LTCM Strategy Again Popular

Sunday, August 22nd.

The United States absorbed Japan's experience (from 1985 to 1994, when the yen exchange rate surged 69%, then caused a deflation of more than 10 years in 1995), and the US dollar exchange rate declined in 2001, making the US economy enter neither an inflation nor a deflationary environment.

Gold and raw materials prices have risen sharply in the past ten years, but the price of consumer goods (CPI component) has been limited.

LTCM strategy again popular

Interest rate drop to the S & P Five hundred

The US economy has entered a low growth period, but it is not the second double dip, because the US monetary policy is still very loose.

The worst economy in the United States was in 1930s, followed by the fall from 1966 to 1982 (or "invisible collapse"), with the Dow up and down, and the US dollar losing 95% purchasing power.

The United States has entered a new era since 2000. Its deficit, trade deficit and high unemployment have been plaguing the United States. The Federal Reserve has been stimulating the economy again and again, triggering an asset appreciation period from 2003 to 2007 and a flood of money from March 2009 to April 2010.

Us property prices will not improve before 2012

In the past few years, the United States has injected $400 billion into Fannie Mae and Freddie Mac, but the situation has not improved.

In the second quarter of this year, Fannie Mae lost 6 billion US dollars (a loss of $840 million last year), which has improved by 8 billion US dollars compared with the first quarter. The US dollar has lost 1 billion 200 million US dollars in the second quarter and asked the Federal Reserve to inject another US $1 billion 500 million.

Fannie Mae and Freddie Mac have become the bottomless pit of the US government. There is not enough money to fill the hole. In March, about 6.3% of the loans were insolvent (a loss of US $31 billion last year, and the loss is estimated to exceed last year).

If the government stopped injections of capital, it would be finished. Last year, two million and eight hundred thousand houses were taken over, 21% higher than in 2008 and 120% higher in 2007 than in 2008.

At present, there are fourteen million insolvent houses, and Deutsche Bank estimates that at least six million of them will take over this year.

In other words, before 2012, property prices in the US still could not improve.

Since the reform and opening up in 1978, China's GDP has increased nine times, not only exceeding Germany, but also surpassing Japan in the second quarter and catching up with the United States.

Seven years ago, China's GDP ranked seventh, while the US GDP was five times that of China. Today, China's GDP ranks second, while the US GDP is only three times larger than that of China.

In the past three years, the US economy has not been known, and China has maintained rapid growth. It is believed that in twenty years, China's GDP will surpass the United States and become the largest economic entity in the world (assuming that China's GDP will rise 6% annually in the next twenty years, while the us will only increase 1% annually).

The era of cheap labor in China has ended in 2007, and has entered a winning stage with high technology and high added value. Many emerging economies have failed to enter this stage, but they believe China can make China enter another twenty years of prosperity.

Credit Suisse estimates that China's per capita income is 90% higher than the figure announced, and the annual income of 10% of the highest income has reached 139 thousand yuan.

China is rapidly entering the stage of the formation of the middle class.

The era of cheap labor came to an end in 2007, and entered the world with high technology and high added value. Many emerging economies failed to enter this stage, but believed China could make China enter another twenty year prosperity period.

Africa has great potential for poverty relief.

Africa has the world's 10% oil reserves. Nigeria and Algeria have the world's seventh and eighth largest natural gas reserves, while South Africa has the world's 40% gold deposits.

In the past, because of the unstable political situation in African countries, it has never been developed.

Over the past ten years, China has invested heavily in Africa, making the rapid development of Africa's economy from 2002 to 2007, even faster than that of Jiao Xinxing's country. I believe that in the near future, nine hundred million Africans will gradually be separated from poverty (as in the past thirty years).

In 1973, it was predicted that global oil free use (Peak Oil theory) in forty years would be proved nonsense today.

Peak Oil was once again popular in 2008. It is believed that after fifteen years of global oil - free, oil prices once met $147.

In fact, as long as Africa is successful, there is no shortage of raw materials and energy.

Investec Asset Managements's Michael Power is very optimistic about Africa's future. My elder Cao is no exception. In this regard, Standard Chartered Bank (2888) is a forerunner.

You may also consider the Ishares MSCI South Africa Index Fund, Market Vectors Africa Index ETF and the New York, China, which are listed on the stock exchange of Hong Kong. Hong Kong people can buy and sell through foreign securities firms or banks.

The aviation industry is not easy because it has low marginal profits, heavy liabilities (borrowing money to buy planes), affected by exchange rate factors, the rise and fall of oil prices and the economic cycle, coupled with the competition of too many airlines (many of them state-owned).

Investment in aviation stocks is usually bought at a low ebb tide and sold at an economic climax, buying at a high oil price and selling at a drop in oil price.

Looking forward to 2010 and 2011, it is a time for the airline industry to make big money, but whether or not to buy aviation stocks is different now.

The issue of "vacant housing" in the mainland has not been very clear recently.

The mainland electricity workers copy electricity meters every two months, for example, Hangzhou 20% housing consumption is zero, whether it represents vacancy? Hainan province has more, the peak period has 40% to 60% housing consumption is zero, because many are holiday homes, after buying only a few months per year, so the two consecutive months of electricity consumption is zero is not surprising.

Another kind of vacancy is that the real estate companies keep up with the stock market and reserve certain stocks for sale.

The third kind of vacancy is to buy the house first, and no one to live at the moment.

The fourth one is investment housing vacancy, that is, speculators buy and sell well.

With the increasing wealth of mainland people, the situation of "one family and several rooms" is becoming more and more common.

What is cheap? In 1982, the US blue chips, such as Boeing, DuPont chemical and Ai Kesen petroleum P/E, were still eight times less, because the thirty year bonds in 1980 had a fifteen interest rate, and investors did not believe that the net profits of these big enterprises in the next thirty years could rise by 15% annually.

In September 2002, the US stock P/E was only eighteen times, and the stock price rose very much in the next five years, but in September 2002, the stock was still regarded as expensive.

Another cheap point is that the US stock P/E dropped to twelve times in March 2009, even lower than in September 2002, but no one wanted to share the stock last March.

So, cheap is just after Kongming, nobody knows before.

For example, in 2000, Lao Cao thought gold was cheap and oil was cheap. How many people agreed with that?

In February 1969, the us twenty - year bond interest rate rose from 6.32 to 15 in 1980, and the US stock market did not drop sharply.

This year's twenty - year debt interest rate is only 3.8 percentage points, that is, since 1969, it has held twenty - year bonds, so far it has won the same price five hundred index.

Who said that holding stocks for a long time would outperform bonds? After the Lehman crisis in 2008, "money" became very cheap, and short-term interest rates dropped to 0.25 or below, but private and business refused to borrow money. Only the federal government was struggling to borrow money, similar to that of Japan after 1995.

The yen has appreciated sharply from 1985 to 1994, making the Japanese economy enter a deflation period after 1995. On the contrary, the US dollar will continue to depreciate sharply from January 2001 to July this year, so there will be no deflation in the US. Only in 2007 America, the average annual income of $46 thousand per capita will no longer be promoted in the foreseeable future.

The US dollar's low interest rate has been going on for a long time since last year, just like Japan after 1995.

Sixteen years later, looking back, Japan is still unable to get rid of low interest rates, and government debt has exceeded GDP 200%; it is estimated that in sixteen years, the situation in the United States will be the same.

In November 2008, the central government launched a 4 trillion yuan economic stimulus plan to digest the excess capacity of steel and cement through investment in the Midwest infrastructure, and drive the electronics and automobile industry through home appliances to the countryside and auto subsidies. The bank increased 12 trillion yuan loans to stimulate the rise in property prices, resulting in the rapid economic growth and overheating last year, although it offset the impact of the decline in export growth, but at the same time overcapacity was not eliminated in time.

Hongkong's "80 generation" is hidden at home.

The second take-off of China's economy should be from the "processing age" to the era of "product design, marketing promotion, brand operation and development of core technology" instead of "4 trillion yuan stimulus economic plan", which will generate "external heat and internal cooling" and make the economy more difficult.

Last year, the Chinese economy was pformed from domestic exports to domestic demand. In the past, foreign exchange earned through exports was converted into RMB, resulting in the stock market crash in 2007 and high property prices in the first tier cities in 2010. If the market was not controlled, the housing bubble burst sooner or later. Therefore, people began to suppress the property market in August last year, and the initial reaction is increasing.

Of China's one billion and three hundred million people, 80% of them are workers and peasants, whose income accounts for only 30% of the total GDP in the whole country. The monthly wage of the Midwest workers is still only 500 yuan. As for the coastal cities, the property prices are approaching Hongkong and Tokyo. On the contrary, the other 20% people account for 70% of the national income.

The phenomenon of not being widowed and uneven has begun to threaten China's future.

So far, most of China's products still remain at the processing level. Core technology, marketing and product design are still controlled by foreign capital. China stays at the wage earnest level, exports 90% of its profits to others, makes only 10% of its profits, and even loses the price of environmental pollution.

In contrast, Japan and South Korea have their own products exported by design, marketing, brand and core technology, so that the average annual income will go from 5000 US dollars to 30000 US dollars. Only after the per capita income rises can we support the prosperity of real estate, consumer market and financial industry.

This year, China's GDP growth rate has dropped from 11.1% in the first quarter to 10.3% in the second quarter. It is estimated that the third quarter will be 9.5% and the fourth quarter will fall further.

Real estate has also entered a fall period since April this year. A shares have reflected in the first half of this year. What is the problem of China's economy in 2011?

The three main directions of investing in China today are: A, a beneficiary under the pformation of economic structure.

Second, the beneficiary industry emerging from the middle class.

C, the business opportunities brought about by the stimulation of the price of agricultural products after the massive loss of farmers.

According to Lyon's The Future of Asia is Domestic, by 2015, the number of people earning more than US $3000 in Asia will increase from five hundred and seventy million to nine hundred and forty-five million, of which three is two from China (that is, China can increase two hundred and sixty million middle-income persons).

Today, there are fifty payment platforms in Carrefour supermarket in Beijing. It has become the busiest supermarket in the world.

Every Sunday afternoon, it takes you an hour to pay in line.

KFC has more than three thousand branches in China, and is still expanding.

Shops selling sportswear or shoes can be seen everywhere.

China's economy is heading for a post industrial period, and there should be fifteen or more years of prosperity.

Hongkong's "post-80s" face a series of violent tumbling since 1997, and become the most dissatisfied group in the society.

A group of wealthy families will still stir fry stocks and speculate in speculation, but those who live in general will often find jobs, but they will not be long.

Their qualifications are not low, but when they are looking for a job, they are often too high to fail.

The situation first appeared in Japan in 1990, and more and more young people are hiding in their homes and staying indoors.