focused on the single market, resulting in our initial intention to choose high-quality enterprises, and finally become a bet on which market is the hottest in the stage. This is often for investors to take risks that should not be taken, but also bring fluctuations that should not have.

On the whole, we pick good companies in good industries from a bottom-up perspective, which is not limited to a single country and market. Finally, we will look back and do not expose the single country and market too high and unconsciously.

From the realistic results, we will have a more positive and sustained investment in the A-share market, the Hong Kong stock market and the US stock market.

问：If you find an excellent target, will you do position management?

Wu Renhao:In essence, as investors who pick companies from the bottom up, as long as we can find excellent companies and reasonable prices, position management is not the only means for us to manage risks. Therefore, only when we face an obvious systemic risk, and the market does not respond enough to it, will we use position management to deal with it.

If you want to live long, first of all, don't die fast.

问：You experienced the financial crisis when you were at Allianz Worldwide. How did this affect your investment philosophy?

Wu Renhao:Over a long period of time, the "crisis" is also a great wealth for us. It teaches us that "if we want to make money, we should not lose money first; if we want to live a long time, we should not die quickly first." it also gives us some hints on how to understand what is real systemic risk and how to manage it.

On the whole, we may not drive the fastest at some stage, but we will remind ourselves to drive the most steadily. Compared with driving fast in stages, it is more important to be steady and far away.

From the perspective of systemic risk, within our current cognitive framework, there are three sources that deserve the most attention:

First of all, in the face of economic recession, individual companies face great challenges in terms of revenue and the overall business environment. In particular, the recession entered in a hot market is one of the more important sources of systemic risk.

Second, the impact on the market comes not only from the fundamentals, but also from the market behavior itself. Similar to the 2015 scenario, systemic risks can easily be triggered if the overall market is based on an unsustainable or optimistic assumption of revenue and profit growth.

Third, it is also worth noting if we realize that the market valuation level is affected by macro policies, which may lead to a significant decline in valuation level.

We will continue to track these three areas, whether in the recession, the overvalued level of the market as a whole, and the stage of relatively severe macro policy tightening at the end of the cycle.

It is necessary to be more modest and rational to make a good investment this year.

问：You have a large amount of capital management experience and achieved excellent performance in A-share, Hong Kong and US stocks and other markets, so what is your view of these three markets? Which market do you value more? Where are the current risk points in the three markets?

Wu Renhao:Although we have some experience in these three markets, in the overall investment concept and investment process, we play down the choice of the market and pay more attention to the process of discovering good companies on the good track with longer-term value.

At the current time, for all stock markets, it is necessary to properly deal with the recovery of profits brought about by the economic recovery and the fluctuations in valuation levels caused by changes in the macro environment, as well as the extremely differentiated returns of investment targets over the past year and the degree of overcrowding in different areas, to strike a good balance between multiple factors.

Compared with last year, this year is a very different macro environment, and it also requires investors to constantly refresh their understanding and not to lie on the short-lived and accidental "success" of the past year. We should be more modest and rational to do a good job in this year's investment.

问：The assets you have managed include US dollar assets, RMB assets, institutional funds and retail funds. what are the different strategies for managing different types of funds?

Wu Renhao: the first difference between service agency customers and retail customers is that customers have investment constraints on you. Generally speaking, institutional funds have a strict framework, including many requirements for personalized services, such as stricter restrictions on risk control and investment scope. Fund managers have less room for personal discretion than retail customers, but especially high-quality institutional funds. The period of time given to a good or qualified investment manager tends to be long and definite.

For individual customers, the entrustment period will be more uncertain as a whole. Therefore, in the actual investment management, we will put more emphasis on the long-term compound rate of return, and at the same time, we will spend some energy on how to deal with the combined rate of return in different periods of time, so as to avoid the overall ups and downs as far as possible. avoid the so-called "three years without opening for three years", do not forget to serve customers to do a good job of investment management.

The key to the long-term development of a thing is the mechanism.

问：Why did you choose to join Gao Yi assets?

Wu Renhao:For us investors, the daily work is to choose the listed companies with the most investment value, and for us personally, we should also choose the organizations and mechanisms that enable us to better serve our customers and create better investment performance in our career. When I decided to enter the private equity industry, I was attracted by Gao Yi's mechanism and the most balanced talent structure.

I have always believed that the key to the long-term development of a thing is its mechanism. Gao Yi was designed by a group of the most visionary leaders in the industry to establish the most reasonable and balanced long-term incentive mechanism.

Whether a good company can go far or not depends not on where its longest long board is, but on whether it is very balanced, even the shortest short board. Gao Yi has an excellent and balanced talent structure in the middle and backstage. At this point, a relatively young company has made a deep impression on me who used to work in a relatively mature company.

Finally, I have always believed that the growth of investors is a process that needs to be polished constantly. Munger said that people under the age of 45 are speculators. I am just 45 years old, and I hope that after I have initially said goodbye to my career as a speculator, I can continue to improve myself in the future. We also cherish the environment provided by Gao Yi for discussion and discussion with other excellent investment managers.

问：You have invested in the US stock market in Hua'an under the State Administration of Foreign Exchange. What is the difference between overseas market and A-share investment? what is your advantage?

Wu Renhao:We are very lucky to be born in this era. China and the United States are the two largest economies in the world and have a very complete industrial structure, but the advantages and stages of industrial development of the two countries are very different, so the efficiency of capital markets is also different.

On the whole, the institutionalization of A-shares is advancing rapidly, while the degree of institutionalization and efficiency of the US market have been relatively high in the past years, so some lessons we have learned from a more competitive and effective US stock market may help us to play in A-shares.

From the perspective of specific reference

First, under the general trend of the integration of global capital markets, our understanding of the global economy and markets will also become an increasingly international A-share market, whether influenced by capital flows or fundamentals. A necessary condition for doing a good job.

Second, in terms of methodology, I think we will also follow the more rigorous tools and research methods we have learned from mature markets to reduce our subjective degree and do basic research as much as possible.

Excellent investment managers are all polished in practice, and will build positions more patiently this year.

问：How to become a good investment manager?

Wu Renhao:Investment managers are slowly polished in practice, the securities market is also in a process of continuous institutionalization, the structure of participants will be more and more rich, so there is not an immutable growth routine.

The essence of the capital market is made up of a group of people who have different views and are willing to exchange their own views on the same target. Their common goal is to improve the efficiency of the market and promote the capital market to become not only an investment market, but also a market conducive to the allocation of macro resources.

I think in this process, as individuals, we should fully show what we have learned in the past, instead of simply using a standard routine to learn from others, but more importantly, to be ourselves and understand our own hearts. the most important thing is to use our own experience and be ourselves, and this is also our duty to the capital market.

问：Tell me about your next investment ideas?

Wu Renhao:The market opportunities this year are very different from those of last year. Last year, we basically grasped the process of rapidly rising valuations, which more or less meant "seize the day". This year, we will have a more leisurely attitude to seriously grasp such a process in which growth creates value. Invest more patiently to achieve stability.