On March 28, in a roadshow, Yang Ruiwen, manager of top flow fund and executive director of Jingshun Great Wall Fund’s stock investment department, rarely apologized to fund holders and deeply analyzed the investment and mental journey since this year.
He stressed that in addition to the necessary living expenses, he has almost filled his own funds. At the same time, he also stressed that his parents have invested almost all their savings in their own funds. Yang Ruiwen believes that the fund investment return of most investors is not ideal. An important reason is that most investors do not treat fund investment with a long-term mentality. “They often buy after seeing Lao Wang next door make money”. This herding effect often leads many funders to get on the bus at a high level.
is it in the end
Q: since the beginning of this year, there has been a significant correction in the market. What do you think of the current market environment?
Yang Ruiwen: there are three main reasons for the market correction at the beginning of this year:
first, the sudden outbreak of the Ukrainian war triggered a decline in risk appetite in global capital markets, especially in emerging markets A series of sanctions triggered by the war have impacted the global supply of energy resources and exacerbated the market’s concern about the risk of stagflation. Some people in the market liken this stagflation risk to the United States in the 1970s, but we don’t think such stagflation will continue. Because a very important factor in the stagflation in the 1970s was the expansion of total demand brought about by the post-war baby boom in the United States, and the energy supply could not keep up with the outbreak of demand, this brought a long time of stagflation. However, this time, there was no expansion of total demand. The more important factor is the global decline in supply efficiency caused by the outbreak of covid-19 epidemic, which is reflected in the insufficient supply of raw materials, the slowdown of capacity construction, the decline of shipping efficiency, and the obvious decline of production efficiency in many industries.
However, on the demand side, because Europe and the United States send money to stimulate consumption, there is a state of rising instead of falling. Therefore, the original balance of supply and demand has become a serious imbalance between supply and demand. With the outbreak of the war between Russia and Ukraine, Russia was kicked out of the swift system, which exacerbated the tension of global resources and energy supply. This undoubtedly aggravates the market’s concern about the risk of stagflation. However, we believe that in the future, with the gradual withdrawal of interest rate hikes and stimulus policies in Europe and the United States and the reconstruction of Russia’s resource trade relations, this will lead to the rebalancing of the global supply and demand pattern. Therefore, we believe that stagflation is only phased, and the relationship between supply and demand in the global market needs some time to rebalance.
The consumption of war is huge, the possibility of protracted war is not great, and the negotiations have been going on. If the situation in Russia and Ukraine eases, commodity prices may fall rapidly, risk appetite will resume, and the market may rebound greatly in a short time. The emotional shock may have reached the most pessimistic state, but in fact, it has little impact on China. However, the Russian Ukrainian incident will strengthen our determination to be independent and controllable. Europe will also strive for energy independence. The Russian Ukrainian war will bring profound changes to the subsequent industrial development. For example, after the Sino US trade friction in 2018, China’s independent and controllable industries broke out in an all-round way. This time, it will strengthen our belief in this aspect, and relevant industries will usher in vigorous development.
second, the multi-point outbreak in Omicron, with many places pressing the pause button, exacerbated everyone’s concern about the impact of the epidemic on the economy Omicron has amazing transmission power, and the impact of the epidemic on the economy is inevitable. However, we must realize that China’s economy is resilient enough. Even in the days when Shenzhen was closed down some time ago, we can see that Shenzhen enterprises use online office and key posts to eat and live in the company to minimize losses. We can also see that some factories start closed management to deal with the epidemic. We can also see that the Shenzhen government’s measures to deal with the epidemic in the later stage are more and more methodical. The cost of the epidemic is inevitable, but we should believe that our government’s efficient implementation, we will be able to find a relatively balanced way to deal with the epidemic.
From another perspective, the capital market is also relatively stable at the peak of the epidemic in Europe and the United States, when there are millions of new people every day. Maybe we always got full marks in the past, but today we only got 80 points. Everyone has an expected gap in mind. However, the capital market should look at the future rather than the present. We should also recognize that the impact of the epidemic is phased, and the epidemic can not have no cost, but a rainbow will come after the rain.
third, some policies in the past have deviated in purpose and effect, which has affected market confidence to a certain extent we can see that some policy ideas in the past are good and comprehensive, but there may be deviation in the implementation effect, which has aroused the concern of the market. On the morning of March 16, the financial committee of the State Council held a meeting specifically aimed at these problems, and talked about all the problems very realistically. The “reassurance” of the financial committee alleviated the short-term anxiety of the market. Historically, China’s pessimistic economic expectations and seemingly difficult goals at the beginning of the year will eventually achieve good results. This is because the more problems exposed at the beginning of the year, the faster the speed and intensity of government adjustment will be. From this perspective, the “digging a hole” at the beginning of the year may not be so bad.
I can conclude from the above factors that we can improve the market. In fact, investment depends more on expectations. Although it is not very good now, these negative factors are expected. As long as the market believes that it will not be worse in the future and will be better in the future, the market will rise. Although we are not sure whether it must be the bottom now, the probability should be in the bottom area. At least the policy bottom has appeared. Historically, the policy bottom is very important. Investment still depends on the general direction of the policy.
In terms of investment opportunities, we believe that the first half of the year is dominated by cycle and the second half is dominated by scientific and technological growth. We are now mainly waiting for the restoration of overly pessimistic risk appetite, and our layout is still dominated by scientific and technological growth. I think the leading direction of this scientific and technological growth will be self-control represented by semiconductors, new materials and software.
Q: you mentioned last year that you are optimistic about semiconductors, electric smart cars, metauniverse, small and medium-sized market leaders represented by “specialization and innovation”. Are there any changes in your views now?
Yang Ruiwen: since the beginning of this year, great changes have taken place. Relatively speaking, today we are more optimistic about the independent and controllable products represented by semiconductors, software and new materials. At the same time, we are also optimistic about the rise of Chinese science and technology brands. China will produce more and more innovative product-based science and technology brands with global competitiveness. In terms of electric smart vehicles, we believe that the excessive rise of upstream materials will lead to the increase of vehicle prices, which will curb the demand, which will lead to the decline of prosperity, and there will be obvious differentiation in the later performance. At different stages, the industrial chain needs to be rebalanced in order to usher in better development. Of course, the adjustment of the new energy vehicle industry chain in the early stage also reflects this expectation. The rebalancing process of the industry chain in the later stage may require us to find alpha.
why don’t fund managers run when stocks fall
Q: how do you view the low tide of the market and how do you deal with your investment in the face of a relatively cold market? What is the idea of stock selection?
Yang Ruiwen: first of all, I would like to thank the investors for their trust in me. I’m sorry that our fund has brought you some losses so far this year. I’m also deeply distressed.
Although the market performance is sluggish, I am really optimistic at this time. Since I became a fund manager, I have experienced three rounds of stock market disasters from 2015 to 2016 and the sharp decline in 2018. I will experience a market retreat of 20% almost every year. Every time I fall into the self doubt of the market, the market bottoms out. If we bite our teeth and buy funds when the three rounds of stock market crash in 2018, now looking back, the return rate is quite high. However, fear makes it impossible for everyone to do anti human operation.
now, many stocks are very cheap. Although I’m not sure if it’s the bottom, it should be a lower area. We should bite our teeth and stick to it. The final return will be very rich. In addition to the necessary expenses of life, I have almost filled my fund. My fund is also on the high side. I am an optimist. I don’t think the sky will fall. It doesn’t matter if money falls
Secondly, let’s analyze whether the current situation will get better or worse? From the perspective of internal problems, we know that the current monetary policy is relatively loose. The main problem now is that there are certain obstacles in the process of credit expansion, and some policies introduced in the past have “unintended consequences”. Since March 16, the Finance Committee has held a meeting to make a series of specific arrangements for relevant issues. We have also gradually seen the gradual adjustment of policies. We believe that the obstacles to credit expansion will be removed in the near future.
As for the impact of the epidemic, the government will also dynamically adjust policies to balance the relationship between the economy and the control of the epidemic. From the perspective of external issues, many people are worried about the impact of the Russian Ukrainian war on China’s trade environment. In fact, the Russian Ukrainian war has more impact on market confidence and will not have a practical impact on China. China accounts for 30% of the global manufacturing industry. Since we have more advantages in the middle and low-end manufacturing industry, it must be higher from the perspective of piece quantity, which may exceed more than 50%. The global economy has been deeply integrated with China’s manufacturing industry. Even if the Russian Ukrainian war has affected the process of globalization, both India and Southeast Asia lag behind China in infrastructure, personnel quality, large-scale personnel mobility and domestic demand market, and the comparative advantage of China’s manufacturing industry is unparalleled. Even if some countries forcibly transfer, the construction of infrastructure cannot be achieved without more than ten years, which is also a long process.
On the contrary, this event will comprehensively accelerate our independent and controllable rhythm. Whether the manufacturing industry is under independent control or resources are under independent control, it may accelerate in an all-round way. China is the country with the most sound industrial system in the world. The huge domestic demand has brought a strong scale effect to our manufacturing industry, which also gives China’s economy strong toughness.
to sum up, we are optimistic, so our response is also positive
Q: you will invest in relatively early growth stocks, and it is often mentioned that they will accompany the growth of the enterprise. However, if the stock price fluctuates sharply in this process, such as rising sharply or falling sharply in the short term, what will you do? Will you pay attention to the turnover rate of the combination at the same time?
Yang Ruiwen: share price rose sharply in the short term, overdrawn the long-term space in the future, and we will definitely sell it. We are not mechanical dogmatism. Our actions are carried out according to the changes of the market. It is the so-called war without definite method. As for the sharp fall, we must first examine whether we are wrong. If not, is the company valuable? What is the value? If it is really valuable, it is only a short-term decline, and we are likely to buy against the trend.
We don’t pay much attention to the turnover rate. It’s just the result. Paying attention to it won’t help us invest much. However, our investment must be viewed from a long-term perspective, hoping to accompany the growth of the enterprise. Moreover, we are not saying that we really do this. Therefore, this determines that our turnover rate will not be too high.
Q: when the market fluctuates greatly, the holder will say “why doesn’t the fund manager sell when a stock has fallen so much”, or “why doesn’t the fund manager run when a stock has risen so much”. What’s your trading framework for buying or selling stocks?
Yang Ruiwen: investment seems to be very simple. It’s OK to buy low and sell high, but it’s difficult to do well in practice. If I know that one of my stocks will fall a lot, I will sell it, but the problem is that I don’t know that it will fall a lot. The reason why I buy and hold it must be that the share price will rise or rise in the future. The rise and fall of stocks are affected by many factors: including valuation, performance, industry prosperity, future prospects, macro liquidity and so on. It is easy to do anything later, but it is difficult to stand in the present.
Therefore, our investment trading framework is not as casual as we think. We cannot completely eliminate the failure of investment cases. As long as you invest, you will inevitably encounter the possibility of failure of an investment case. We can only control the success rate of our investment. We improve our investment success probability through self consistent investment methodology. In recent years, we believe that the success rate of investment along the industrial development trend is very high. Therefore, the enterprises we choose are looking in this direction. We believe that as long as the enterprise continues to grow, it will eventually give us rich returns. Of course, the premise is that we can’t buy it too expensive.
new energy needs further screening opportunities
Q: theme funds have been popular with investors in the past two years. What stage do you think the new energy vehicle market has reached?
Yang Ruiwen: since this year, certain changes have taken place in new energy vehicles. The price of lithium carbonate has now exceeded 500000, and the prices of other raw materials are also at a high level, which leads to huge cost pressure on vehicle enterprises. Therefore, we have also seen that various car companies have raised prices recently, ranging from thousands to tens of thousands. This price increase will certainly curb demand. We believe that the prosperity of the new energy vehicle industry will decline later, and this cycle may be as long as half a year to a year. However, this is not a bad thing for the new energy vehicle industry. The ultra-high growth rate in the past is not normal. Some links of the industrial chain also need time to alleviate the contradiction between supply and demand.
After this adjustment, I believe that the new energy vehicle industry will develop more healthily and countless investment opportunities will be born. The development of the industry has never been smooth sailing. We need patience and persistence to achieve good results. We will also actively respond to changes in the industry, hoping to bring investors a more stable investment experience. For industry funds or indexes, the early decline has reflected some expectations. The adjustment of the industry or the decline of prosperity in the future does not mean that the stock will adjust. After all, the stock reflects the expectations in advance. At this stage, we need to make efforts to identify opportunities and risks, and test our ability to find alpha.
Q: there are many new energy theme funds on the market. What is the difference between the new energy funds you manage?
Yang Ruiwen: our new energy fund mainly invests in the direction of new energy vehicles. Relatively speaking, we invest more in the whole industrial chain without betting on a certain link. From this perspective, our positions in the new energy theme fund are relatively scattered.
Q: can you tell us the specific focus of the funds you manage?
Yang Ruiwen: the three funds we now manage, including Jingshun Great Wall optimization, environmental protection advantages and innovative growth, are positioned as industry wide funds, mainly adopting the methodology strategy of enterprise vitality evaluation described in the previous quarterly report. They will not only invest in the explosive stage of enterprise growth, but also invest a lot in the early and medium-term stage accompanying enterprise growth. The market value distribution ranges from 3 billion to trillion, and the industry distribution is also relatively scattered, which is reflected in multi-level balanced investment.
Jingshun great wall growth leader is also positioned as an industry wide fund, but the invested enterprises will pay more attention to large market value leading growth stocks. Jingshun Great Wall corporate governance fund and growth pilot fund are also positioned for balanced growth, but there are more positions to invest in small and medium-sized stocks represented by specialized Texin. Jingshun Great Wall Electronic Information Industry and new energy industry are industry-based funds managed by teams, focusing on technology stocks and new energy industry respectively. Due to the focus on technology stocks and new energy industry, the two foundations reflect high volatility. We hope to achieve sustained excess returns through industrial entry, and let investors share the dividends of industrial growth through more professional industrial investment.
“I advise my mother not to be bullish when she falls”
Q: in the early stage, the fund fluctuated greatly. Some investors complained that fund managers invested with other people’s money, and the rise and fall had nothing to do with themselves. How do you manage your money? Do you also buy products managed by yourself?
Yang Ruiwen: first of all, the fund has lost money, and our fund manager must be very sad. It’s impossible not to care about the rise and fall. In fact, sometimes the market is not very good, and we feel tasteless when we eat.
Secondly, I am also the holder of my own fund. In addition to the necessary living expenses, I put almost all my activity funds into my own fund. My parents and family are the same. They have invested almost all their savings in my fund. I think some of my colleagues and leaders have also bought a lot. The fund lost money, so did my family, colleagues and leaders. However, there is no need to worry about our motivation to do well. Standing at the moment, I am still very confident in the medium and long term. I think the pain is temporary. Our confidence is based on our investment in enterprises with huge growth space. We believe that they will eventually grow up, and the harvest is a matter of time.
We especially understand Jimin’s anxiety and worry. After all, it’s not easy for everyone to make money. We always hope to make money for investors when we manage funds. However, the fluctuation of the market is affected by various factors, including macroeconomic prosperity outside China, monetary policy, capital fluctuation, geopolitics and so on. Our past historical experience is that the market is difficult to predict. For example, you can’t predict the occurrence of the Russian Ukrainian war and the development trend of the Russian Ukrainian war, let alone the intensity and comprehensiveness of European and American sanctions. Maybe someone said, I can wait for the adjustment after it happened, but it may also be the end of the just adjustment, or the emergence of new events. Therefore, short-term prediction is really random. You may predict the beginning, but you may never guess the result.
Buffett once said that others are greedy, I fear, others fear that I am greedy. However, from the perspective of human nature, more than 90% of people can’t do it. It’s more likely that others are afraid, and I’m more afraid. However, according to our past experience, the return of anti human investment is often the greatest.
Finally, I would like to say that investment is not easy in fact. There will be a lot of noise interference and influence on the way, which requires us to adhere to it. Investment also needs an optimistic attitude. If we worry about the sky falling all day, we may not be able to invest anything. If one day, innocence is falling, and money is not important. Therefore, we still need to be optimistic about the future, or believe that the Chinese are the most diligent people in the world, believe in China’s comparative and competitive advantages, and believe that the Chinese nation will rise. Only in this way can we share the dividends of the times.
Q: now buying funds has increasingly become the financial management method of ordinary people. Can you share some fund investment methods with investors from the perspective of fund managers?
Yang Ruiwen: I think the most important thing for ordinary investors is to do a good job in the construction of investment mentality. According to statistics, over the past few years, the annualized return of active equity funds has exceeded 15%. In fact, this data is not inferior to most real estate investments. However, in fact, the fund investment return of most investors is not ideal. I think an important reason is that most investors do not treat fund investment with a long-term mentality. They often buy after seeing Lao Wang next door make money. This herding behavior often leads many funders to buy funds at a high point.
Therefore, I suggest that every investor should allocate assets according to their risk tolerance. If conditions permit, when the market is low, they should allocate some equity funds to ensure that they will not envy Lao Wang next door in the process of rising, and then catch up with the high.
For most investors, fixed investment is much better than one-time buying, because timing is really very difficult. In addition, if you choose long-term investment, I suggest that most investors do not look at the net value every day to reduce the impact on life and mood. My mother used to look at the rise and fall of the day every night before going to bed. I suggested her not to look at it when she fell and not until she rose. Of course, this is a little ah q, but it is helpful to improve investment sentiment. If you invest in real estate or start a business, you don’t know the continuous daily price. Therefore, you won’t worry about the daily price fluctuations. In this way, you can make a lot of money. Therefore, the anxiety and worry about fund investment are more from the impact of continuous daily prices on spirit and emotion. I hope you can try to dilute the short-term and invest more in the fund with a long-term mentality.
I believe that as long as we invest in the right industrial direction and excellent enterprises, the fund will eventually give investors rich returns. We will also strive to do well, hoping to live up to the expectations of investors. We understand that every investor’s money is hard won. Please believe that we are working hard all the time. If you are in a bad mood, you can vent your anger and scold me. However, I hope you will believe that the rise of China is unstoppable and that we can reap the dividends of the times from the capital market.
