Fu Peng's internal speech at HSBC Private Bank --- November 24, 2024

HSBC Private Wealth Planning

Xiyue Family·Zhenxiang Salon Shanghai Station

(Shorthand transcript)

Date: November 24, 2024

Location: Oriental Hall, LG1, Mandarin Oriental Hotel, Pudong, Shanghai

Host: Ladies and gentlemen, distinguished guests, my name is Chen Jiahao (sound), and I am the general manager of HSBC Private Wealth Planning Shanghai. On behalf of HSBC Private Wealth Planning Shanghai, I would like to welcome you all.

There are many new friends and old friends today. On Friday, I asked my colleague in the backstage how many people had signed up, and he told us that it was almost 200 people. But judging from the scale today, I feel like the number of people today may be even higher.

Of course, some of them are old customers, and many of them came here because they saw that Mr. Fu Peng was invited this time. There are also some new friends. Before Mr. Fu Peng takes the stage, please allow me to give a brief introduction to HSBC Private Wealth Planning.

HSBC Private Wealth Planning is one of HSBC's global strategic priorities. Old friends all know that HSBC Private Wealth Planning was established in 2020, exactly four years ago. During these four years, the group has been investing heavily in us. It is also one of the most important projects in the group.

Why focus on the Chinese market? Many people know that China has the largest number of middle-class people in the world. With the rapid development of China's economy, the demand for wealth management among Chinese people has gradually increased to a very high level. Therefore, private wealth planning will also become one of HSBC's important strategies.

Let me introduce the development history. HSBC Private Wealth Planning was established in 2020, first in Shanghai and Guangzhou. The headquarters is not far from here. HSBC headquarters is in Guojin. Welcome everyone to visit. Gradually entered Hangzhou, Shenzhen, Beijing, Foshan, and opened branches in Suzhou and Chengdu this year.

HSBC Private Wealth Planning was just established in 2020, so what is the history of HSBC? HSBC is abbreviated as HSBC. Many people will ask what the four letters of HSBC stand for. I can briefly introduce it to you. H stands for Hong Kong and S stands for Shanghai. Many people think that HSBC is a foreign bank, but in fact, what everyone does not know is that HSBC has established its headquarters on the Bund during the Qing Dynasty. Now this building has been handed over to Pudong Development Bank. After 1949, HSBC withdrew from China for historical reasons and returned to China after the WTO.

HSBC was founded in 1865, during the Tongzhi period of the Qing Dynasty. At the same time, it has more than 3,900 customers in 62 countries around the world. This history and such a large distribution are also the pride of many HSBC colleagues. When we communicate with many customers, we often bring up this history to tell everyone, just like this stone lion. Many people have seen it, but many people don’t know its history. Many people have seen this stone lion on posters, advertisements, and Hong Kong dollar bills. There used to be two on the Bund, and now they are placed in the Shanghai Museum. I saw these two stone lions when I visited the museum a while ago. There are still many historical traces on them, such as bullet holes left by the war. They are in the museum in People’s Square. If you are interested, you can go and have a look.

The wealth matrix and the Chinese mainland market, HSBC Group attaches great importance to China's private wealth planning business, which plays a very important role in the big matrix.

87 out of every 100 customers regard HSBC Private Wealth Planning as an important brand in providing wealth services and give it many positive comments, with 82% of the respondents giving it a high score of 9-10.

There are also some interesting comments, such as: "I am satisfied with the product content and the company is very secure; Zhenhui Life has a certain appeal, HSBC's products are more expensive but I am willing to buy them because I recognize HSBC's private wealth planners."

In the past two years, a new slogan has been proposed: "Understanding your concerns and giving you peace of mind."

We have invited a heavyweight guest to today's event. He has worked in top global financial institutions such as Lehman Brothers and Salomon Investment Group, and has been engaged in hedge fund and other related work. He is Mr. Fu Peng, Chief Economist of Northeast Securities. Let us welcome Mr. Fu Peng to bring us the theme sharing of (2024 Year-end Review and 2025 Outlook - Hedging Risks VS Soft Landing). Please welcome Mr. Fu Peng!

Fu Peng: It is the end of the year. Although HSBC has been emphasizing that everyone should not record or record audio or video, it is highly likely that you cannot stop it. I will be more cautious when speaking here. It is highly likely that someone will leak it and put it on YouTube. Basically, everyone who sees me says, "Mr. Fu, I have seen your videos on YouTube." I say that they are all pirated, and there are many people who have made fortunes by piracy.

The content I share with you today is basically official, with more reviews and less prospects, because after this month's prospects, what should we do next month? Some of the words seem very simple to me. In essence, we started out as a hedge fund, so our overall logical framework has a strong continuity. We don't discuss it this year or next year.

Inertial thinking Since 2016, I have been emphasizing to everyone that the world is completely different. Of course, after the past few years, I believe that everyone here should have a deeper understanding of these words.

2016 was actually Trump's first election in the United States. I have a characteristic. If I think there is an investment opportunity somewhere, I will go to the front line to research it as soon as possible. I don't like watching YouTube, and I don't like to dig up information online. Of course, you will say that ChatGPT is very powerful now, and artificial intelligence seems to be able to help you solve many problems, but have you ever thought that a lot of information that may be widely circulated or widely disseminated may be wrong. This is what I felt most deeply after returning from my research in Japan in 2012.

Of course, there is an important person in Japan, named Benson, who will soon become very familiar to everyone. At present, he should be the US Treasury Secretary nominated by the Trump administration. Benson was originally the actual controller of the Soros Fund. Because Soros is already very old, he just handed over the fund's business to his son Alexander last year, but before that, the most important battles were essentially led by Benson.

In 2012, when I went to Hong Kong from Beijing to meet friends for dinner, the Soros Fund's Hong Kong office told me that Benson went to Japan from here. I said OK. I often say "Stand on the shoulders of giants to look at problems."

Of course, you know, the scariest thing about netizens is that Buffett is "SB", Soros is "SB", and I am the most "awesome". You have to remember that all their behaviors must have changed a lot. Many people may not know that Buffett went there for the first time in 2011. We were talking about the Fukushima nuclear power plant leak and seafood could not be eaten after nuclear waste water pollution. An 80-year-old man went to Japan to eat seafood despite the nuclear radiation leak. Of course, why did he go to Japan? This is actually very critical.

After we went to Japan to do research and came back, I told many people that Japan was changing, and Japan's interest rate structure would change accordingly, including Japan's securities market. This year, Japan's stock market finally came out of these 35 years and set a historic record.

But many people on the Internet are still saying that they don’t seem to see anything in the economic data. This is what we call “information gap”, because sometimes you know that people’s understanding of society and the economy is based on inertial thinking. In the past few years, I often popularized the understanding of Japan. Many people always think about economic growth. Is there a possibility that it is also good without economic growth? For example, after China’s reform and opening up in the past 30 or 40 years, we are used to economic growth. If the economy does not grow, we will be very sad. Have you ever thought of a way to eat more cake without growth? The answer is distribution. Why do you always think about division of labor, hard work, work, work, make money, and growth? Is there another possibility of redistribution?

Why do you have to understand Japan more? In my opinion, the pie has remained the same for the past 30 years, but the fundamental reason for the rise in the long-term interest rate is that young people can eat more. Why can young people eat more? Do you know what the death data of Japan was in 2012? Have you noticed the changes in its population structure? Until today, you suddenly found that in Japan, the applicants sit at the bottom and the recruiters stand at the top? Don't worry, China is not a problem of recruitment now, but a problem of HR firing people. What is the root cause of this change? In fact, many people just think inertially, and you may not understand the world.

A lot of changes have taken place in the past 40 years. Starting from 2016, China is no longer the China of the past 40 years, the United States is no longer the United States of the past 40 years, Japan is no longer the Japan of the past 40 years, and Southeast Asia is no longer the Southeast Asia of the past 40 years. The logical framework of your capital operation is undergoing tremendous changes. At this moment, if you keep thinking in the past, you will not understand what I am talking about.

I can only say that everything depends on fate. I don’t need to say “Mr. Fu is talking nonsense, I don’t agree with him”. It doesn’t matter. If you can understand it, then you will understand it. If you can understand it early, then you will understand it early. If you understand it early, you will be able to follow this thread to get the great changes that have taken place in the world after 2016.

In the latest US election, Trump came back to power, but this time he came back different from the one in 2016, because he became more right-wing than in 2016. The major political shift in 2016 was essentially anti-globalization and right-wing. In 2016, I edited a version of my own manuscript, but I didn't have the time to publish it that year. Last year, because our child came back and started a media company, in principle, I gave the manuscript to him as part of the publishing business of the media company. This is what you saw later (witnessing the tide). But this book is incomplete. The full text is nearly 700,000 words, and you only got 500,000 words. Almost 200,000 words were deleted in the middle. These 200,000 words are actually very critical. They involve our core framework of the top-level logic of the world's major asset classes. What is the pyramid? The bottom layer is all our assets and markets. The market is actually at the bottom of the framework. The rise in housing prices and stock prices that everyone wants to ask about every day are actually at the bottom of the pyramid.

Some people say that macroeconomics is very important, especially after the subprime mortgage crisis in China in 2008, Chinese investors began to change dramatically. Before the 2008 financial crisis, most Chinese investors talked about "catching dragons" and how to catch the daily limit. But the 2008 subprime mortgage crisis and the global impact made many people engaged in financial transactions and asset transactions begin to realize that the global financial market is like this and is interconnected. From that moment on, real finance began to take root in China.

Some people have begun to realize the importance of macroeconomics. Of course, among the 36 chief economists in the current team of chief economists of the China Securities Regulatory Commission, I have always said that I am the least serious one, because I am not an academic, nor do I come from the government. I am on the front line of the market, and our understanding of many issues is completely different.

Two days ago, on Fox News, Benson and several Nobel economists were arguing about the role of tariffs. Suddenly, you found that a person who stands from the market perspective understands what role tariffs play as a tool, and what those old scholars say, or even what you see on the news broadcast, that "American imperialism imposes tariffs, making people live in dire straits." You will find that if you are smarter, you will know that many things are not right. This is the difference. This time, Trump's first group is the real power group, the second is the all-killing group, which can be understood as the right-wing trend has no restraint at all, and the third group is all the doers. Guess what the result will be? This battle is not easy to fight, and it is even harder to win than the 2016 election.

What is above? Some people say that we have finally come to politics. Yes, above is politics, the Democratic Party, the Republican Party, and changes in global politics. But what is at the top, at the core of the pyramid? It is actually ideology.

I teach many researchers not to blindly make simple comparisons when studying the world economy. I think many research reports will make such mistakes, making comparisons with the 1970s and 1980s at every turn. This kind of comparison is purely to fill up the word count in the report. From my perspective, I would not just tear up the report and throw it in the trash after reading it. I actually feel sorry for these securities researchers. Why? They have to write a report for every event, and the report is tens of thousands of words. It's so hard, but no one reads it.

What is the top-level generational gap, or the cyclical generational gap that everyone often talks about? Remember that the top-level generational gap is ideology. The development of social politics is essentially a cycle of collective ideology, which is the "left" and "right" in the ideological and political courses that everyone has learned. The changes in these things are the biggest changes in the world economic cycle.

What is the current situation? The words of the great leader are very correct. The great changes that have not happened in a century are basically the end of a complete cycle from the Great Depression in 1929 to the end of World War II. The world has gradually developed from the extreme right wing in World War II to the center right, then to the center left, and then to the extreme left wing in the past 20 years, and finally led to the right wing again. This world is very interesting. No direction is absolutely correct.

I have always warned everyone not to argue online. I stand on the left, you stand on the right, PK, and discuss who is the most awesome and who is the most correct. No. It's like you want to find a girlfriend who is beautiful, has long legs, big breasts, a thin waist, and has money and loves you very much. You think too much, just pick one, where is perfectionism? The final result is that the movement will affect politics, and then the economy, and then the financial market. Remember the logic of the pyramid.

Most of the time we don’t need to care about the top level because, in the past hundred years, the direction of the top level has been fixed, moving from the extreme right to the left. So when the direction of the top level remains unchanged, the following set of operating logic will be formed.

For example, take the United States as an example. You should have seen Ray Dalio's book on the debt crisis. There is an interest rate curve in it. Our interest rate was 0 before World War II. It peaked in the 1980s. From the subprime mortgage crisis in 2008 to the epidemic, the interest rate reached 0 again. What does the low point of interest rate mean? Why has the low point of interest rate always been the starting point of war in the past 100 years of history? There is a reason, because the essence of interest rate is actually the gap between the rich and the poor. The lower the interest rate, the greater the gap between the rich and the poor. The higher the interest rate, the smaller the gap between the rich and the poor.

Of course, each of us follows our own thinking. For example, everyone holds a lot of financial assets and a lot of leverage in their hands. I can tell you that you always shout that low interest rates are right, just like everyone’s understanding of the United States. You always believe that the logic of the United States in the past 40 years is that interest rates cannot be raised. If interest rates are raised, the country will collapse, and if there is a collapse, interest rates will be lowered. Interest rates will always be low, and the US dollar will always be the borrower and lender of Carry, but you have never thought that this logic will change.

A few years ago, when I was talking to many people, I said, "Remember this: China's interest rate has changed from high to low, and overseas interest rates have changed from low to high. The so-called "few cents" are still saying that Mr. Fu said what the high interest rate is, and 4-5 is a high interest rate. What is the low interest rate? Is there a big difference between 0, 1, and 2? No, this is the key point. Some people said that they had to correct it, and turned my words directly into what Mr. Fu said, China will not raise interest rates, and will always lower interest rates, and the United States will always raise interest rates and will never lower interest rates. Lower a little, increase a little, increase a little, and lower a little. Isn't this very normal? For example, if Trump comes to power, will there be another kind of surprise next year? For example, if the rate is reduced by 50, reduced by 25, and returned to the level of 4.75 or 5, it will suddenly rise back to 5.25. Isn't this normal? The entanglement between 4 and 5 is not important. What is important is that it will not return to 0, 1, or 2. This is very critical.

For labor, interest rates are critical. If the rise in interest rates comes from the growth of labor income, this is a good thing. Think about China. If you go back 20 years, were interest rates high? Did you feel uncomfortable at that time? No. Are interest rates low now? Are they low? Do you feel uncomfortable? Yes. Why? So you need to know whether you get income through labor or through capital leverage. Your feeling about interest rates is completely the opposite.

However, when the whole society discusses the rich and poor, the rich and poor are mainly discussed from the labor value. Simply put, those who deliver takeouts and run Didi every day are the lost generation. In the past 20 to 30 years, those who rely on labor are the eliminated generation. There is no way, this is the inevitable result of social development. However, when the pressure of this contradiction is great, it will turn into a social contradiction, and even through votes, it will be transformed into an impact on politics and ideology. Therefore, when the rich and poor reach extremes, they will definitely be corrected. Whether it is the extreme left or the extreme right, there will be contradictions in the end. This is the law of social operation.

This round of big cycle that has occurred in the past 100 years is a complete cycle. In 2016, it was called the Sino-US trade war on the surface. On the surface, it was the so-called confrontation and game between the two major countries of China and the United States. In fact, it was a display of internal contradictions in various countries around the world. Internally, it was internal distribution, and externally, it was external distribution. In this context, the risk of war will increase.

Two days ago, we also saw the first use of an intercontinental ballistic missile in human history, except that there was no nuclear warhead on the front. Do you think this thing is still far away from you? Our generation can be said to be a happy generation, but our generation will also experience an unusual major change that has not been seen in a century.

When many people think about the world, they really shouldn't think that we can go back to the past. We can't go back. The era of global inclusiveness and integration, continuous left-wing advancement, and continuous globalization has completely ended in 2016.

Many people made a wrong judgment in 2016, thinking that 2016 was just a trade war. After I came back from a two-week research trip to Washington, I told many people that it was not a trade war. It was not about which party, the Democrats or the Republicans, would be gentle with China. No, it was a consensus between the two parties. The only difference between the two parties was that I was a little left of you and I was a little right of you, but we were both going to the right. The core of the change in American politics is that the pressure on China is the same regardless of whether it is the Democrats or the Republicans. It's just that one of them has more pressure and the other has less pressure, and one of them has more pressure in diplomacy and one has more pressure in economy. That's all.

It is also troublesome for China now. In the past 1980s and 1990s, the West was constantly accommodating and integrating right-wing trends, while China was also constantly moving to the right. Of course, this does not refer to China's right-wing tendency. Please note that the concept of the Western right wing is completely opposite to that of China. Don't think it is wrong. If you think it is wrong, you should first understand what is the left and right, the left-leaning right-leaning, and the left-wing right. If you cannot understand this, you must have completely reversed the left and right in the framework of China and the West.

China is also moving towards tolerance and integration, so we have a series of operations such as market entry, WTO, reform and opening up. I often say that girls in the family are born right-wing. The right wing has a typical feature. The right wing can be called populism, nationalism, patriotism, and the extreme right wing can be called Nazism. But the characteristics of the right wing are very obvious, "I am not wrong, it's all your fault", this is the right wing.

Lesbians in the family are born with it. Of course, I am not discriminating against you ladies. This is in your DNA, in the two Xs. If the boy in the family is left-wing and the family is happy, what does it mean? "Wife, it's okay, it's all my fault." The boy is left-wing, and the family is very good, left + right.

If both men and women are left-wing, it would be extremely happy. When the boy comes home, the girl puts down her slippers and says, "Honey, play games for a while. I'm cooking. I'll call you to wash your hands and eat when it's ready." The boy really goes to play games, and after dinner he says, "Take a break, watch some TV, I'll wash the dishes." You must not be a straight man who throws the pot away and goes back to play. No, after a long time, she will become right-wing.

At this time, you also show left-wing characteristics, and your family is integrated. If there are two right-wingers in the family, it's all over. It's all your fault, not mine. Why do you say it's my fault? It's your fault, you did it wrong. Generally speaking, there is no good combination when a straight man meets a girl. Two right-wingers will fight, and fight until divorce.

Don't think that this is a discussion about family and marriage, it is also a discussion about the country and the world. When the combination of countries and countries is all left-wing, it is an excellent historical environment for tolerance, integration, and global growth. When it is all right-wing, it is a war.

What is our big problem now? It is here. Over the past five or six years, the whole world has gradually become right-wing. The characteristics of right-wingization, the importance of politics, the return of votes to tradition, and the anti-immigration characteristics have been reflected.

I have said before that the world's famous trade in the past two years is "long the United States, short Canada". The reason is that Canada's small potatoes have been ruined by letting so many Indians in. What is Canada's core contradiction? Economic growth has created five cakes. Originally, Canadian citizens could eat one each, but now 10 Indians have been let in. Canada's problem is distribution. When the distribution is not enough, it will definitely tend to be conservative, right-wing, and anti-immigration.

It's the same in all countries. In the 1970s and 1980s, Britain was anti-Chinese, and now it's anti-Muslim. This is normal. The turmoil in the world is not simply reflected in simple assets. The UK introduced a new policy two days ago. In principle, if you are not a British citizen, you have to pay inheritance tax, and the British government will also collect inheritance tax from you. I have told many rich people before that they should stop thinking about tax avoidance every day. It's okay to hide some private money when you are inclusive and integrated. When everything is right-wing, you will be finished if you hide private money. What is the big problem in the world now? Find a place with a low tax rate and pay what you should pay. When Trump came to power, 20% was legalized as long as you were willing to return to the United States. How much capital did you see flowing back? So you know the general framework and characteristics of the left and right wings. This is the real essence of my book, but it was deleted.

If you understand it, and you can penetrate it into the economy, interest rates, and assets, you will understand it clearly. This is the essence of major asset classes, the real essence. If you want to ask who created this thing, Soros and Benson and his group, the overall framework is the same for everyone.

What am I talking about? Actually, I am talking about reviewing, because from that moment on, several problems have been exposed one after another. The United States is undergoing reconstruction, and the direction will continue to be reconstructed after Trump came to power. This actually involves why the Democratic Party is wrong, why many of the Democratic Party’s policies are extremely left-wing, and why left-wing policies are not necessarily right, and why the right wing has led the United States into an environment of increasing inflation and interest rates.

Some Chinese people have ideologies. I can only say that as global investors, the best choice is to have no ideology. For me, I know very well that the left has its own problems and the right has its own problems. The left has its own advantages and the right has its own advantages. I will not stand on either side. My answer is that if the whole world chooses to go left, I know what my trading path is. If the whole world chooses to go right, I also know what my trading path is. But I will never stand on the side and say who is absolutely right, otherwise I will bet on the wrong horse. Sometimes the world does not necessarily go according to our consciousness. This election in the United States is also a typical result. In fact, I did not expect that the speed of the right-wingization of the United States would be so fast and the speed of advancement would be so rapid. I originally thought that the Democratic Party could still hold on, but now it seems that it has basically been completely defeated.

For China, the problems we are facing now are not only external problems, but also internal problems. Putting them together, there will be a very strange answer. Many people asked me before, what is the difference between China and Japan? This sentence has been hyped up on the Internet. Some people say that China will follow Japan's old path, and some people say that China will not follow Japan's old path. If you ask me the correct answer, I will tell you that this question is meaningless. Why? It is too general. If I break it down a little bit, I can answer you. For example, if you ask whether China's resident sector is different from Japan's resident sector? My answer is the same; is China's corporate sector the same as Japan's corporate sector at that time? My answer is different; China's government departments are different from Japan's government departments at that time? My answer is different; China's financial institutions are different from Japan's financial institutions at that time? They are different; China's current international environment is different from the international environment Japan faced in 1990? They are different.

What do you think the final answer is? If you look at it from the perspective of a pure resident, I can tell you that 99.99% of it can be replicated, but if you look at it from the perspective of the larger international environment, the final answer you get may be completely different from Japan's. In my words, are you saying the same or different? It makes no sense.

So I spent most of my time comparing the Japanese resident sector with the Chinese resident sector. I have also shared with you Japan's corporate sector, financial sector, and development model. You should all know that last year, Buffett bought Mitsui, Mitsubishi, Marubeni, and Itochu Corporation, and issued a large amount of yen bonds to purchase assets in Japan's Mitsui, Mitsubishi, Marubeni, and Itochu. What was he doing?

At that time, China Business News asked me to tell you why Buffett bought stocks. I found that many commentators simply talked about Mitsui, Mitsubishi, Marubeni, and Itochu Asset Management. The smarter ones would say that the trading companies were Japan's overseas assets and the main source of income for Japan's carry trade. The smarter ones would say that Buffett participated in the redistribution of Japan's accumulated wealth over the past 40 years.

I may send our youngest son to Japan next year. I told him very clearly that I don't need him to learn artificial intelligence or AI. Why? You don't seem to be that smart, and you're not an IT guy. You just need to learn Japanese well and get into Yingqing. There are girls from traditional Japanese aristocrats there. You just need to marry one. It's best if their family members are 80 or 90 years old. You can win by lying down. When their family members die in the next two years, the house is yours, the equity is yours, the land is yours, the wealth is yours, the deposits are yours, and we will participate in the redistribution of Japan's 40-year wealth. Buffett participates with money, and we participate with people. It's essentially the same. You buy stocks, and I marry my son there. This is all participating in the distribution of wealth.

You need to understand what the core of Japan is? The core of Japan is to participate in distribution, not to participate in growth. Many people don't quite understand this because they have never participated in distribution in their own country. They always think that growth is at a certain link. If I am closer to power, resources, and capital, I will eat more, and those who sell labor will eat less. When the economic growth rate is not enough, the bottom will have no food to eat. If the economic growth rate is 5%, the perception of each class may be completely different. So some people on the Internet say that the economic data is fake. Is it really fake? Maybe not. 5 represents the whole cake, and your perception only represents your class.

What have we done right in our research on the Chinese economy over the past few years?

First, after the 2020 epidemic, I told everyone very clearly at the Changbaishan Forum. I was very blunt. There were problems with the balance sheets of Chinese residents. At that time, brokerages were very happy because they always needed to be happy and could only go long. But for us who came from hedge funds, I can't do that. If I do that, I'm finished. My money is in it. After October 8, is there anyone in it? Don't numb yourself, it's all nonsense. Generally speaking, it's okay to use this kind of so-called stuff to deceive others, but if you believe it yourself, you're finished, just like "6,000 points is not a dream, 10,000 points is just starting" at that time. Remember that it was said to retail investors. If you believe it, you're finished. What is the core? From our perspective, it is very clear that everyone has high expectations, but the reality is cruel.

During those two years, when I communicated with various public funds every quarter, they could not understand the current economic situation. For example, when I talked to them about online car-hailing drivers and food delivery, a large number of my survey sample parameters in those two years were at the bottom. When economic growth and consumption expansion and upgrading, the survey sample was that the rich first went to five-star hotels, the rich first bought supercars, and the rich first ate seafood. Then your sample parameters were sinking, and in the end, ordinary people ate seafood, drove cars, and went to five-star hotels.

But when the economy shrinks, the first thing to shrink is the bottom. A few years ago, I said that there are tens of millions of online ride-hailing drivers every year. Have you ever thought about where these people come from? Some people said that rural laborers are moving to cities. I said, what era is it now? Why are rural laborers moving to cities? It’s not like you were short of migrant workers when you were doing large-scale infrastructure and urbanization construction, so you transferred rural laborers on a large scale. Look at the countryside now. Where is the labor force? Apart from the elderly, the weak, the sick, the disabled and the young, is there any labor? Have you ever thought about where the 20 million online ride-hailing drivers who have suddenly increased in the past two years came from? The answer is simple: the fall of the middle class. It’s just that you are from a different class and you look at the problem differently.

Many people's surveys are very problematic. Many people say that inflation in the United States has caused the US resident sector to be in dire straits. I asked him why. He said, "Look, I called my friends in the United States and they are all miserable." I asked, "What is the status of your American friends?" When he described it, I said, "Of course they are miserable. When they were happy before, the husbands earned money from inflation in China, and the wives spent money from deflation there, enjoying the social welfare security system, and did not pay taxes." Now it has become the opposite that the husbands can't make money in China. Overseas people come to your house to clean the lawn and charge you an extra 50 US dollars an hour. Your money has not increased, but you spend more money. Of course you feel uncomfortable. If I were the one who mowed the lawn, I would tell you that inflation is nothing. A sandwich that cost 5 yuan has increased to 7.5 yuan, which is 50% more. It is not important to me. What is important is that I earn more than 50 yuan an hour by mowing the lawn from your house, and the value of labor has increased. People who work are very comfortable, but people who spend money simply feel uncomfortable.

The samples you want to survey are the same. When the samples shrank in the past two years, the bottom suffered first, but it had little impact on macroeconomic data. You should remember this.

I'm talking about online taxi drivers. If you do research in Guangzhou, their characteristics are that whether they are rich or poor, they all eat Longjiang pork trotter rice. But pay attention, how much is the lunch box for online taxi drivers on the North Fourth Ring Road in Beijing? 15 yuan for a bottle of water, and also comes with pot-baked pork, pork stewed with vermicelli, and pork with a shavings, which is delicious. But remember one thing, don't ask how old the meat is, you won't be able to eat it if you ask, because it is basically 80-year-old Lafite, it must be frozen meat, it must be frozen for more than 20 years or 10 years, otherwise how can it be so cheap. So don't look down on pre-prepared meals, I think pre-prepared meals are very good, without pre-prepared meals, people's lives are more difficult, with pre-prepared meals, people's lives are better, why? 12 yuan can fill you up, and you can also eat meat and enough protein.

Just remember one thing, when you have a 12 yuan meal, how many years will you still pay attention to meat? Now statistics on China's demand are very interesting. I never use a number, never use China's CPI. China's CPI has always had a big problem. When macroeconomic data was established, the first goal of Chinese people was to solve the problem of food and clothing, to solve the problem of food and clothing. So for us, the fluctuations in vegetable prices, pork prices, grain prices, and oil prices are more important than the sky.

At that time, generally speaking, when leaders went to visit people, the first thing they did was to open the pot at home. The action was very standard. They would open the pot to see what you ate. This action was actually because our important issue at that time was to solve the people's food, clothing, housing and transportation, so the first thing I paid attention to was your food situation. But after the reform and opening up, until now, if food has become a problem, it is a big problem.

Why not use data? Because this part of the data fluctuates greatly, and this part of the fluctuation has nothing to do with demand. For example, if there is flooding in the city, the price of vegetables will skyrocket in those days, and the impact of such changes is actually not important. Now we are talking about demand. For example, China's economy has had big problems since 2019, which is very troublesome. Don't think that the current economic problems are now, they started in 2019 and worsened this year, so you don't know how serious the situation is this year. The data has already told you that it is very serious, and it was even more serious when the survey was conducted.

In August and September, we had to change direction. Many people didn’t understand it at that time because everyone had developed a habit in the past year. This is also a characteristic of right-wingism. The characteristic of right-wingism is that I am not wrong and it is your fault. I don’t allow you to say I am wrong. Think about it, do you dare to say that your wife is wrong? In the end, the boys just go out to smoke and don’t say anything.

In the past few years, our right-wing characteristics have been reflected in the fact that everyone has a habit of saying no to the domestic economy. Anyone who says no is a traitor, unpatriotic, and anyone who says no will be attacked online. The problem is that another kind of business has been born. What kind of business? You know, as long as you say this thing is far ahead, an 8,000 yuan item can be sold for 18,000 yuan.

From my point of view it is very simple. It is the core of the overall ideological change in society. But what is really scary is that if no one speaks up, at the critical point in time, all information feedback will form fallacies and errors. In the end, you will find that even the decision-makers make wrong judgments, and then it will be the end of you.

In the end, history will correctly judge who is the one who misled the country and the people. The top leaders should have done research at the critical moment and let you speak out. What happened in China in August and September? Most people did not understand it at the time. Starting from August 27, you can pay attention to all the financial summits and forums, and you will be asked to speak out about the core issues of the Chinese economy.

Of course, I just said that I didn’t speak long enough at the Greater Bay Area Forum, and everyone spread it more widely, but it doesn’t mean that I was bold to speak. After I finished speaking in the afternoon, a friend sent me a message in the evening, “Mr. Fu, can you talk about this?” I said, “If you can, you have to think about why?” Less than 24 hours later, about 12 hours later, the next morning, Comrade Yi Gang immediately told you about the core problems of the current Chinese economy, the risk of deflation, and the lack of effective demand in the economy at the Bund Financial Forum in Shanghai. Everyone used the same words from August to September, and the current core problem of the Chinese economy is the lack of effective demand. In fact, I want to say that effective demand has been declining since 2019, and this time the effective demand is very troublesome. It can be said that it is a major change that has not happened in the past 100 years since our reform and opening up.

In the policy recommendations I made in early September, I did not use the word "solve" but "hedge". On September 11, I was afraid that everyone did not have a deep understanding of this matter, so the original title of my speech was to pay attention to the problem of effective demand and quickly come up with policies to hedge. On September 11, I wrote it out for you and talked about it again.

But at that time, you will find that the overall atmosphere in society is still immersed in "Don't say we can't do it, we are fine." So far, what is the reality? Do you think the rise and surge of the capital market has anything to do with the good economy? It just so happens that it happened because the economy is bad, not because the economy is good. Have all the policies issued now achieved their goals? To be honest, no. Can the hedging goal be achieved? I think it is impossible to solve it by hedging a little bit, because if you carefully understand the complexity of this effective demand, it means that this is difficult because it is mixed with medium- and short-term factors. In fact, after the epidemic, we made the root cause of the high expectations for China's domestic economy but the poor reality also came from the contradictions behind effective demand.

Does anyone remember that in my public speeches over the past two years, I have been emphasizing what the core variables of the domestic economy are? I have been talking to you about population issues and aging issues. I have been telling you about this from a few years ago to now. Through the data behind the financial market, capital market, and banks, you can probably see what is happening. Aging is not a good thing for China, South Korea, and Japan.

Western economic research studies immigration policies, while China, South Korea, and Japan study population birth, because the history of these countries determines that they will not have large-scale immigration. Don't always say that the aging population has a small birth rate, and Northern Europe is so and so. My goodness, you cut it off with a knife. Have you ever played (Civilization)? (Civilization) will be updated soon. You can download it on Steam and play it. The starting resource elements are different, and the civilization and empire development strategies you form in the end are also different. Don't always make blind comparisons, it's useless. This is the big problem of the Chinese economy.

This is the combination of all the effective demand this time, including our policy recommendations below. You don’t need to read it as it doesn’t make much sense.

These two pictures are enough for the core, it’s very simple.

First, I won't use the CPI figure because it contains data that is actually not very relevant to the current effective demand. What do we use? If we enlarge the high-definition picture to after 2007, we use inflation after deducting food and energy. Simply put, what I care about is the price of people having nothing to do after they have eaten their fill. If your price is high, it means that you have good demand. If your price is low, it means that your effective demand is poor. It's that simple. As for eating, it's very easy to solve. Longjiang pork leg rice.

To be honest, the cost of the takeaway you order for 20 or 30 yuan is only 4 yuan, and you can eat delicious food with 4 yuan. Just think about it. The food industry has developed to this point. The cost is very low after adding preservatives and additives. Of course, it is impossible to have all the above. It must be cheap, delicious, and healthy. It must also be cooked by the chef. You think too much. If you want to eat freshly cut meat and cook it, you pay 50 yuan, and I will cook it at your home, and you only pay 5 yuan. That is pre-prepared food. You must understand that this is a very important factor in solving the problem of eating, drinking, defecating, and urinating. Sometimes, both sides cannot be achieved at the same time. Health and cheapness cannot exist at the same time, so health is very expensive.

Let's look at the enlarged version of the figures first. 2019 was the peak of the entire platform. The typical feature after 2019 is that the total demand curve has been falling. The figures in October are negative. There is no epidemic, no collapse of external demand in the 2008 financial crisis. From 2002 to 2024, for 22 years, without any major risks, China's effective demand has been negative for the first time. What does a negative number mean? It's very simple. The middle class is tightening their belts. This macro data tells you the answer.

I just said that the grassroots people will feedback little by little, and it will not affect the macroeconomic data quickly. So the digital platform you see after the epidemic has not fallen rapidly, but the grassroots (online car-hailing drivers, food delivery) at that time were actually suffering a little bit, but when they went to financial institutions for roadshows at that time, they did not feel this way. What is the reason why all financial institutions feel so painful this year? Because they were laid off, they were required to reduce costs and increase efficiency, and they were asked to return their bonuses. After the board hit their class, they began to feel the pain. Do you know what this means? Why did the economy fall all the way since March this year? The answer is very simple. The big problem this year is the fall of the middle class.

Don't talk about this year. In the past two years, the lower classes have been "pinduoduo". Now it should be the middle class that starts to "pinduoduo". The best sample parameter survey this year should be in Hangzhou next door. In fact, Shanghai can also do surveys, which are almost the same. In March, Zhang was laid off for cost reduction, and in June, Li was laid off for cost reduction. I ask you, Wang, what should you do? Go home and celebrate with your wife with champagne. Zhang and Li were laid off, but I was not laid off. Is that right? The reality is that you go home and quickly settle accounts with your wife, how much does the international school cost, how much does the child cost, how much does the mask cost, how much does the gym cost, how much should be spent and how much should not be spent, how much mortgage is owed, and list a number after the account is calculated. What should you do if you are laid off? After the calculation, tell your wife not to go to the SPA center for your mask. It's almost the same as taking a fuzzy face in Li Jiaqi's live broadcast room. Then you start to shrink your food and clothing, and your shrinkage is fatal. Remember one thing, the shrinkage of the middle class has the greatest impact on the entire macro-economy.

The bottom layer is really doing a job today, running around, whether you make money or not, you have to eat Longjiang pork trotter rice, anyway, it is not expensive. Make more money, run a single king, tell the boss "Longjiang pork trotter rice with an egg", today everyone gives 10 yuan on the food delivery platform, you can get Longjiang pork trotter rice with an egg and a leg.

I don’t have many investment groups, but I will lurk in the groups of delivery boys and online ride-hailing drivers across the country, because they are the sample parameters of my broad research class. I even have a sample parameter: the owner of the largest beauty chain store in the country. I often use him as a research sample. Why? The more than 2,000 stores behind him, as well as the women behind the store, are the standard consumption survey sample parameters. If his business is good, the economy will be good, and if his business is poor, the economy will be poor. There should be 500 beauty shops to be transferred in Hangzhou in the first half of this year. If any of you want them, I will put you in touch. Will you want it? You have to know that no matter whether it is the official empress or the non-official empress, they have no money, and the men behind her have no money.

Are you talking about consumption downgrade? In fact, it is not just downgrade. You must remember that the end of this big cycle is terrible, because this is the first time for most Chinese investors to experience such a cycle.

The Chinese stock market reacts very accurately. Don't look at the Shanghai Composite Index anymore, that's not very meaningful. We often say there is a structural market, and that's absolutely correct. The results show that the reaction to the economy and policies is very accurate. It's not inaccurate, it's very accurate. So your real understanding of the macro economy in the past few years is to tell you one sentence, there is no increment, it's just structure. How do you grasp the structure? The structure here is not the structure of 40 years ago.

A few days ago, I talked to a company. The black line is PPI. I believe everyone here understands what PPI is. Simply put, it is corporate profits. If PPI is negative, everyone is desperately competing in price wars. I squeeze you, you squeeze me, the upstream squeezes the downstream, the downstream squeezes the customers, and in the end, who can survive? This is the answer to the negative PPI.

The reason why China's economy has never encountered major problems in the past two decades since 2002 is very simple: the red line always exists, the red line above exists.

Any supply problem in China's economy is caused by demand, including internal demand and external demand. External demand is the support of globalization for us. What is internal demand? The real estate tycoon seems to be working on a sewing machine. He once said a classic saying, "What real estate, supply, demand, land development, urbanization, nonsense, in a word, we have a huge number of people born in the 1980s." I think he was very sincere, because what exactly is internal demand? In essence, it is the debt function and leverage function of population income.

So you know who is the generation with huge domestic demand in China. It is the post-80s generation. They are the group with the largest population base after the "Cultural Revolution". They can spend three pockets of money. They can spend the six pockets left by the previous generation in the past. They can spend the income function given to you by your business boss in the present. They can spend the leverage given to you by financial institutions in the future. You are spending the money of three generations and the population peak of one generation. That is all the trump cards of China's domestic demand. Any problems of China's economy can be paid by this group of people. All debt problems and economic problems are paid by this generation, so there will be no real economic risks.

For example, in 2008, you will find that some policies are very similar to those in 2008, such as the deregulation of real estate, the lifting of purchase restrictions, purchase tax exemptions, consumer subsidies, and consumption stimulus. But you will find that can they still produce the same effects as in 2008? Can we go back? I can tell you clearly that we can't go back.

Remember this: the phrase that has fooled the people for the past few years is "Domestic debt is not a debt". I don't know who spread this phrase, but many people are shouting "Domestic debt is not a debt". This is one of the couplets handed down from our family. What is the next sentence? "Domestic debt is not a debt, as long as people are still alive" and the horizontal banner is "Ten thousand taxes, ten thousand taxes, ten thousand taxes". The local currency debt of any country is the right to tax its own residents. What is tax equal to? Tax base × tax rate, tax base equals population and income function, and when added together it is population income × tax rate, which is tax and debt.

What is China trying to reduce its debts? Either increase the tax rate, increase the population, or increase income. If the population and income do not increase, there is only one answer: increase the tax rate. Do you think your inheritance tax can be avoided? Do you think your property tax can be avoided? What are you thinking? If young people do not have children, we cannot collect them. So we can collect from the elderly. It is the same. You should know that debt is not like what you think, "internal debt is not debt". You think too much. It is essentially a source of tax.

As long as the government debt-driven investment behavior can collect taxes, all investment behaviors are theoretically reasonable. In 2008, two economists were discussing whether the high-speed rail should be built. At that time, I sided with the latter. It should be built at that time, because whether it is built depends on whether taxes can be collected, but their calculation methods are different. One is to calculate according to the standard market economy. The market economy calculates taxes based on whether the project can make money. After the high-speed rail from Hangzhou to Shanghai is built and the cost is calculated, the second-class ticket costs 150 yuan. Can the people afford it? If they can afford it and operate it, the project will pay off. So the slogan he often said is that if the project cannot make money, then in principle the high-speed rail is a waste, and it is pure debt. His words were wrong at that time, because China is very unique. China's taxes are divided into indirect and direct. All the cost accounting you just mentioned is direct taxes, but China's characteristics are to reduce and exempt direct taxes and increase indirect taxes. This gives the Chinese people a very good feeling that our high-speed rail is fast, good and cheap. A ticket that costs 150 yuan only costs 60 yuan. People feel that life is convenient.

Why are you so innocent and cute? I want to ask you, who will pay for the remaining 65 yuan? Then he said, domestic debt is not a debt, the government pays for this money. How is it possible? Who will pay for this money? Do you know why all infrastructure must follow urbanization? Must it be built in new cities? The land in the new city within the high-speed rail must be very cheap. After the enclosure is completed, the three connections and one leveling are completed, the cross grid is drawn, the land is sold, and the house is built. The post-80s generation buys a house for 10,000 or 20,000 yuan. What does it mean? This is called indirect tax. We collect indirect taxes to subsidize direct taxes.

What is the core? The core is that as long as indirect taxes can be collected, all government investment in infrastructure can be done. If indirect taxes cannot be collected, the project will be ruined. Do you think there will be large-scale infrastructure in China in the future? I can tell you clearly that there will be no more. There will only be patchwork because the largest source of tax base is gone. This is the biggest problem exposed in the Chinese economy in 2015 and 2016.

Do you know what it is? Young people, why don't you have children? What will happen to me if you don't have children? What will happen to taxes if you don't have children? At that time, the population was at a turning point, and large-scale aging began. Young people no longer had children, which would be a huge problem, because all our debts were gone, who would cover them for us? At this time, it was very simple, to collect taxes overseas, so everyone understood that we had to go international, and the essence of internationalization was to levy taxes overseas. The government, enterprises, and finance all levy taxes on residents. Remember one thing, corporate taxation is the so-called commodity inflation. If a 1-yuan item is sold for 2 yuan, it means that a 1-yuan tax is collected from the resident sector, but the domestic PPI continues to be negative, which means that enterprises cannot collect taxes, and enterprises are in a vicious cycle, and corporate debt is severe. A positive PPI means that enterprises can transfer to residents through inflation and price transfer, that is, to tax you.

As long as the resident sector exists, adjustments on the supply side will bring about a cyclical recovery in PPI. Simply put, once supply-side reforms are implemented, real estate is promoted, and people pay for it, corporate debts are no longer debts. All government debts, corporate debts, and financial sector debts are not debts as long as the resident sector can bear them.

Do you know what the big problem is now? I'm talking about a certain industry now. Do you know what the big mistake some people made? So far, I've been told that it's normal for the total PPI to be negative. Market competition means survival of the fittest, elimination of the weak, and the winner takes all. I said it's not the case now. Now there will be a situation where everyone will die. He didn't understand. Do you understand it in this picture?

First, in the 2011-2015 cycle, the 4 trillion yuan infrastructure in 2008, plus leverage, expanded effective demand very well. Once the policy was introduced, it was absolutely effective. The mistake many officials make now is that they think the people are still the same people as before, and they still use the same policies. The policy back then was that I was going to give 500,000 yuan to honor my mother-in-law and buy a house, but you told me that the down payment only required 400,000 yuan. Do you know what young people do? 400,000 yuan for the down payment, 100,000 yuan for decoration, and still 500,000 yuan. What is the situation now? Tell him that he doesn't need 500,000 yuan, only 499 yuan. The young people said that I don't need the 100,000 yuan, but I need the 400,000 yuan now.

Leverage is the end, and consumption is a completely different concept. Using leverage to stimulate the economy will be ineffective. The only thing I vote for now is to reduce leverage to stimulate the economic policy, such as reducing the interest rate of existing mortgage loans. This is a solid reduction of leverage. To put it bluntly, the bank will spit out money for everyone present to pay 800 or 1,000 less per month. But you still say to reduce the down payment ratio, uncle, come on, add leverage, I can tell you, it can't be added, this is the core. When the capacity was added, there was oversupply, mainly old capacity, 36 months of PPI, vicious competition among enterprises, bankruptcy, and huge pressure on banks. We did supply-side reform, and then administratively cleared part of the capacity, which was actually transferred to new capacity, so that supply and demand stimulated demand again, and the people paid the bill.

The big problem back then was that there was a girl, fair, rich and beautiful, and two handsome guys were competing with each other. After the two guys eliminated each other, they finally married the fair, rich and beautiful girl, because the fair, rich and beautiful girl needed a handsome guy, so the two of you were the winner. This sentence, after sufficient market competition, the winner is the king, assuming that the demand remains unchanged. This economic work is really ruined by self-media and the Internet. After sufficient market competition, the winner is the king, and the winner takes all assumes that the demand remains unchanged, that is, the girl is there, and you two are competing.

Do you know what the current numbers mean? The red line is gone, 0. If we deduct the period of the epidemic, PPI has been negative since 2019. Two guys are competing there, and the goal is to win. In the end, there is only one left. He shook his head and looked, where is the girl? You wait and see. This will inevitably happen in some industries in two or three years. Do you really think that the winner will be the king? What is your environment? It is that effective demand is facing a medium- and long-term contraction and adjustment. In this case, there is no winner in such vicious competition and volume in the market, and a crisis will eventually break out. I send this to the chairmen of certain companies.

Unlike previous years, in which any excess market competition would eventually win out, the reason is that the effective demand of the household sector is always there, it can always be leveraged, and it can always pay for your company's production capacity and profits. In the end, there is only one way left. Do you know what it is? Because this red line only represents domestic demand. If the domestic girls are gone, they will have to marry overseas white and rich beauties, so he only has one way left, to go overseas. This is also what many netizens are very happy about. We just want to go overseas and we just want to take over the international market.

What is the current international environment like? Is it true that the global environment of left-wing tolerance and integration 20 or 30 years ago would allow you to go abroad and marry a beautiful, wealthy woman? Of course, Japan's Mitsui, Mitsubishi, Marubeni, Itochu, etc., went abroad to marry a beautiful, wealthy woman after the 1990s, but the question is whether we can do so now? I believe everyone has a scale in their hearts, and the "whether you want to" and "whether you can" in the future environment will form a fierce collision. If you can't, what if there is no effective demand for you at home?

Now all economic problems have two problems: oversupply and insufficient effective demand. We need to solve the problem. The answer is to boost domestic demand. The core of domestic demand is redistribution. Redistribution between the government and residents, between the rich and the poor, and between debt and leverage. If we don't do it, we will be like Japan in 35 years. How did Japan's 35-year cycle come about? Do you finally know the answer? I still don't know. I have sent my son there. Don't you understand what redistribution means? Japan obtained all resource elements (jobs, positions, salaries) after the war. The first and second generations after the war began to die in 2012. Intergenerational distribution, the old comrades died, and the young people naturally had more cake to eat. It's that simple.

If you can understand this change, you will naturally understand what I am talking about the core of the Japanese economy. It is intergenerational distribution, not growth. Growth without distribution means that the rich will always be rich and the poor will always be poor. Do you know what this means when translated to the stock market? If listed companies do not distribute dividends and do not grow, the answer will always be that the rich will always be rich and the poor will always be poor. The post-00s are counting on stock speculation to share the wealth of the post-60s. You think too much. You might as well go to Xiaoshan to be a live-in son-in-law. You don’t have to work hard. You can make yourself handsome and marry into a wealthy family in Xiaoshan. The wealth will be redistributed intergenerationally and you can win easily. Why do you have to work hard every day in stock speculation? Thinking that I can kill the post-60s, I have become a smart person. Can you do it? He changed hands and ran faster than you, shouting, "Young people, hurry up, this is the only chance in life. If you don’t go all in this time, you will have no chance in the future." While he was all in, we changed hands and withdrew, leaving them standing on the high hill.

The market is the same as the economy. When creating increments, they must also be distributed. It is meaningless if they are not distributed. Some things are essentially the same, and this is the biggest problem facing the Chinese economy at present.

In 2006, during the supply-side reform, I would like to remind you that there are a few wrong views that I would like to emphasize. Why are they wrong? In my opinion, we must know these views, but we don’t have to let the people know them.

Let me give you a simple example. The stock market creates a wealth effect and uses it to change the fate of a country. Is this a common voice heard outside? What do you think? If a house does not have the function of income and rental return and living, in other words, if the house does not create its own value, the answer is still that the rich will always be rich and the poor will always be poor. Can it create a short-term wealth effect? ​​Yes, just like the example I gave you in 2015 and 2016, full warehouse all in, financing leverage umbrella, and then you find that the stock price rises by the daily limit, the account is full of money, and you go out to buy a bag for your wife, and the wealth effect.

Then what? Do you know what you regret buying when the stock price hit the limit down? You regret not selling the stock, but rest assured that the stock cannot be sold because it hit the limit down at the opening. What you really regret is that I didn’t buy this bag for my wife. I often advise them that you bought a bag for your wife because at least she still has a bag. If you didn’t buy this bag at that time, you wouldn’t even have this bag left.

The only result of this game of turnover is that the rich will always be richer and the poor will always be poorer, and the consequences will get worse and worse. China is a typical example of this logic. Don't treat bubbles as family wealth to fool ordinary people. This is nonsense. It deviates from income, corporate growth and dividends. We all know that this kind of thing is just for turnover. If you treat it as family wealth allocation, it will kill people, and it will eventually cause the situation this year in the economy.

When you change hands, you feel good about consumption. For example, the house I mentioned here, the largest increase in China's house prices was not from 2008 to 2015, but after the stock market crash in 2015 and 2016. I remember Beijing most clearly at that time. When the house speculation was in 2009, the house price in the Asian Games Village was 17,500. At the end of 2015, the house price in the Asian Games Village was 25,000. In 2019, the house price in the Asian Games Village was 100,000. The black line represents the year-on-year increase. 70 large and medium-sized cities have increased year-on-year. The year-on-year increase + long-term accumulation is the time when housing prices have increased the most. So we are in the wave of 2015 and 2016. Housing prices have brought everyone's consumption expectations and hopes, but from this picture you can clearly see that consumption deviates from income. This kind of consumption is what everyone calls based on the wealth effect, but the wealth at this time is not supported by income.

The problem is, four or five years ago, I shot some short videos. The platform cooperated with me to shoot some short videos. I made it very clear at that time, if the house is purely for turnover, what is it? I bought the house for 2 million yuan, and sold it to a young person for 6 million yuan. What I took away was the current cash discount of the young person's youth for the next 40 years. I can live freely for my future 40 years, and he has to pay back the debt for these 40 years. If there is no income growth, he has to pay back for 40 years, and he will lose it. I have lived for him for 40 more years, it's that simple.

The same is true for stock prices. What we exchange is called time value. I am a major shareholder. I take it now. I am happy now. I lock you in for 10 years. Can you get out of it after 10 years? Maybe you can get out of it. Do you feel happy? You lost 10 years. You must pay attention to the time function of the exchange cost of financial assets. Without the time function, it is all nonsense.

The problem is that if income does not grow, and it is purely exchangeable, the wealth effect created in the short term is equal to the debt accumulated by another group of people in the short term. In other words, if we are happy, when his debt reaches a certain level, it will cause a comprehensive collapse, and the entire asset cannot be sustained. When he bought the house for 8 million, he expected to buy it for 8 million and sell it to the next young person for 10 million. As a result, he found that there were no young people, and the next young person could not take 10 million. At this time, his balance sheet began to deteriorate, and consumption began to return to a cliff. This is the result after 2019. After 2019, it began to fall step by step, returning to the real income.

Don't dare to tell the people to regard stocks and houses as family wealth. In the past, when there were young people, they were our wealth. Whether through stocks or houses, young people are the source of wealth for everyone. To be honest, what is the fundamental reason for the rise in China's real estate for almost 20 years? To be honest, if young people can buy any house, we will take away wealth. My house is their liability. All of us are eating one thing, that is, the leverage ratio of the household sector. Everyone is eating this red line.

Some researchers say that China's household leverage ratio is lower than overseas because they simply compare numbers. I can tell you that it is not lower now. Do you know why? Our leverage ratio is not high welfare. High welfare countries have 70% and low welfare countries have 60%. You tell me that 60% is lower than 70%. What is your actual leverage pressure? Don't you have an idea? For your education, medical care, and retirement, with elderly parents and children, how much money do you need to spend? Is this the household leverage ratio of a country where social welfare was established in the 1970s and 1980s? No. From various phenomena, this leverage ratio has reached its limit.

The capital market is very smart. From 2002 to now, for about 18 or 20 years, it has been trading on China's consumption upgrade. It doesn't matter whether the Shanghai Composite Index is 3,000 points or 3,500 points. The big cycle of the consumption sector is the period when China's resident sector born in the 1980s increased leverage.

Starting from 2019 and 2020, the logic of all my education on China's consumption is: first, there will be structural changes in consumption, which is actually a generational change; second, consumption will begin to downgrade.

At that time, I said in my speech that coffee was no longer 30 after finishing 20, 40 after finishing 30, and 50 after finishing 40. Instead, it was buy one get one free for 9.9. Young people started saving up KFC coupons on Thursdays.

Young people are beginning to change their consumption patterns. For example, my children drink tea. When I see them drinking tea, I immediately tell my wife to sell all the Pu'er tea cakes we have stored. Why? Do you know how my daughter drinks tea? Go to her office, black tea, green tea, Pu'er, you say black tea, take out the Oriental leaves, twist them open, don't even use water, pour them into the pot, put the cute little cup there, pour them there, please. She won't give you a cake and rub it for a long time, and then brew it, that's the previous generation.

When Japan's economy was at its peak, it was producing sake and whiskey. But after 1990, Suntory and Jim Beam became popular. Young people say, what kind of wine is worth 1,000 yuan? I want a 10 yuan wine that tastes sweet. RIO makes me feel tipsy. Can I get drunk? Yes, it's OK. My social scene has changed. I don't sit there for dinner. My consumption scene has become two kids sitting there and watching live e-sports games.

This era has arrived. Don't think it hasn't arrived yet. Remember one thing about the stamps and wood you hoard: there is no inheritance, but you still hoard stamps. My son doesn't even know what a stamp looks like, but he knows that My Little Pony is valuable. This is the change of the times. Consumption is undergoing structural and total changes.

China's capital market is completely accurate in its response to the economy. You can look at the entire sector index. Real estate has ended, and the food, beverage, consumption, and retail sectors of the household sector have ended. As for whether new energy vehicles have ended, my answer is that you wait and see. In fact, only one sector is expanding now, semiconductors.

Do you understand what it means? The couplet of the bank is "Only to add icing on the cake, never to help in times of need", and the horizontal banner is "My Bank". If you don't manage well, the first thing we do is to withdraw loans. "Domestic debt is not a debt as long as the tax is still there", and there is another secret about the Chinese economy, which is not available overseas. We are "J, Q, K" under the non-market economy.

What does "J" mean? Come on, uncle. "Q", uncle, invest some money, circle the money. "K" means get out, KO. China's rapid economic development is actually closely related to this hand. Everyone who trades stocks knows that the worse the economy is, the more you trade this hand. Some people ask whether China's stock market is related to the economy. I can tell you that there is an inverse relationship between the two ends and a positive relationship in the middle.

The inverse relationship between the two ends is that the worse the economy is, the more this hand will be moved, and you will have an inverse relationship. In the middle, it must return to the economy, and then go to the other end, too excited, and it is also an administrative relationship. For example, 2015 and 2016 were very typical. I posted a Weibo in the last month, saying that whoever wants to play can play, we are withdrawing, goodbye. Of course, the advantage is that I did not short China, I shorted Hong Kong. If I shorted China, I would not be able to come back.

At that time, I went to Jiangsu, Zhejiang and Shanghai to investigate the umbrella trust OTC financing allocation at that time. When the CSRC issued a policy, I said it was very simple, whoever wants to play can play, I will withdraw, the fundamental reason is that this hand is the key, your current market 6000 points is not a dream, 10000 points has just started, which one do you support? Once the debt leverage is withdrawn again, the game will collapse, run away quickly. Don’t you think this thing is going to go wrong? That is also a hand, not the economy. The middle period is the normal economic development, and China’s index compilation will determine that most of the time the economy reflects the structure, not the increment. Now there is an A500, which is an attempt to make the A500 reflect the total amount and structure like the S&P.

What does JQK mean? China is very unique. In the process of investment, we only do JQ and never K. What is the JQ link? Has the industry risen? No. Does the industry have nationalistic significance? Yes. You must remember one thing. We are right-wing. The industrial policies of the right wing are all biased towards nationalism. So nationalism does not do anything to make money, but to have. Remember this sentence. So all the purposes of JQ are for political achievements and to have.

Old stock investors all know the logic of watching the news broadcast to speculate in stocks. Tell me, do you speculate in the economy by watching the news broadcast? You speculate in stocks by watching the news broadcast. You invest in stocks because he doesn’t have what he wants. There is no falsification at this time, and he will pour all his resources into you, including land, taxes, local guidance funds, and all resources. The stock market is also a resource, used for financing. He will give you all the resources, and you will feel the best. Once you are far ahead, and his political goal is achieved, he will throw you into the market to be KOed by the market economy. At this time, you will discover the secret of PPI. You will find the cyclical nature of PPI. The cyclical nature of PPI is very simple. If you divide the industries in PPI into means of production and means of living, you will find the relationship between cyclicality and policy.

What is it? I don't have it, so I will make PPI positive. I will devote all resources and methods to make you make money in it, and there is no need for competition. But once I achieve my goal and throw you into the market economy, you will develop rapidly. If it is a formal market economy, the competition fluctuations will be relatively mild, that is, as soon as there is a little money to be made, someone will come in and it will be flattened. The cycle is relatively long, and it takes 30 years for a large enterprise to emerge.

But it is not the case in China. China takes 5 years, and the industrial chain must be far ahead of the world. During the protection period of JQ, everyone can survive, but it will also create many "big guys". Once the protection period is over and thrown into the market economy, you will find that everyone is not your own people, and PK, competition, and internal circulation will begin. PPI will start to turn negative. It's that simple. Then a round of industrial overcapacity will begin to be eliminated, and the government will drive and guide new industries. Using this method of the front wave pushing the back wave, the cycle of each link of the entire industry will be shortened to five years, but the price is that many industries will enter the negative PPI at a very fast speed, and all industries that can reach the negative PPI will be able to survive in the end thanks to their own liability side, and the resident sector can pay the bill. Once domestic demand is insufficient and this continues, there will be a crisis, which is the current situation.

Ordinary people's investment is to see the penetration rate of new energy has reached a certain level, and ordinary people are driving more and more cars, so why do stocks keep falling? This is his mistake. He did not understand when the policy should be invested. It should not be invested when it is mature, because when it can be released to the market, it will definitely not make so much money, and when it is not released to the market, it will definitely make a lot of money.

Of course, this also involves the supply-side reform. You may not think that the supply-side reform is highly related to the stock market crash and the property market. When Zhou Xingtao (sound) was in the city, he held a meeting in Shanghai at the end of 2015 and the beginning of 2016 and asked me to talk about the supply-side reform. I said that the supply-side reform is very simple. In 1997, Premier Zhu Rongji flipped it and the term supply-side reform came from there. The starting point of this round of China was 2002, when PPI was positive, core CPI was positive, and effective demand was positive. It continued until 2012, when supply began to be in excess, but effective demand could continue to increase leverage. This is the supply contradiction. In 2009, both supply and demand fell, which was the end of this round of China's big cycle that started in 2012.

When was the last end? Reform and opening up lasted until the late 1990s and early 2000s. I went out to JD.com and bought (Premier Zhu Rongji answers reporters' questions) for 150 yuan. It's a three-volume book. Everything happened, including the real estate bubble and the financial and economic crisis. People were encouraged to have confidence. Do you know how people were encouraged to have confidence back then? "If the heart is there, the dream is there. At worst, we can start all over again." Comrade Liu Huan came alive from there, and that was to encourage you to have confidence back then.

To prevent the youth unemployment rate from being so high, do you know what we did back then? We expanded undergraduate enrollment, because our youth unemployment statistics do not include students who are still in school. By sending you all to college, the unemployment rate can be postponed for three years.

What is the ratio of undergraduates to postgraduates in Tsinghua, Peking University, and Jiaotong this year? 1 to 3, 5,000 for undergraduates and 15,000 for postgraduates. Of course, what was the direct result of the policy back then? Undergraduates used to be very valuable, and then they became worthless. I think it is very likely that postgraduates will not be worth much in the future. If the economic problems are not fundamental in three years, I guess I will start to encourage you to study for a doctorate, and then start working when you are 30 years old. For those of you who have children at home, if your children are not the second generation of rich people, don't try to win, and the second generation of rich people don't need to try to win. In my words, think clearly, there is not much value in winning over academic qualifications in the future.

What else was done back then? Bank risks, the four major asset management companies dealing with non-performing assets, supply-side reform, debt reduction, stock and government debt reduction. If you want to know what the stock market is used for, please taste it back then. From 2002 to 2004, the economy had recovered. What was the reason for the A-share market to fall to 2004? All of them, so do you know how to reduce debt? The answer is very simple. Remember the upper and lower couplets of all debts, "As long as people are still there, any debt can be reduced." As long as people are gone, how can this debt be reduced? Tax rate. If the volume cannot be collected, then increase the tax rate. Some people used to say that China has a high tax rate, a high tax rate for the resident sector and a low tax rate for the corporate sector, because various tax refunds and subsidies are given to you at a low tax rate. Everyone should understand that when it is time to increase the tax rate, you should increase the tax rate, otherwise it will not be enough. This period of the big cycle has entered the end so far, and this is the most troublesome point and the external environment at present.

I won't analyze overseas, because if you look back, it's OK. If you look back over the past 40 years, you will see that overseas is slowly changing, industries are returning, and trade relations are being reshaped. I just came back from Singapore these two days. Singapore, Southeast Asia, Malaysia, Indonesia, and Vietnam, to make a joke, have really benefited from your fight since 2016, because they are following positive feedback and cycles, and their positive feedback cycles are what we transferred.

Finally, I want to say something to you. This chart is very important globally. When fiscal expansion is needed and interest rates are falling, you can think about the fact that fiscal spending cannot earn money in the short term, the effective demand of the domestic economy is insufficient, savings are in excess, the return on investment is declining, and interest rates are falling. In this context, the exchange rate represents your actual rate of return and the purchasing power of the local currency, which is weakened. So in general, in emerging markets, if this situation occurs, first, the interest rate differential will push the exchange rate to depreciate; second, the government's debt will push the exchange rate to depreciate, which will lead to capital outflows, and you will need to raise interest rates to cope with it. But once the interest rate is raised, the economy collapses and capital flows out further. This is the crisis of emerging markets.

Note that the emerging market crisis is not simply about the US interest rate hike, which is a misconception of many people. I can tell you that China has never collapsed before, because no matter how much the US raises the interest rate, China's investment return rate is much higher than that of the US. If I hadn't had an emerging market crisis, it would have been essentially about the domestic investment return rate and debt.

People always say that the Americans will reap the benefits of raising interest rates. I would like to say jokingly that if you don’t borrow so much money and your investment return rate is very strong, the interest rate hike will not affect you. If you always say one thing, it will become a conspiracy theory, either left or right, which is biased. We stand from a neutral perspective. The left has its own problems, and the right has its own problems. Both sides have problems.

In the world, only Europe, the United States and Japan can guarantee exchange rate stability under low interest rates and government fiscal expansion. The model they adopt is very simple. They cannot make money at home, but they have to ensure the stability of their credit and currency. The answer is that I can make money overseas as a capital party. This is also the path that globalization was bound to take in those years. Use overseas carry trading arbitrage assets as endorsement to support the exchange rate.

I don't think that (the Plaza Accord) defeated Japan. If you visit Japan, they will tell you that the Japanese officials at that time were all right-wing nationalists, because they came after World War II. When they wrote all their memoirs, they said that Japan has developed well, our policies are not wrong, and it's all American imperialism. Think about it, which right-winger would write a book saying that I was wrong? Would your wife say that she was wrong? You think too much, and you have to say that you are wrong no matter what. When you read the books of Japanese officials, you will form a wrong right-wing perception that it was American imperialism that defeated Japan, and they will not reflect on their own problems. On the contrary, when these neutral people in Japan do historical analysis and review, the answer is more accurate.

In that context, after the Plaza Accord, the yen appreciated significantly, and Japan formed a low-interest yen and a strong exchange rate. What does that mean? Go overseas and buy overseas assets, carry trading the yen, and go overseas to form it. This is Japan's Mitsui, Mitsubishi, Marubeni, and Itochu. They carry all of Japan's overseas wealth. What's more important is that the Japanese government debt is used to compensate that generation of residents, and to support you in education, medical care, and pensions. Of course, there is no growth, so his heart is in pain, but his body is not in pain. So Japan is in pain, but not in pain. The answer is depression, anxiety, and suicide forest. If the body is in pain, it is not suicide, it is killing others.

In this context, fiscal policy shifted, interest rates fell, carry trading was used to hold interest rates, and exchange rates were formed using overseas assets. This was very famous back then. As long as there was an earthquake in Japan, there would be an immediate sell-off of global assets, and the yen carry trade would quickly support Japan. The important thing was that some of the assets would flow back.

The same is true for the United States. After 1980, the dollar carry trade was carried out, so the world formed a low-interest dollar, borrowing dollars, and always borrowing. The United States could not raise interest rates and always lowered interest rates. The dollar was always a borrower, not an investor. In this context, the exchange rate was supported by the multinational assets of the dollar, that is, all listed companies and multinational companies in the U.S. stock market, using fiscal expansion and low interest rates.

But the result he created is that Mitsui, Mitsubishi, Marubeni, and Itochu have become rich, while the people have become poor. It’s not called poverty, it’s just that there is no growth. The same is true for the Americans. The executives of multinational companies have become rich, while the people are poor. And the people will eventually use their red necks to vote for Trump to reverse the situation. If the situation is reversed, the game will be turned upside down. Low interest rates will return, arbitrage will return, industry will return, debt will fall, and the exchange rate will move in the same direction. This is the logic.

China wants to do the same, but it can't. Our current problem is that the interest rate is low but it can't be that low. The fiscal policy wants to help the people but can't really help the people. The exchange rate appreciates. I don't know how many people thought that the exchange rate would appreciate to 5 or 6 yuan. I don't mean in 2016, but in the past two years, some people suddenly said that the RMB will appreciate to 5 or 4 yuan in the future. What do you rely on to appreciate? What do you use to appreciate? Now it is a kind of balance. The interest rate cannot be that low, the fiscal policy cannot be that expanded, and the exchange rate cannot be that depreciated. Find a balance between the three. For example, an interest rate of 2 corresponds to an exchange rate of 7-7.3, and the fiscal policy can be used to save local governments. If the trade war becomes more severe next year, the interest rate can be lower, such as breaking 2, and the exchange rate can be raised to 7.3-7.6, 7.3-7.8, and the fiscal policy can be expanded a little more. This is the only card left in our hands now. How can we play it all at once? How to play it? After playing it, there is no overseas market to endorse you. We are an emerging market. This game is the current domestic logic, stop and stabilize. There is no stimulus. What stimulus can we rely on? If you have a thorough understanding of all domestic assets, it will most likely be something for next year.

To be honest, the risk of war has been increasing globally in the past two years. Some assets are not taking into account interest rates, exchange rates, or currencies. Instead, some assets are taking into account war and decoupling. Please refer to Russia here.

Due to time constraints, we will leave a few minutes for you to ask questions.

Question from the audience: Mr. Fu, I have a question. You just mentioned in your report that for a country with such a large population and a per capita income of more than 10,000 US dollars, in which industries or fields will there be structural opportunities?

Fu Peng: Just remember one thing, you are either rich or poor now, give up the middle class, this is the answer, the rich are not affected. For example, the luxury goods just mentioned, what is rich? Ladies, remember one thing, only buy Hermes, Chanel, LV, GUCCI, Prada are all abandoned, from new products to second-hand products, they will collapse, this is called rich.

What should the poor do? Hangzhou has already started. A Chanel bag costs 25 yuan a day to rent. Second-hand luxury goods are no longer viable. Now everyone is renting for 25 yuan a day. Why? Renting to celebrities to take photos and check in. This is the extreme of the two ends. Uniqlo, either go up, or upgrade to Arc'teryx, or downgrade to Uniqlo, but young people are more aggressive now. They all think Uniqlo is expensive. There is nothing I can do about it. I found that Uniqlo's sales data in China is declining. Why? When young people ask, Uniqlo is quite expensive. This is impossible to understand, Uniqlo. It is just going to the two ends, not doing the middle part.

Second, young people do business, old people do business, and middle-aged people in their 40s don’t do business, because they basically have elderly parents and young children to take care of, and they are in debt. They are middle-aged slaves who are suffering. They give up this part. When young people do business, their interests and hobbies will change a lot. They are different. Whether they are rich or poor, their interests and hobbies are completely different. For example, animation, games, and the second dimension are like young people buying bags. What kind of bags do my girls buy? They don’t buy LV, GUCCI, or Hermes. They buy “pain bags”. Do you know what a pain bag is? Do you know what a bunch of baji stuffed inside is? This is the consumption of their time.

Do you know what to do, old people? Old people, remember one thing, the last moment of your life to spend money, must be the last house, ICU ward. In the middle of 60, 70 years old, you have nothing to spend. I have always encouraged Chinese people to retire as early as possible, while the generation with wealth can spend it, let them spend it, and give up their positions to young people. If you really learn from Japan, the old ones stand, and the young ones can't get up, you will find that you are still working when you should spend it, and you can't earn what you should earn, so time is delayed. China is the same, give up the middle.

What is left? You should do the industries that the country asks you to do, and you must do them in the early stage. After you have done them in the early stage, there will definitely be a surplus in the later stage. Do them in the early stage, when the market is at its peak, it is extremely hot. You should withdraw when you want to gain fame and profit.

Question from the audience: Are semiconductors here yet?

Fu Peng: Not yet. It’s very simple. We haven’t announced that we are “far ahead” yet. Why rush? They will do whatever it takes, even if 9 out of 10 companies are scammers. They will admit it. There is no other way. You must understand the characteristics of nationalism.

Question from the audience: Thank you Mr. Fu. I would like to ask about overseas asset allocation. Do you have any suggestions on overseas assets such as U.S. stocks, U.S. bonds, and bonds and stocks in emerging markets?

Fu Peng: The bonds of emerging markets are China. In principle, you buy them. For example, you will allocate emerging market bonds, and we will directly lend money at high interest rates in emerging markets. The first thing we do in any emerging market is to lend money. I went to Vietnam in 2015. I was the general agent of Xiaomi. I started lending money while working. Why? China also lent money in the early years. Emerging markets have a characteristic that when the financial system is imperfect, the interest rates of the central bank and banks cannot correctly reflect the capital supply and demand of the economic cycle. Therefore, the interest rate of the bank must be lower than the investment return rate of the actual economy.

Our "porters" can just move to the highest interest rate. The default rate of small loans is very low. Do you dare to lend in China now?

For example, if you ask me for 2 cents, will anyone lend me money? Your first reaction would probably be, you want my principal, right? But let's go back 10 years, 2 cents, the developer asked you to lend, would you lend it? Were you worried about default at that time? No, the reason has nothing to do with how much interest you lend, but the judgment of the economy. I can tell you that emerging markets are like China in that year in this dimension.

Their employees are born in the 2000s. In 2015, some industries moved to Vietnam with us. I told the boss very clearly that you should not think that Vietnam's labor costs are low. They are not low. He said that it is not cheap. I said that overtime should be paid and that work must be ended at 4:59. The union would really go on strike. What is the reason for China's low labor costs? Cattle and horses can be exploited at will. This is the root cause of the low labor costs.

Why do some companies want to move back in the past two years? In Vietnam, young people often go on strike in the past two years. When they go on strike, the union will intervene. If you don’t give them a raise, they won’t work. The bosses are helpless. Chinese bosses are not used to it and want to move back. I say don’t move, because the post-00s generation in China are also rising quickly and they have already started to clean up the workplace.

What has been causing a lot of controversy in Hong Kong these days is Huawei’s HR recruitment. The same principle applies here: this era has arrived.

Bonds in emerging markets are indeed high-interest in nature, which is good. U.S. stocks and U.S. bonds are not to be mentioned. You can naturally figure out the investment return rate of U.S. dollar assets. Of course, the U.S. stock market will be a little special next year because it created a miracle this year. This year is a miracle year for the U.S. stock market. You may not have paid attention to the return rate, volatility, and valuation. High valuation, low volatility, and high returns. These three combinations theoretically will not appear at the same time, but they appeared at the same time this year, which is absolutely abnormal. This is what I told you a few years ago. You must understand that artificial intelligence has begun. A few years ago, I said that the U.S. stock market would slowly spread from the concentration of artificial intelligence. Many people said it was impossible because they did not have a deep understanding of the stock market structure.

Of course, the most glorious battle this year was before Nvidia’s flash crash. We clearly told all domestic public funds that you should pay attention to Nvidia’s OTC leverage. It crashed that night. After the crash, we immediately did a live broadcast with nearly 8,000 people the next night, telling all public funds that this was the peak point of volatility, because there was no problem with the economy or the market. In fact, it was the excessively low volatility that caused many people to increase leverage. We just had to get rid of these people.

At that time, some friends in Singapore called me and asked me what to do. I said, "If you make up the margin tonight, you can live tomorrow. If you can't make up the margin, you will die." This has nothing to do with Nvidia or artificial intelligence. It's definitely a leverage explosion. Once it's over, it's over. We've also exploded. After deleveraging, Nvidia has returned to 3 trillion. This is the situation now. But this combination will not continue next year. High valuation, low volatility, high return, no. Next year, either maintain high valuation and low volatility, and the rate of return will decline, or maintain high volatility, the rate of return will decline, high valuation, or directly kill valuation. I can't see the path to kill valuation at present. Killing leverage is possible, but killing valuation is unlikely. The mid-term and early valuations of the industry are all high. Looking at it next year, the US stock market is indeed different.

But I still say that most of the time you have to think about why the US stock market has been rising for a hundred years. There is a reason. For ordinary people, the US stock market is not high because it is high, but it is enough to prevent high volatility. If you just want to prevent high volatility, most of the time you are asked to invest regularly, there is no choice.

Another point, remember, Buffett is an asset manager, not a big retail investor. When ordinary people understand that Buffett holds so much cash, is the US stock market going to collapse? What is cash? It is a stock with zero volatility and a 4.5% dividend. If you think about this sentence, it will be OK. In the asset portfolio, you evaluate the value, volatility, and rate of return. When there is an abnormality between the three, your proportion will be adjusted to zero volatility dividends and 4.5% stocks. This is cash. Don't make Buffett a big retail investor, saying that Buffett buys cash because the US stock market is going to collapse. It's okay to make short videos to deceive ordinary people, but we shouldn't do this ourselves. This is probably the US stock market.

Host: Thank you Mr. Fu Peng for your wonderful sharing. In the free communication time later, if you have any questions or inquiries, you can continue to communicate with your personal wealth planner. At the end of the event, we will take another two minutes of your time. Please scan the QR code on the top of the screen and fill out the questionnaire. We are looking forward to receiving your feedback on this event so that we can better serve you in future events.

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