Today I would like to discuss two topics, one is about the US market, which is a question that everyone is very concerned about: when will the dollar cut interest rates, and what will be the impact if it does not cut interest rates?
The second theme is about cross-border ETFs, which have been a topic that has been updated recently.
Investment opportunities in the intertwined rise and fall of U.S. stocks
First of all, on the issue of the US dollar rate cut, the inflation situation in the United States is more stubborn than expected. As Wall Street continues to revise various inflation-related statistics, the original forecast for the Fed's rate cut path is also changing.
Last year, when the Fed stopped raising interest rates, the consensus was that it could cut rates four times, five times, or even six times in 2024. But at the moment, such predictions are becoming less and less common.
We are already entering the first month of the second quarter, and there is less and less talk about the possibility of a rate cut. The most optimistic view is that rate cuts could start in July, followed by one in September, one in December or one in November.
The more neutral view is that the inflation problem in the United States will not be so easy to solve, so it is expected that there may be two more rate cuts before December at the end of the year, or even only one.
Over the past few days, several senior figures in US investment banks, albeit in the minority, have been discussing the possibility that the US benchmark interest rate could rise above 8%, while it is currently at the level of 5% to 5.25%.
In this case, the US stock market began to show a trend that was neither easy to fall nor easy to rise, showing a state of bullish market that lacked momentum. This situation should reflect the current macroeconomic situation in the United States.
If the roadmap for U.S. rate cuts is really as predicted by Wall Street, with three or two rate cuts likely this year, then the U.S. stock market may still have some upward momentum.
Because every interest rate cut will have a positive impact on the capital market. However, with the likelihood of a rate cut now seemingly decreasing, what should investors do? They may only be hoping that the US-listed companies will release some positive news that exceeds market expectations.
Nvidia has become a model in the first half of the year, but now its stock price is fluctuating around $900 and is encountering significant resistance in its attempt to break through $1,000.
Some Wall Street analysts have suggested that Nvidia's best golden age may be over, and its stock price may fall to $200 in the future. At the current share price, this means a potential drawdown of more than 80%. Is this possible?
As bystanders, we can only wait and see. The U.S. stock market has now almost completely entered a wait-and-see phase, and operations have become very difficult. The U.S. policy of raising or cutting interest rates has actually limited the upside potential of the U.S. stock market.
If there is a similar "black swan" event at the moment, then it will certainly cause a greater correction in the US stock market. So in the current situation, I think investors can only stay on the lookout and be cautious in the stock market.
Cross-border ETF investment premium risk needs to be vigilant
I pay more attention to cross-border ETF investment, and there are two things that deserve your attention recently.
The first thing we pay attention to is that in the operation of public funds in the A-share market, there are two managers, one is a male manager and the other is a female manager.
This male manager has been backlogged in the industry for many years, and almost all mutual fund managers are sought after and are known as Internet celebrity managers. When he is popular, you may not be able to buy his funds smoothly, because the daily subscription volume may sell out quickly.
Recently, a financial media conducted statistics on this male manager and found that the funds he managed in the past three years have lost 10 billion in each of the past three years, and the cumulative loss in three years has reached 30 billion.
Another female influencer fund manager, who graduated from biology, has lost more in the past decade. The only contribution she has made to the company may have been through her popularity and influencer effect to attract a large number of residents to subscribe to the fund, generating billions of subscription fees or management fees for the company.
The dilemma faced by these two star managers does not match their earnings. This situation is also a norm on Wall Street, because in the US investment market, it seems difficult to find a second place for someone who can be undefeated for a long time, or has a small chance of failure, other than Warren Buffett.
Even the star fund manager, known as the "wooden sister", performed well in good times, but in the first year, two or even three years, part of her Ark fund lost to the S&P 500 index.
We shouldn't expect too much from fund managers. It is challenging to outperform the so-called general trend in the market.
If you can outperform the market within one year, it is already a very good result, and those who have outperformed the market for two consecutive years are the best, and those who can continue to outperform the market for more than three years have become a rare variety. I think it's very common for investment performance to be good and bad.
Because according to statistics, even on Wall Street, fund managers who can enter the top 10 in one year can continue to be found in the top 10 in the next year, which is rare for decades.
Therefore, I would like to offer you another view on cross-border ETFs: instead of looking for celebrity managers, influencer managers, or so-called popular funds that everyone is looking for, it is better to invest directly in index funds.
This is related to the investment of the fund, but also to the investment of cross-border ETFs. In our country, there are some very well-known private equity bigwigs, who have won most of the nearly 20 years of their investment career. Recently, they made their private equity portfolio public.
Now there are a couple of very high-profile private equity fund managers, who are arguably the top names in the private equity space, and all of a sudden they are increasing their holdings of cross-border ETFs.
Because it is difficult for these private placements to obtain a license to invest in the world, they are more like individual investors, investing by buying cross-border ETFs that can be purchased in RMB in Shanghai and Shenzhen.
Judging from the behavior of these private equity bigwigs, some of the funds they originally used to invest in the Shanghai and Shenzhen stock markets were used to buy cross-border ETFs, and they are still in the process of increasing their positions.
From a financial point of view, if you choose to buy a cross-border ETF, then it means that you give up the opportunity to buy other stocks in Shanghai and Shenzhen. Judging from their current profitability, there are also different performances.
Some private equity bigwigs choose to increase their positions in cross-border ETFs that invest in the mainland and Hong Kong markets, while others mainly buy cross-border ETFs that focus on the U.S. market.
Buying cross-border ETFs in the Hong Kong market and the U.S. market, judging from the current report card, there should still be a big difference. As we all know, the main battlefield of global investment, or bringing more profits to investors, is still in the US market.
Recently, there has been an article circulating in the financial circles that discusses which investment varieties perform best after more than 50 years if $100 is invested in different varieties from the 70s to the present. This is discussed in detail in the article, and after a cursory glance, I found that stocks are still at the top of the list.
The article points out that neither buying gold nor investing in bonds performs as well as investing in stocks. This reminds me of how many investors have recently bought gold through ETFs and invested in gold ETFs.
Gold ETFs seem to have appeared in the Shanghai and Shenzhen markets in China, and recently there has been a significant phenomenon, that is, there has been a large premium, even reaching more than 30%.
The price of gold itself has risen and fallen, sometimes experiencing important corrections and sometimes reaching new highs. However, the gold-backed ETF saw a 10% daily drop in the limit, but its premium remained above 10%.
This illustrates a problem that we often encounter when investing in cross-border ETFs, including the current situation where a significant number of cross-border ETFs are traded at a premium when traded on the exchange. Therefore, I have always reminded everyone that as long as there is a premium in the ETF, it should not be bought in principle.
If an investment is held in a company for a long time without dividends, then you would rather give up and not invest. As an investor, Warren Buffett has the so-called "true meaning" in his investment philosophy. Someone asked Warren Buffett, is there a simple and easy-to-understand investment secret?
Warren Buffett replied: "Don't lose money, control your capital." Later, someone continued to ask him, this is the first sentence, so is there a second and third investment maxim? Buffett replied, "My second sentence is to ask you to remember the first sentence, and the third sentence is still the same." ”
Now, another sentence has been added to the market circulation: I'd rather not do it than do it wrong.
I think what I'm talking to you about today is actually about investing in cross-border ETFs. Not everything can be bought, we need to see which market it is linked to.
Also, when you're planning to buy, be sure to have a clear idea of whether the price you're buying contains a premium, and if it does, don't buy it.
Author: Li Guangyi
Editor: Zhang Tianyi
Producer: Wang Junji
This article is the exclusive content of the WeChat public account of "CBN Broadcasting", please contact the background for authorization before reprinting. The individual stocks involved in this article are for reference only, and are not recommended for trading and are not responsible for personal income.