Berkshire Hathaway's shareholders' meeting, which is the focus of global investors, was held in Omaha, Nebraska, and Sina Finance had a conversation with Yang Delong, managing director, chief economist and fund manager of Qianhai Open Source Fund, at the shareholders' meeting.
Yang Delong told Sina Finance in an interview: "Buffett's value investment can be said to be a universal concept," Don't think that value investment is not suitable for domestic market investment because the domestic market has fallen sharply in the past few years. "In fact, the essence of value investing is to continue to advance, to choose a good industry, a good company, a good price, and the decline in the past three years has just made A-shares and Hong Kong stocks produce a good price, and now is a good time to do value investment. ”
He pointed out that recently, global capital has taken profits from the stock markets of Europe, the United States and Japan to find new valuation depressions, that is, signs of inflow into A-shares and Hong Kong stocks, especially the amount of inflows into Hong Kong stocks is very obvious. Hong Kong stocks have seen this surge for more than 7 consecutive days, gradually breaking through the 20% "bull-bear dividing line", that is, entering a technical bull market. Therefore, Yang believes that future investment opportunities may shift from European, American and Japanese stock markets to some high-quality stocks in A-shares and Hong Kong stocks.
Guest's golden sentence:
There will still be certain changes in the world situation in the future, but technology is also constantly advancing, and the history of mankind is always spiraling.
The theory of value investment with Chinese characteristics combines Warren Buffett's value investment philosophy with the reality of A-shares.
Warren Buffett is concerned about the emergence of a new technology, but it still has to repeatedly verify whether this technology can be used by human beings and whether it can produce great enterprises.
China's economy is now slowly recovering from its low point, which will also drive global economic growth, so the global economic situation will still improve to some extent in the future.
The following is a transcript of the interview:
Sina Finance: We know that Yang is always a frequent visitor to our conference. Compared with previous years, do you feel different about this year's Buffett shareholders' meeting?
Yang Delong: Now, the general meeting of shareholders of Bart has just ended, and this is the sixth time I have participated in it. Warren Buffett is 94 years old this year, but he still has a clear mind and witty words. After listening, I have a clearer understanding of the future economic development, market changes and the direction of investment. This year is also the first conference after Munger's death, so without Munger's participation, Buffett still expressed this sadness at the meeting. And what touched everyone was that at the beginning of the meeting, a VCR was played, showing a slice of Munger's life, and after the show, Buffett asked the lights to turn on, and then all 40,000 people stood up together to pay tribute to Munger.
It can be said that without Munger, Berkshire would not have achieved its current achievements, which is what Buffett himself said, reflecting Munger's great significance to the formation of Buffett's price concept.
Now that Munger has passed away, Buffett will continue his previous investment style to do value investing, and made it clear at this meeting that he may hand over more investment decisions to his designated successor Greg Abel in the future. So in the future, can Greg Abel fully inherit the mantle of Warren Buffett, inherit the value investment and carry it forward, and continue to continue the investment myth?
Sina Finance: In the context of the current global economic situation and market changes, can we continue to invest in value?
Yang Delong: Warren Buffett's value investment can be said to be a universal data concept, and it is not only applicable to a period or a certain country. Not only U.S. stocks are suitable for investment, but also A-shares and Hong Kong stocks. Don't think that value investing is not suitable for investment in the domestic market just because there has been a relatively large decline in the domestic market in the past few years. In fact, the essence of value investing is to continue to choose good industries, good companies, and good prices, and the decline in the past three years has just caused A-shares and Hong Kong stocks to produce a good price, and now is a good time for value investment.
Warren Buffett has always been an optimist, saying that the U.S. stock market has experienced many crashes and recessions in the past 100 years, but in the end those stocks have hit new highs, and the indices have hit new highs, and they have brought a huge return.
So every time there is a stock market crash, it is actually a gift from God to value investing. There are still certain changes in the world situation in the future, but technology is also constantly advancing, so the history of mankind will always spiral. Therefore, at a time when the capital market of the mainland is in a general position in history, we should learn the concept of value investment and maintain confidence and patience. We have to believe in the fortune of the country, and believe that China's capital market may usher in a round of attrition, and good companies will eventually innovate.
Sina Finance: We know that Qianhai Open Source adheres to the investment philosophy of research to create value, what is the same or different from Warren Buffett's value investment?
Yang Delong: In the past 11 years since the establishment of Kaiyuan Fund, we have been adhering to the concept of value investment, and it can be said that advocating value investment is not only what I have been telling you, but also we have been practicing the concept of value investment in practice. So in the last 11 years, we have achieved this growth in AUM from 0 to more than 100 billion, seizing the opportunity of several important inflection points in the market in the past 10 years.
So what is slightly different from Warren Buffett's value investment is that we combine the reality of the A-share market to be a price company with Chinese characteristics. For example, the A-share market often has mispricing, which rises very high in a bull market, has a large bubble, and falls too much in a bear market. Therefore, while insisting on being a good shareholder of the company for a long time, we will reduce our positions in advance when there is a relatively big bubble in the market, for example, when it was 5,000 points in May 2015, and successfully achieved the escape from the top, which is also the point of Qianhai Open Source's fame.
So at the low point of the market, for example, there was a monopoly in the market at the beginning of 2016, and many investors were not confident, so we ended the months-long short period and increased our positions across the board, and after the trade friction in 2018, we increased our positions in October of that year when the market was at its lowest. The most recent example is that when the market continued to decline last year, many people did not have confidence, Qianhai Open Source Fund with 580 million of its own funds and shares, with real money to show our attitude, that is, when the market is extremely pessimistic, good assets are discounted, we must dare to sell. I call it the theory of value investing with Chinese characteristics, that is, the combination of Warren Buffett's value investment philosophy and the reality of A-shares, which may be more suitable.
Sina Finance: We see that Qianhai Open Source has done a very good job in forward-looking layout and grasping industry rotation opportunities. So in the face of today's global economic uncertainty, what risk management strategy do you recommend?
Yang Delong: After three years of adjustment in the current A-share market, in fact, many high-quality stocks have fallen out of value, and the price of many stocks is only 3 or 4 percent off the high point, or 5 or 6 percent off the high, which is relatively low. And now the intensity of the policy is increasing, and the expectation of economic recovery is also increasing. A-shares and Hong Kong stocks are expected to start a slow bull market, and this driving force is the control repair of good companies. So from the perspective of the main line of investment, I think there are three main lines of investment this year.
The first is that the valuation of these wrongly killed high-quality leading stocks has been repaired, even if it is repaired to a high point of 6% or 7%, it may be almost double the current price, and if it can reach a new high in the next two or three years, it may be 3 times the potential return.
Then the second main line of investment is that we see some stocks with low valuation and high dividend yield, because there are stable dividends, and after the announcement of the National Nine Articles, everyone attaches great importance to cash dividends, so such high dividend yield stocks will continue to perform.
The third is that these leading technology stocks, represented by AI, may become the direction of the main data for economic transformation. These technology stocks, especially those with core technology and performance support, will also usher in a better opportunity. However, some junk stocks, theme stocks, and concept stocks will fall more, because the new national nine clearly encourage everyone to do value investment, stay away from those garbage that may have the risk of delisting, and severely crack down on some financial fraud and malicious shell protection, which will make the concept of value investment more deeply rooted in the hearts of the people, so that the A-share market is also expected to be more mature.
Sina Finance: As you just said, there will be a lot of opportunities in the field of AI, and we also know that Pa Lao has a cautious but optimistic attitude towards artificial intelligence. He believes that this technology can have a long-lasting impact on society and the economy. Given the rapid growth of the AI industry right now, how do you see the opportunities in this industry?
Yang Delong: Then at this shareholders' meeting, some investors asked Buffett's views on AI, and whether Berkshire Hathaway's investment direction will be invested in AI? And then Buffett's attitude is the same as what he said at last year's shareholders' meeting, first of all, the development of AI, which is a manifestation of technology, which may have a great impact on our work and lifestyle, but it is an opportunity and a challenge for us. Warren Buffett even compared the emergence of AI to the emergence of the atomic bomb, which, if not used well, could lead to a catastrophe for humanity. Bill Gates and Cook both came to the scene this time to cheer, so Bill Gates showed ChatGPT to Buffett in advance, and then Buffett asked ChatGPT The first question is when are you going to destroy humans? ChatGPT gave Buffett a bunch of explanations and justifications, but Buffett said I still decisively unplugged the power. It can be seen that Warren Buffett is concerned about the emergence of a new technology, but he still has to repeatedly verify whether this technology can be used by human beings and whether it can produce great enterprises, and then he will invest.
Just like Apple, he didn't invest in the early stage, and only when Apple's market value exceeded $1 trillion and it was already the world's largest market capitalization company, Buffett began to invest. But because it can be heavily positioned at this time, nearly half of Buffett's positions in equity investments are Apple, so Apple has brought it hundreds of billions of dollars in fees and achieved great success. So in terms of AI investment, I believe that if some great companies are established in the future, Warren Buffett may also invest. According to some recently disclosed information, Berkshire Hathaway's companies have invested more than $30 million in AI-related stocks. Of course, this amount of money is still a drizzle for the entire Berkshire Hathaway asset of $700 billion. But in the future, if the great development of AI may bring more of this company, then his fund managers may invest, because after all, Buffett has now handed over the main decision-making power to the new generation of fund managers like Greg Abel, then they may have a deeper understanding of technology and AI, and may increase this investment in the future.
Sina Finance: Our last question is what are your predictions for the global and Chinese economy in the next few years?
Yang Delong: I think that after the global economy is now affected by local turmoil, and the Federal Reserve has raised interest rates violently for 11 consecutive times, the benchmark interest rate is relatively high, reaching a high of 5.25%-5.5%, plus some debt crises in some countries, so the future economic growth will definitely be twists and turns. But the good news is that the Fed is likely to start a rate cut cycle in September, in which case the dollar index may retreat, and the non-US currency will recover somewhat. China's economy has now slowly recovered from its low point, which will also drive the growth of the global economy, so the future situation of the global economy should be said to be somewhat improved.
From the perspective of the global capital market, the stock markets of Europe, the United States and Japan are now at historical highs, and many stock prices are already at record highs. A-shares and Hong Kong stocks are a major valuation topic in the world, so we see that global capital has recently taken profits from European, American and Japanese stock markets to find new valuation depressions. That is, the signs of inflow into A-shares and Hong Kong stocks, especially the amount of inflow into Hong Kong stocks is very obvious. Hong Kong stocks have risen sharply for more than 7 consecutive days, and gradually broke through the 20% "bull and bear dividing line", that is, entered a technical advantage. Therefore, I think the future investment opportunities may shift from European, American and Japanese stock markets to some high-quality stocks in A-shares and Hong Kong stocks.