To The Moon

The first article in my series on investing in 2025

I am a veteran, and I have made 8% cumulative gains since opening an account in early 2021. I'm also new to global brokerage, having just started a few years ago. Like I didn't know about the 3700, 3400, CSI 300 and the CSI 300, I had little idea about the Nasdaq, Dow and Australian indexes, and I hadn't studied the Hang Seng specifics.

For beginners to invest, start with the macro. China is deflationary and the United States is divided after inflation; China and the United States focus on resolving the economic structure of their own issues. Looking at the economic cycle, we may still be in the old cycle, as shown in Figure 1.

Looking at the political cycle, there are many elections in 2024. As we can see in Figure 2, important economies have held elections, and the red marked is a change of leader. The bottom two, recently Germany and Canada, are also going to be re-elected. Needless to say, the most important thing is for the United States, Donald Trump,[可爱]  to take office for a second time. The new leadership has new ideas for governing, but the common characteristics are likely to be more conservative and isolationist. China may have a lot of resistance.

Real estate cycle (China) Look at figure 3. Since 2017, China's birth population has been in a cliff-edge decline, and in 2023 it will be only about half that of 2017. Less is likely in 2024 and 2025. Although financial conditions in the housing market have been friendly, they are still in the downward cycle, perhaps more than halfway through, but certainly not over.

Equipment cycle (full next time you chart), inventory cycle, etc.; Let's talk about the United States, etc.

China's economy: reality down, expectation up

The realities of China's economy remain under downward pressure. Government revenue and household income are not so optimistic, which is a drag on consumer spending. In just three or four years, we have seen three negative year-on-year revenue growth, while spending has been positive year-on year, reflecting the imbalance between local government revenue and expenditure.

There are many to talk about for China, if Hong Kong stocks and the Nasdaq China Dragon Index are included.

$苹果(AAPL)$  

Then here are second part that I posted yesterday in Chinese, and figures and tables can be accessed from my essays yesterday.

The equipment cycle is basically 8 to 12 years. Take industrial products as an example, the investment in mines includes project planning, exploration, mining, production, processing, end products, and the process is very long. According to data from the Chinese industry, it is also the end of the downward phase of the equipment cycle. As early as 2017-2018, the increase in industrial product prices promoted new investment, and the epidemic further delayed the investment cycle. Investment often leads to excess, excess leads to low prices, low prices lead to declining enterprise profits, which in turn suppresses investment impulses, and the industry gradually reduces capacity until a new balance of supply and demand is reached. Now it is usually not conducive to current prices, or will form support for a new cycle in the future. Figure 1 shows mineral fixed asset investment. [财迷]  

The inventory cycle is a short cycle of 3-4 years, which is only higher than the seasonal cycle. It describes the cyclical behavior of the overall market in terms of replenishing and removing inventory. After the last inventory cycle ended, the new inventory cycle started very weakly. Will there be a second wave in 2025? However, observing the product market, industrial goods, and agricultural products are in a state of relative surplus, but the inventory levels of the middle and downstream links are not high. There are many potential disturbances in 2025, such as the impact of geopolitics on energy, the impact of climate change on agricultural products, and the unexpected strength of China's policies, as well as the unexpected easing of the United States, but these are difficult to predict. (Figure 2)@ZxyLoveZxh 

I learned the Buffett indicator: total market value / GDP. The higher the value, the greater the risk of stocks. China's number was 0.7322 yesterday (January 20, Jan 20). Okay, let's explain the United States in detail.

Since 1932, after the end of the general election, the stock market usually rises until the new president takes office, and then there are four stable months. In fact, using the Buffett indicator at about 200% and the US stock market at more than 20 times the price-to-earnings ratio, it is doubtful about the US stock market, but it must be pointed out that the proportion of overseas sales of US enterprises is high, about 40% of the revenue of the S&P 500 index components is from international markets, and GDP does not include these. Secondly, it should be pointed out that the proportion of new economy is high, GDP cannot accurately measure the quality change of goods and services, and it is also difficult to fully reflect the value of new goods and services, GDP may be underestimated, this indicator may be more suitable for the manufacturing industry.[真香]  

In addition, Berkshire Hathaway's cash and short-term investments are related to the S&P 500 for the next five years, such as 35% of the market value in 2004, but the United States returned to March 2009 in October 2007; now the indicator is slightly lower than 35%, which is not significant for the next half year or one year. According to Bank of America's view, it does not recommend reducing US stocks because the structure of US stocks has changed, and each indicator is not significant compared with the historical average.

In 1980, 70% was asset-intensive, manufacturing, finance, and real estate, but now half is light-asset technology, healthcare, and the profit margin from less than 6% in the 1980s is now close to 12%, the leverage ratio has halved, and the profit volatility is lower.

Of course, U.S. stock fund managers and other trading indicators are regarded as signals to sell stocks. In addition, the U.S. fiscal deficit should also be considered, such as interest expenses accounting for 15% of tax revenue and the $7 trillion of U.S. Treasury bonds due next year.