This year I have developed a habit. Occasionally, I look through the photo album on my phone and take a look at what I was doing on the same day last year. Especially the second half of the year. Therefore, I am very glad that I am no longer in that state of extreme anxiety and hysteria. There is no doubt that time is moving forward and life is getting better.
For a long time last year, writers who commented on the investment field were very embarrassed, because under the influence of certain information black holes, there was really nothing to say. Or you can only regard the various sides as entertainment and watch them express their opinions on a medical field that you have no understanding of. But that is no fun at all and will only make your blood pressure and adrenal glands soar.
Life is good because everything must end one day, and common sense surrounds us.
But on the other hand, common sense tells us that “everything has a price.”
In 2023, the wealth level of most ordinary company people around me will be declining.
The reasons for the decline come from three aspects, the revaluation of real estate, the stock market, and limited growth in wage income.
The house is both a macro issue and a micro issue; it is the manifestation of all problems and the foundation of all problems. The valuation of real estate held by Chinese people accounts for about 70% of personal wealth – this is a statistic. Judging from the company people in first-tier cities around me, the proportion is even higher than this. What proportion of financial assets such as stocks and funds account for overall wealth? It is said to be around 5%.
In 2022, due to the special social management method, the transaction volume of real estate is relatively low. People do not pay attention to real estate, so in their impression, the price of their house is still low. Pretty much the same as before. The seriousness of the real estate problem in 2023 has gradually become clear to ordinary people. When measured by the latest market prices, everyone realizes more clearly – Oh my God, we have lost so much!
So what will happen next?
The fact is probably as Professor Yi Gang, the former governor of the Central Bank, recently stated publicly – China’s real estate problem has not yet been resolved!
The most iconic real estate companies in the mainland are Evergrande, Country Garden and Vanke.
For example, Evergrande is the kind of unruly “bad boy” in the class. The problems it causes mark the collapse of highly leveraged companies in this field – it is very likely that Evergrande will The current situation of similar companies is the purpose of the policy-making authorities to squeeze out the real estate bubble, but they probably did not expect that the problem would be so big and the correlation between the problems would be so strong.
Country Garden was originally an honest kid in the class, and he was very successful through diligence and hard work. However, its main asset allocation is in third- to fifth-tier cities in China. The structural changes in property values caused by this economic cycle have devastated the giant company’s balance sheet – in an almost inexorable trend. It is precisely because of this structural adjustment that Country Garden is gradually facing the danger of falling into the abyss.
The world is getting better, but the problem is much more complicated than imagined.
Recently, Vanke, an absolute top student in the industry, is also facing a crisis of trust in the capital market.
This actually shows the opinion of the market that they suspect that China’s real estate problems are spreading to first- and second-tier cities. If real estate prices in first- and second-tier cities drop significantly, even top students will face terrifying problems.
To put it in a fashionable way, it is difficult for the big players in the real estate industry to “realize self-salvation.” As for what the monetary authorities should do, there seems to be an angle between valve managers and the mainstream opinions of the market. This is likely to be a somewhat painful break-in process.
I guess most corporate people’s stock and fund account performance will not be very good. The problem is obvious. Several major A-share indexes have fallen, and Hong Kong stocks have also fallen. There are no eggs left under the overturned nest.
As we have talked many times before, the stock market will definitely reflect economic conditions in the long term, but more appropriately, it is a barometer of the market’s expectations for liquidity. This is true in mature markets, and it is no exception in emerging markets.
This year’s liquidity is generally loose, but on a quarterly basis, there are always certain fluctuations in expectations. What’s more, there is also the issue of expectations for U.S. interest rate hikes.
Do you still remember the problem of water storage in the pond in middle school? One pipe puts water into the pool, and the other pipe draws water out. How long will it take for the pool to be filled with water?
Since the United States occupies a core position in the global economy, interest rate increases have made the U.S. dollar a drain on almost all countries. What’s more, the different perspectives between China and the United States on epidemic management issues have led to different perspectives on liquidity management.
The U.S. economy entered a recession later than expected – “recession” is not a curse, but a practice in the U.S. economy after high liquidity stimulates active fiscal policies. The economic recession in the United States in the post-epidemic era is a bit like what happened after the end of World War II when the Truman administration ended its stimulus to the military industry. But this time, the U.S. economy is performing much stronger, not only is the recession coming later, but it may just be a soft landing. This unexpected turn of events has lengthened the cycle in which the Federal Reserve may raise interest rates.
For the stock market, the United States will have a situation of “good news is bad news” for a long time this year and next year – the economic data is strong, but the stock market will fall because of the strong economic data. The data will allow the Federal Reserve to maintain high interest rates for a longer period of time and further tighten liquidity.
However, due to the characteristics of the U.S. deficit economy, its operation still requires the maintenance of low interest rates most of the time, and the Chinese and American economies will eventually be on the same page. The market expects this to happen in the second half of next year. At a certain point during this period, A shares will undergo structural changes.
Of course, for value investors, this kind of obscenity in timing is meaningless. They just need to look for stocks with high cost performance on the market and buy them slowly. . Seth Klarman once said that Buffett’s investment method will fail in 3 to 4 years out of 10 years, and this is the reason why value investing is effective in the long term – ignore the philosophical nature of the last sentence, and count on the fingers, value investing It’s been three and a half years since it expired.
In 2023, most company people may feel the difficulty of regular revenue growth. A basis for this phenomenon can also be found from a macro perspective.
Our monetary authorities have released considerable liquidity but underinvested. The corresponding external data performance is that the growth of PPI (Producer Price Index) has remained negative for a long time. If you still have time to pay attention to the company’s financial reports, especially some large companies in traditional industries, many of them have shown stagnant sales and rising profits in the second half of this year. This shows that everyone does not invest the money they earn in reproduction.
Insufficient investment has resulted in a lower incidence of new projects, lower demand for manpower, and a lack of promotion opportunities for similar positions.
The Pew Center once conducted a survey and found that the average IQ of corporate workers who enter society under the current circumstances will be lower than those who entered the workplace during economic prosperity in a few years.
Why? Researchers analyzed that there are two reasons. One is that people who enter the workplace when the economy is not very good are more likely to be more short-sighted; the other is that when the economy is not good, people are more likely to be cynical.
The so-called “lying flat” is a deformation of cynicism and greasiness, and its spiritual core is probably shirk of responsibility and laziness.
Even if you don’t get a salary increase, don’t be infected with these qualities.
Because your life is your own, not just this year or next year, but any year.