Sina Financial News on Thursday, April 1, Shanghai and Shenzhen stock markets showed a better rebound, especially the gem index rose a lot. Driven by bottoming funds, Bailongma stocks rebounded well and gradually began to complete the bottoming out and entered the rebound stage. This wave of downward adjustment after the Spring Festival has been relatively sufficient, whether in terms of the time or space of the adjustment, it is basically nearing the end, which has also attracted a lot of bottoming funds to enter the market. Yang Delong, former Managing Director and Chief Economist of the Open Source Fund, visited the live broadcast of Sina Finance and Economics to give an overview of why consumption of white horse shares is worth taking care of the elderly.
Although the short-term trend is unpredictable, Warren Buffett once said: I can't predict the trend of US stocks next month or next year, but I am sure that I am configuring a good company. Believe that U. S. stocks can continue to hit new highs, believe that the U. S. economy is long-term upward, this is Buffett heavy positions in U. S. stocks and has been long bottom logic.
For us Chinese, it is also necessary to trust the motherland and do more China. Buffett said that no one gets rich by shorting the motherland, and we also have to be long Chinese assets in China, especially core assets, so that you can share the fruits of China's economic transformation and the fruits of China's long-term economic growth.
At present, China's economy contributes more than 35% to global economic growth. In the next decade, China will still be the world's best growing large economy and a collection of world growth. A lot of foreign capital began to flow into the Chinese market in recent years to look for opportunities. As domestic investors, we should seize the opportunity of companies to allocate core assets and never short China.
Just as Buffett reiterated in a letter to shareholders released in February that he would never short the United States, it is patriotic for Buffett to never short the United States as an American. We invest in China, and as Chinese, it is also a sign of patriotism that we should never short China.
Of course, this does not mean that everyone should match all stocks, but Bailongma shares, that is, China's high-quality assets should be long rather than short. There is a very important saying in the capital market: pessimists are right, optimists make money. Because only optimistic people can allocate assets in the long run, although there will be fluctuations in the middle, it must be upward in the long run.
I think there are two core assets in China: one is the real estate in the core area, including those with rigid demand in first-and second-tier cities. No matter how the government suppresses it, it will not affect the value of these assets. I think they can be firmly allocated. The second is high-quality stocks or high-quality funds. These are the two core assets of China, and they are also assets in which our investors can participate in good investment.
In 2019, I proposed that the next ten years will be the golden decade of the A-share market. Under the strict regulation and control policy of not speculating in real estate, a large number of household savings need to find new investment exports, and this export is the stock market. Of course, most residents enter the market by buying funds and giving them to professional institutions to invest is more reliable than their own investment.
In 2019, I also proposed that consumer white horse stocks are worth providing for the aged. Why am I firmly optimistic about brand consumer goods and consumer white horse stocks? Because China has the largest consumer market in the world, China's total consumption has exceeded 40 trillion yuan in 2019, surpassing the United States to become the world's largest consumer market.
Coupled with the vigorous development of China's Internet economy, such as takeout, e-commerce, live video and other non-contact economy has developed greatly in the past decade, and this epidemic has further promoted the development of the non-contact economy and provided convenient conditions for the growth of consumption in our country. Therefore, although it was hit by the epidemic last year, the total amount of consumption in our country has increased and has not been greatly affected, because people are now used to online consumption.
In 2020, China's GDP exceeded 100 trillion RMB, and per capita GDP exceeded 10, 000 US dollars, which is an important node. According to the experience of developed economies in Europe and the United States, when the per capita GDP exceeds 10, 000 US dollars, it will face consumption explosion and consumption escalation. The explosion of consumption will bring opportunities to general consumer goods, while consumption upgrading will bring opportunities to high-end brand consumer goods. It can be seen that whether it is high-end consumer goods or general consumer goods, there are great opportunities in the future. This is the point I have been telling you.
Therefore, I call the three major industries, liquor, medicine, food and beverage, consumer swordsmen, which have performed very well in the past few years. Consumer white horse stocks are worth taking to provide for the aged in the long run, but this does not mean that these white horse stocks will not fluctuate. There is no stock that only goes up and does not fall, it is very normal to have certain fluctuations after rising more, but it does not affect the logic of long-term investment of these consumer white horse stocks.
In overseas markets, the US stock market closed sharply higher in the first quarter, rising for the fourth consecutive quarter, which also broke the doubts of many people before. Many people worried before that the large asset bubble in the United States would lead to the bursting of the bubble and the collapse of the bubble, which would bring down A-shares, but now we see that everyone is worried too much. I have been telling you that the bull performance of the US stock market has been supported by the economic recovery and earnings growth of listed companies, in addition to the reasons for the release of water by the Federal Reserve.
U. S. stocks remain the strongest stock market in the world. The Dow Jones Index has reached a round number of 33000 points, hitting a new high recently, the NASDAQ has reached 13000, and the S & P 500 has reached about 4000. Us stocks are strong, not least because the US economy is beginning to recover. this partly digested the bubble in US stock valuations.
The US Congress has passed a $1.9 trillion economic stimulus package, making investors more confident about the future of the US economy. Biden will announce that the total size of the next economic recovery plan is likely to exceed $4,000bn, of which $2.25 trillion is infrastructure investment, which will boost investment growth in the US, while consumption stimulus package will increase consumption growth.
Of course, in order to solve the problem of funding, the White House said there may be tax increases in the future. The corporate income tax rate in the United States will be raised from 21% to 28%. The United States has begun to raise the tax rate from 35% to 21% in the tax law reform in 2017. The White House also plans to raise the global minimum tax rate for multinationals to ensure that they pay at least 21 per cent.
On the one hand, through a large number of infrastructure plans to increase economic growth, on the other hand, through raising corporate taxes to solve the source of capital, a two-pronged approach to boost the growth of the US economy, which is undoubtedly conducive to the continued strength of US stocks. Instead of caring about the performance of US stocks for the time being, we at least allay the concern about the possible bursting of the US asset bubble and are more confident about the future operation of the A-share market. The short-term trend is unpredictable, which I have repeatedly stressed to you.
As a result, looking ahead to April and the second quarter, it is impossible to predict how much the index will rise, but at least good companies have fallen out of value. What we need to do now is not to predict the rise or fall of the index, but to find the opportunity to allocate the stocks you want. Every round of decline is the time to buy the bottom of high-quality stocks, no exception. Now many Bailongma stocks have fallen back by more than 30% from their highs, and some have even reached 40%. This is a good opportunity to bottom out in batches, and of course many funds can now be bought at a 30% discount.
The fluctuations in stock prices do not affect the fundamentals of these listed companies, nor will they affect the investment value of quality funds. Therefore, in this position, we are more concerned about how to bargain-hunting layout, rather than panic again. Many people have not considered reducing their positions to avoid risks until now. I think it is a pedantic view.
I remember a famous investor said: don't sell stocks in despair, because it must not be a good time, because when you are desperate, you must sell at a very low price. Munger also said the same thing: the so-called stock investment is to buy stocks from desperate people and sell them to those who are excited. It is very incisive, so under the current pessimistic situation, we should be rational and seriously select which good companies are worth holding, instead of being influenced by some pessimistic people and selling high-quality chips at the bottom.
With the global stock market rising, it is impossible for the A-share market to continue to fall, which is an important point that I have repeatedly stressed to you in the near future. As long as you are sure that you are investing in good stocks, good funds, and holding white horse stocks, especially consumer white horse stocks, you should not panic again, but should be glad that you are not intimidated by some pessimistic voices. This should be the time to look for opportunities, not panic selling.
Again, sticking to value investment, being a good shareholder of the company or holding a high-quality fund is the best investment strategy to seize the A-share market for a decade.