Written on the occasion when the Shanghai Composite Index closed at 2756, judgment on the future trend of A shares

Source: Daoshuo Blockchain

Regarding A-shares, I wrote about it in an article at the beginning of last year, and I have never written about it again.

During this period, during every Twitter exchange, listeners still asked me what I thought of A-shares. Although I expressed my unchanging views, I still never wrote an article.

Why?

Because this investment market has left many investors with extremely painful memories, and my point of view is to sing the opposite, it is really unpleasant to write about this topic.

My views on A-shares have always been consistent:

I think A-shares will have a bull market between 2024 and 2025, and this bull market may be It will exceed many people's imagination.

However, before A-shares reach a bull market, my previous estimate was that it would hover around 3,000 points, and the lowest estimate was around 2,800 points. However, the actual situation is that after the so-called "policy bottom" last year, the stock market did not even have a decent rebound but continued to fall. Until January 22, 2024, the Shanghai Composite Index fell below 2,800 points and closed at 2,756 points.

I think this kind of decline was difficult for many people (including me of course) to predict before.

Under this situation, I feel that the trend of A-shares can no longer be viewed just as an investment market, but as another more basic trend.

So I feel it is necessary to share with you my basic logic and thoughts during this very special period.

1. In today’s China, the investment market plays a greater role than before

In the past few years of the epidemic, we have witnessed too many “unprecedented” events. . These "unprecedented" events have led to the increasingly complex international situation we face on the one hand, and on the other hand, several industries that once shined in our country's economic field are slowing down and collapsing at a speed visible to the naked eye, and some have even disappeared completely.

With the superposition of a series of external and internal factors, we ordinary people have increasingly felt the biting winter in our lives.

This kind of cold winter has been directly reflected in all aspects of our lives, such as the departure of foreign capital for several years, personnel changes in large factories for several years, the whereabouts of more than 10 million college students every year, and the change of flexible employment. is increasing, and even the entry threshold for food delivery is rising rapidly.

Under such circumstances, for many individuals, the income from "flexible employment" may not be enough; for the country, "consumption" as one of the three carriages is not easy to achieve. expected. Therefore, many problems can only be solved by increasing personal income or personal wealth through other channels.

And this channel is only the investment market.

Therefore, in China today, I think the importance of the investment market has exceeded any previous period since the reform and opening up.

2. The only investment channel that can benefit the public is the stock market

When it comes to increasing the income or wealth of ordinary people outside of work, in our country, The ways that can be counted are roughly as follows:

A shares, real estate, financial management, precious metals, and collectibles.

Among these categories, collectibles are niche and cannot benefit the public.

Precious metals only maintain their value in most cases, and it is difficult to increase their value.

Financial management is divided into two categories, one is high-net-worth financial management and the other is ordinary financial management. High-yield and high-risk high-net-worth financial management has been in full swing in recent years; most safe and reliable ordinary financial management has only slightly higher returns than monetary funds, and it is difficult for it to bring significant wealth appreciation to ordinary people.

Only real estate and the stock market can truly benefit the public and produce widespread wealth effects----------This has been widely verified around the world.

The development of real estate in the past 30 years has enabled countless ordinary individuals and families to achieve astonishing growth in wealth, which can be called a miracle of wealth effect since my country's reform and opening up.

However, the collapse of real estate in recent years has essentially destroyed the financial attributes of real estate. I think that in the next ten years, it will be difficult for real estate to reproduce the broad wealth effect it once had.

So after all calculations, the only investment channel left for the general public is basically the stock market.

And the stock market is different from real estate. Real estate has a very high entry barrier. The stock market is so low that as long as you have 1,000 yuan, you can invest in funds.

So the stock market is also the largest investment market.

After the stock market closed yesterday, I saw some comments on the Internet that revealed the despair of some investors. Frankly speaking, those investors are no longer simply "investors" but survivors who hope to continue their lives in the stock market.

So at the moment, some of the general public's expectations for the stock market may not only be the appreciation of assets, but more of a need to maintain survival.

3. About A shares

When many readers or listeners ask me why I am optimistic about A shares, in addition to explaining some logic and ideas, I will also Mentioning a more fundamental judgment: that is, in the long run, A-shares are not only a reflection of the economy, but also a symbol of the national destiny. So if we believe in the national destiny of this country, then we have reason to believe that A shares will not hover around 3,000 points for a long time.

I still hold this view today. Therefore, I still judge the future trend of A shares based on the most basic national destiny.

There are only two trends in this trend: one is to the south and the other is to the north.

If this destiny goes all the way south, then not only A-shares, but also all RMB-denominated investment markets will probably go south, and no one will be spared.

In this case, we ordinary people may not be able to do anything else except deposit money in banks for time deposits, demand deposits, buy government bonds, and buy some gold, silver and other precious metals. But it is difficult to achieve a substantial increase in wealth by relying on these.

If this fortune will eventually go north one day, then when the fortune starts again, I think that in the RMB-denominated investment market, only A shares have hope of going north.

As I said before, I don’t believe that the housing market will have a chance to move significantly northward in the past ten years.

So the above logic can be summed up in one sentence:

If the fortune goes south, all RMB assets will not be spared; if the fortune goes north, only A shares have hope.

4. How much time do we have?

The current situation we are facing, whether it is the economy or the complex situation in various aspects, I estimate that it will not be easy to change in a short period of time, and there is a high probability that it will become more and more serious.

This further highlights the importance of A shares.

Since I believe that A-shares represent the future of the country’s destiny to some extent, when can we judge whether this destiny will continue to move south or start to move north?

I don’t think this time will be long.

Here, we might as well recall a bottom line that I often share with you: I always say that we should set aside enough living expenses for 18 months to ensure that we can maintain ourselves in case of emergency. livelihood.

I believe that most of my readers are somewhat aware of risks. But even so, how many of our readers can really save enough for 18 months of living expenses?

This is true for my readers, not to mention the wider general public.

In other words, I believe that most people are not necessarily ready for this bottom line.

This is for individuals. In fact, for entities as large as the country, many basic strategic reserves are generally planned according to this time period. For example, the strategic oil reserves of the United States can sustain domestic demand for about 139 days (4 to 5 months), and my country's food reserves are about 200 to 300 days (half a year to a year).

Under such circumstances, we have survived the difficult 2023; I am afraid we can grit our teeth and survive 2024, which will not be easy at all; but what about after 2024? If this is still the case in 2025, how many of us can persevere?

So I think the time when fortune can be revealed is unlikely to be later than 2025, which means that the watershed for A-shares will be 2025 at the latest.

If A-shares can take off before 2025, then I still believe that it will enter a bull market that we can’t imagine; but if A-shares still don’t take off at the end of 2025, then as ordinary people, we What needs to be considered is probably not the issue of making money by investing in A-shares.

This is my lowest level logic and thinking.