Since red weekly held high the banner of value investment, it has made a lot of relevant in-depth reports, especially the interviews with well-known investors including Charlie Munger, which left a deep impression on me. "Red weekly" can adhere to the value investment route of fundamental analysis, which is worthy of appreciation and respect. I hope that red weekly can continue to think about what happens in the capital market from the perspective of fundamental analysis (value investment) for the benefit of investors.
Looking forward to the market in 2022, I think we should be vigilant against the downside risks of peripheral markets such as US stocks. After all, since 2009, the US stock market (except for an adjustment due to the epidemic in 2020) has come out of a 12-year bull market, which is basically a trend of continuous record highs. In this case, the monetary policy is tightened again, so there is likely to be a substantial adjustment in US stocks.
More importantly, the valuation increase of the US stock market has significantly exceeded its GDP growth, which means that the US stock market has been overdrawn. The decline in the US stock market since the beginning of the year in 2022 is likely to be the time to "repay the debt". Even so, the valuation of stocks like Tesla is still "in the sky", so I think the adjustment of the U.S. stock market may have just begun.
Relatively speaking, China's stock market, especially Hong Kong stocks, has entered a historical "bottom". For one reason or another, Hong Kong stocks have fallen in advance. Then, Hong Kong stocks may also end the decline in advance. Even if we continue to adjust, in my opinion, there is not much room to go down.
As for the A-share market, the possibility of ushering in a comprehensive bull market is still relatively small. Although we are adhering to monetary easing, such as cutting interest rates and reserve requirements, after all, the overall economic growth is lower than before, so it is difficult to support the stock market out of the overall bull market. In addition, the painful process of real estate, which accounts for the largest proportion of China's economy, has not ended. Next, deleveraging is still the main theme of the policy. According to our prediction, this process may last for the whole year of 2022, in which the first half of the year will be intense and the second half of the year will be eased.
On the whole, our strategy is mainly divided into two parts: one is bearish on US stocks. For example, in the new energy sector, we will continue to use the long short combination. The long is a stock with good performance price ratio compared with the expected performance growth in 2022. It is also the only Chinese stock among Buffett's heavy positions. Short is three stocks of new energy automotive stocks, with the new energy vehicle bubble in the past two years, the greater the blow, we put the three stocks short positions than the long even slightly higher.
It should be noted that for those circuits that have been popular for two or even three years, such as new energy and photovoltaic, be careful, because basically the third year will enter a period of risk release.
Second, some sectors with extremely low valuations that are bullish on A-Shares and Hong Kong stocks are looking for opportunities for oversold, which can be divided into five sectors:
\u3000\u30001。 Consumer sector, mainly downstream consumer goods. Among them, some companies with brand bargaining power can transfer the rise in the cost of upstream raw materials in 2021 to consumers, so when the cost decreases in 2022, their profit margin will be significantly improved. Specifically, it includes luggage stocks, sofa stocks and brand traditional Chinese medicine health products stocks.
\u3000\u30002。 In the pharmaceutical sector, the pharmaceutical sector led the market in 2021, especially the leader of innovative drugs, which has a strong margin of safety. Of course, whether it is an opportunity also needs to be screened. For example, both Changchun High And New Technology Industries (Group) Inc(000661) and Jiangsu Hengrui Medicine Co.Ltd(600276) which are "neglected" by the market due to centralized mining, one has just started to fall, and the other has fallen for more than a year. In our opinion, there are still risks at the beginning of the decline. The valuation probability has not been adjusted in place, but if it has fallen for a year, its value has been slowly reflected.
\u3000\u30003。 The financial sector, mainly insurance and banking, also fell sharply in 2021.
\u3000\u30004。 In the real estate sector, real estate stocks have fallen for four consecutive years since 2018. Especially in the second half of 2021, they suffered a once-in-30-year crisis and entered the extreme of industry reshuffle. Then, real estate enterprises with low operating costs in the industry are likely to win in this round of "knockout".
\u3000\u30005。 The military industry sector, similar to the new energy sector, is also a sector with upward boom, but some of the companies that have been adjusted in place also highlight the investment value.
In addition, the Internet sector will also have certain opportunities. Now the policy risk has been reflected in its valuation. Next, we should focus on the changes in its fundamentals or profits.
