Guoyuan Securities pointed out that asset shortages have appeared periodically, and everyone is also periodically making grand narratives. Behind this is the decline of macro elasticity and the continuation of Keynesianism. Whenever asset shortages occur, TMT will raise a round of valuations, and growth stocks will If there is an excess opportunity, the 30Y-10Y spread will also narrow.
1. I don’t know if you have ever thought about why asset prices cannot be reached in one step when we are facing a relatively certain long-term trend.
2. The reason may not be everyone’s unsteadiness, but our lack of money and stability:
1) Lack of money means that we do not have funds that can push asset price-in information for a long enough time in the future. Therefore, even if zero interest rates are the trend, our current interest rate is still positive. Even if new energy vehicles are the trend, the stock price The rise is still one step and three shakes;
2) Lack of stability refers to: no matter how certain the future is, compared with assets that can only be played in the future, funds prefer to play in short-term assets. The recent high volatility of assets. Therefore, everyone likes to buy bonds with a suitable maturity, and also likes to buy stocks that are easily verified by recent financial reports.
3. If the growth of assets is more tortuous than the reality, then we believe that few people will turn a blind eye to the phased adjustment of assets for the determined trend, after all, the liabilities of most funds are unstable. No matter what asset we buy, we must consider when it is the selling point. This is an investment discipline that we should always implement.
4. Since money and stability prevent us from looking too far ahead, usually the inflection point of assets is not brought about by the industry itself, but by liquidity:
1) Seemingly high-growth stocks are actually restricted by liquidity, and are constantly adjusting how far into the future their stock prices can be price-in;
2) Stocks with long-term performance are like buying ultra-long-term bonds, and investors are very easy to fall into the prisoner’s dilemma of mutual suspicion.
5. From this point of view, it is not difficult to guess the reasons for these forward asset adjustments. One is the decrease in total liquidity, and the other is the rise in the macro cycle. These funds have more opportunities to gain recent performance.
6. Correspondingly, if a large amount of funds “have nowhere to put” (there is no macro clues, but the liquidity is flooding), you can only take the next best thing and rely on various grand narratives to settle in forward assets.
7. This state is called asset shortage, and this kind of forward asset is called short-term unfalsifiable asset.
8. Asset shortages have appeared periodically, and everyone is also periodically making grand narratives. Behind this is the decline of macro elasticity and the continuation of Keynesianism. Whenever asset shortages occur, TMT will raise a round of valuations, and growth stocks will have excess opportunities , The 30Y-10Y spread will also narrow.
9. We are also in a state of asset shortage. Therefore, there are crowded transactions between AI+ and China Special Evaluation. Even institutions are strengthening blending and grouping to improve the stability of investment. We are also intermittently speculating on 30Y National debt tells the story of long-term interest rates at zero, and we even give gold a grand narrative of de-dollarization.
10. The follow-up fundamentals, whether it is recovery or stall, will resolve this state, but in the short term, the probability of this environment changing is not high. Therefore, the focus of current investment is still “unfalsifiable”.
11. Although the term and yield of interest rate bonds have been kept very low, we can still continue to extend the long-term and flatten the curve. After short-term adjustments, there will be a second round of market prices.
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1. Introduction to the question: about the future of certainty
From a distance, some trends can be seen clearly。
For example, zero interest rates are destined to be a long-term trend; for example, the population is destined to decline, and the elderly economy will eventually come; for example, the price of gold is destined to rise; and for example, new energy is destined to replace traditional energy.
Some trends are told by history. We probably have to experience what developed countries have experienced. Some trends are told by the sense of mission of science and technology. When the theory of science and technology takes shape, it will usher in the moment of application transformation. Some trends, It is economic theory that tells us that currency issuance is easier than annihilation, and the price of hard currency can always rise.
But let’s imagine a question: If we believe enough in these irreversible trends, and believe that any ups and downs that hinder the trend are just small stones on the road, why don’t interest rates fall to the zero line ahead of schedule, why new energy and gold If the prices don’t rise to the sky, these asset prices still need to go forward so hard and tortuously.
2. Money and dreams: both are indispensable
The reason for the possibility is not that we don’t believe in these trends enough, but that,We lack money and stability。
1) To give an easy-to-understand example, in the past ten years, the yield center of 10Y government bonds has dropped from around 3.9% to around 2.8%. This process is destined to be related to the continuous issuance of currency. In the past 10 years, the size of M2 has increased by 1.7 times, and the bond assets allocated by commercial banks have increased by 12.5 times. It is precisely because of more money that we have sufficient funds for bond purchases to suppress bond yields. Imagine if 10 years ago, when we only had an M2 of just over 100 trillion, we asked for the rate of return to be lowered to below 3%, which was almost an impossible task.
2) Regarding stability, we also use bond assets as an example. Looking to the future, if everyone admits that zero interest rates are a long-term trend, it can be inferred that the rate of return in 30 years will be lower than that in 10 years, and even lower than it is now. If this prediction comes true, the 30-year yield will naturally be lower than the 10-year yield. How can it be possible that the spread between 30Y and 10Y is still positive, and the spread has not even shown a downward trend in recent years.
The reason why funds do not dare to invest in 30-year term varieties is that most funds need short-term stability, banks need to manage liquidity, and funds need to consider short-term net worth. This kind of low liquidity and high volatility varieties. The more essential reason is: If you go back to the root, 90% of the money is released from the creditor’s rights. The creditor’s rights themselves are time-limited contracts, which requires the debtor to use the funds within the debt period. Must be the first consideration.
When it comes to the stock market, the principle remains the same.
At the end of the Eleventh Five-Year Plan, we gave the strategic positioning of nine emerging industries, among which new energy vehicles are listed, which is indeed the case in hindsight. After the technology matures and business incubation, the average profit of the new energy vehicle sector is now 3.3 times that of 2010.
But it is obvious that the performance of the new energy vehicle sector in 2010 has not been mapped to today. The PE of the entire new energy vehicle sector in 2010 was 18.2 times. If calculated according to the profit in 2022, the PE level becomes 5.5 times. (The potential rate of return is 18%). This valuation level is low for any year. Then, we can only think that when the market priced the new energy vehicle sector in 2010, there was no price-in 2022 The high profit of this sector in 2009.
As for the reason, it was not that the market at that time was not optimistic enough. I did not expect the growth of the sector at this time. When the author was a new energy researcher, almost every practitioner mentioned the new energy vehicle sector, and they would describe the magnificence of new energy vehicles eloquently. Blueprint, imagine a new world in a few years when the new energy dynasty comes. It’s not that the investors at the time believed in the industry but didn’t believe in the company. Even though I didn’t know who could become the king of the sector at the time, it made no difference whether I bought the index or not the company.
Many people will use the Gartner curve to explain all this: You see, the curve of new energy vehicles is similar to the Gartner curve. Between the technology from budding to maturity, there must be a period of disillusionment, and then there will be an explosion of industrial performance . Then let’s change the question, why do we have to go through the bubble disillusionment period of the Gartner curve, instead of the valuation rising to the sky, and then waiting for the performance to be realized slowly.
The answer to this question is still the same, we lack money and we lack stability.
Even if we believe enough in the sustainable profit prospects of the industry in the next 50 years, the stocks in the industry cannot price-in all the performance of the next 50 years at once. The reason is simple. Even if the prospects of the industry are unlimited, the money in our hands will always It is limited. The stock price is restricted by the amount of funds and can only reflect the profit expectation for a limited time in the future. Therefore, we have also seen that the valuation of popular tracks in recent years has been very similar to the trend of stock index valuation. Yes: Even for the most popular track, macro liquidity must be taken into account when valuing it. This is the point where alpha and beta are integrated.
Also, stability is another consideration. Even if an investor believes in the company’s long-term profit prospects, he is not sure whether others believe in the company’s long-term profit prospects when he is speculating on the company’s long-term performance. The bright future of the track, amidst everyone’s mutual suspicion, no one dared to make a serious move, and everyone fell into a prisoner’s dilemma in a sense.
Relatively speaking, there are also some companies whose prospects are not as bright as these emerging industries and have limited space, but these companies are growing steadily. The company’s financial report will give you the answer. Therefore, in the process of confirming again and again, everyone does not have to be suspicious of each other.
Obviously, the investment stability of these companies with recent performance can be better than those companies that can only gain long-term performance. Even if there is not so much space, many funds prefer such companies. Conversely, for the tracks that everyone praises, when valuing these tracks, when the low-hanging fruits are picked, the valuation of the track should be further raised to reflect its longer-term future. At the time of performance, many funds fell into the prisoner’s dilemma and began to be cautious.
then,For funds, Bo’s long-term performance is equivalent to buying a super long-term bond。
3. Industry fluctuations that have nothing to do with the industry
If we admit the above discussion, then in the face of a deterministic track of emerging growth, we also understand some stories and logic that have nothing to do with the industry.
1) For us,A successful investment is not grasping the buying point, but grasping the selling point. Even if the direction is clear, we should think clearly about the selling point before investing real money. But let’s imagine, for a rising track, if there are no unprecedented difficulties in the technology or commercialization process, how can we consider the selling point from the technology itself.
For most tracks, the trend of the industry is smooth and firmly upward, but the fluctuations of stocks are full of twists and turns. The method cannot capture the selling point at all, as can be seen from the above discussion,The adjustment of most industries does not lie in the industry itself。
2) If one of our pain points is lack of money, thenLiquidity is indeed a problem that can affect the market. When there is a lot of money, we can look farther in the future. At this time, the stock can also calculate the profit of a longer period in the future, but once the money is low, the stock can only calculate the profit of a short period of time in the future. At this time, it is restricted by money. , the stock price cannot realize the subsequent further profits, and the stock price will start to adjust at this time.
3) In addition to lack of money, the principle of stability will also cause stock adjustments in emerging industries. For emerging industries, investment in emerging industries is long-term investment. Therefore, the investment stability of emerging industries will not change much in the short term. However,If there are clear investment opportunities in more stable stocks (such as opportunities for cyclical stocks brought about by the rise of the macro economy), then funds will quickly flow out of emerging industries and flow into more stable cyclical stocks。
So if you think about it the other way around, when will there be relatively reliable investment opportunities in these track stocks, there is only one answer, which isWhen a lot of money is desperate。
What is desperate? On the one hand, there is a large amount of funds in our market (this is determined by the bank’s credit allocation), and on the other hand, although there is a large amount of liquidity, the macro economy is still weak. When the above two conditions are met, it means that there is a large amount of funds that lack the opportunity to obtain stable short-term income, but there is pressure on income. Therefore, we can only give up short-term meat and invest in long-term soup.
For example, these funds have entered into ultra-long-term interest rate bonds, betting on a story that long-term interest rates will eventually decline, and these funds will also be squeezed into a relatively certain track, betting on a long-term rising industry space.
Therefore, what is relatively fixed now is that at a certain period of time in the cycle, people start not to talk about the present, but only to imagine the future, not to analyze the situation of the year, but to talk about the grand vision of the long-term. Behind this is the decline of macro-elasticity and Keynesianism continuation.
In reality, these have also become verifiable “science”.
For example, in the past ten years, we have experienced three times of “desperation” in funds. Once in 2014Q3-2016Q1; once in 2019Q1-2020Q1; once from 2021Q2 to now. The commonality of these three times is: the bank’s credit extension continues to accelerate, but the real economy is relatively weak, so the scissors gap between the two is in a state of upward and high growth.
In recent years, there have been three rounds of increases in the hot TMT valuation, all of which happened to be in this state. From the perspective of the industry, it is actually difficult for us to explain this market rhythm. It is impossible for us to think that technological and industrial breakthroughs can only be made in an environment where funds are desperate. Therefore, only liquidity can explain this fluctuation.
Even this rule will spread to the entire growth plate.
During this period, funds will also be concentrated in Bochao long-term treasury bonds. Although the 10Y yield is declining, the 30-year bond is falling more sharply than the 10-year bond.
This state is commonly referred to as asset shortage by the market. In the state of asset shortage, these long-term assets acquired by funds can also be called short-term unfalsifiable assets.After all, the investment logic of these assets is super-long-term logic, which cannot be falsified by one or two financial reports or one or two rounds of inflation.
4. “Unfalsifiable”: the current way of investing
There is no doubt that we are also in a state of asset shortageso we seized the relatively certain AI+ track, and even strengthened the integration and grouping among institutions to improve the stability of investment. We also told the story of the interest rate being zero for a long time when intermittently speculating on 30Y treasury bonds. It also grasped the concept of China’s special assessment. The large-scale settlement of funds and the ever-increasing valuation of central enterprises have in turn kidnapped the policy. In short,It is difficult to falsify in the short term, this is the way to succeed in current capital investment。
Even, we have stayed in the state of asset shortage for too long, and the grand narrative has become a habit. Some market trends that are not so certain and have nothing to do with the long-term have also been grandly narrated. For example, gold, the market is tirelessly telling the story of de-dollarization, but perhaps, there is no relationship between the recent rise of gold and de-dollarization.
Then, in the future, there are two ways to resolve this situation. One is that the economy has really recovered, and the monetary policy has been reduced accordingly, and the time when the money in the market is most abundant has passed; The speed of currency circulation has dropped sharply, but now it seems that both conditions are difficult to achieve in the short term.
therefore,The logic of asset allocation has not changed, and the focus of investment is still “unfalsifiable”。
From this point of view,Although the term and yield of interest rate bonds have been suppressed very low, we can continue to extend the long-term, flatten the curve, AI+ and China Special Evaluation, after a short-term adjustment, there will be a second round of market prices。
Moreover, what we want to say is: the inertia of this round of residual liquidity is particularly great.
For example, the speed of this round of M2 is much faster than the bank’s own credit issuance. This is a very rare thing in itself. From a mechanism point of view, it should be that many residents and companies invest their capital in high-risk assets The investment on the website has been recovered.
This has also led to the low valuation of track-type players like TMT. Then, if the subsequent interest rate drops further and the funds become more “nowhere to escape”, it is very likely that the valuation of these tracks will accelerate upwards. Bridging, although this is not the main logic, it adds a big safety cushion for the investment opportunities of track-type players in the future.
The author of this article: Guoyuan Securities Yang Weixuan and Meng Zijun, the source of this article: To our beloved bond market, the original title: “When Money Can Be Worthy of My Dream: The Cycle of Grand Narratives”
Securities analyst: Yang Weixuan practice certificate number S0020521060001 Meng Zijun practice certificate number S0020521120001
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