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Text丨Xie Changyan and Li Zhuang

On August 7, at the Beichen Asian Games Village Hotel, Mr. Lin Yuan had lunch while talking to our magazine - a box of mixed noodles delivered by a takeaway boy. "My pursuit of life is very simple now. I have no requirements for food and clothing." Lin Yuan said, "I often go out to eat.PinduoduoI buy clothes online. The clothes and shoes I am wearing now are all from the same brand. They are all of good quality.”

Talking about the Chinese economy from Pinduoduo, Lin Yuan believes that the Chinese economy is very resilient and is now facing insufficient effective demand in many industries and declining investment enthusiasm. This is why the "Pinduoduo" phenomenon occurred. It takes time to balance supply and demand, which is why there is no inflation in the Chinese economy at present. But this phenomenon is not normal, and the economy will be corrected in due course.

This is one of the reasons why Lin Yuan "invests in the mouth". In his opinion, food and medicine are easier to correct because they are not stored in large quantities due to their shelf life. However, for products like textiles, once there is insufficient effective demand and they become inventory, they will become worthless over time.

For the A-shares currently trading at around 2,800 points, Lin Yuan's daily routine is "buy, buy, buy". "Now is the easiest time to invest. The short-term market is bound to fluctuate, but we don't predict this. There are three major foundations for the rise of Chinese assets. If measured from the perspective of buying assets, there are many good targets in Hong Kong stocks," he said.

One of the bull market foundations:

Global interest rates are falling

Editorial Department : Recently, overseas markets have been volatile, and the Shanghai Composite Index has returned to the 2,800 point level. What do you think of the adjustment of overseas stock markets?

Linyuan ：The adjustment is because the price has risen too much.Adjustments in a bull market are a high-probability event.Among the global mature markets, Japanese stocks have the highest valuations. The adjustment of Japanese stocks is also due to the depreciation of the yen. At the beginning of last year, one US dollar was exchanged for 120 yen, and now it is exchanged for more than 140 yen.

Editorial Department : What reference value can we get from this performance of the peripheral markets?

Linyuan ：Take the Japanese stock market as an example. Japan has implemented zero interest rates or even negative interest rates in recent decades (the current interest rate has been raised to 0.25%). The Japanese stock market has long been 50 to 60 times (PE, price-earnings ratio, the current dynamic PE of Nikkei 225 is 19.61 times), and the direct reason comes from low interest rates.

Judging from the current Chinese capital market, interest rates are generally going down. Currently, the 5-year fixed interest rates of many banks have dropped below 2%, reaching 1.8%. In terms of interest rates, I believe that in the next three, five or even longer years,Interest rates are all going down. This is one of the foundations for the A-share market to rise.So I am optimistic. If the major overseas markets raise interest rates and the stock market goes down, it will be more beneficial to A-shares.

Editorial Department : But the US dollar interest rate has reached 5% and the US stock market is also doing well. What do you think?

Linyuan : My point is,Current US dollar interest rates cannot last long.Some investors save US dollars to earn that 5% return, which is to take short-term behavior as long-term behavior. Imagine if a company or a region gives me a 4% return every year for a long time, let alone a 5% return, then I will not invest.Compound InterestThe returns are very high. The average annual return of the world's top companies is just over 10%, and the US dollar interest rate has been 5% for a long time. This does not conform to common sense.

Bull market foundation 2:

The dividend payout ratio in the Chinese market has been rising year by year

Editorial Department : In addition to the macro environment of interest rates, from a fundamental perspective, are there any core factors for the rise of A-shares?

Linyuan ：Dividend yield is a very important reference standard.

In 2013, if a company could achieve a 3% dividend rate, it would be great. That year, we actively bought three pharmaceutical stocks because of their high dividends. The dividend rate of these companies was more than 2%, which was very high at the time. In order to buy more, we even boughtUBSThe interest rate for borrowing money was 1.25%, which was very high. At that time, the interest rate of the US dollar was between 0% and 0.25%. I bargained with UBS for this. UBS made a lot of money from us, but it was precisely because of the low interest rate of the US dollar at that time that we invested more.Interest rate is a very important factor affecting this capital market.

Someone asked me whether it is okay to buy a high-end liquor leader. I think it is OK to hold it for more than 10 years. Why?

Because the current dividend payout rate of the leading high-end liquor company is less than 4%, the purchase cost can be recovered by half in ten years of dividends. What's the rush?The country is now vigorously encouraging dividends and increasing dividend rates. High-dividend stocks definitely have a future, which is also one of the underlying logics for the rise of high-end liquor leaders.If the company's stock price falls further, the company can definitely increase its dividend rate. (On the evening of August 8, the day after our magazine communicated with Lin Yuan, the leading high-end liquor company announced an increase in its dividend rate, with the dividend rate from 2024 to 2026 not less than 75%)

We visited several companies (for research), and the first thing the bosses said when we met was, "We want to increase dividends, what do you think?" I said that this is of course a good thing, and the investment is more certain. It can be said that now is the easiest time to invest, without so many obstacles.

Moreover, the current market risk is not great. A pharmaceutical stock we bought before has already "distributed" back our capital. If you look for stocks with a dividend rate of 6% or 7% in the market now, you will find a lot of them. The dividend rate of these companies is around 30%. If the dividend rate is increased to 60%, will the dividend rate exceed 10%? Some companies have a PE of only about 3 times, so they can get their money back in three years, and the dividends after that will be free. What is the risk for you? So,I said there are plenty of opportunities to make money in the market now.

Editorial Department : The dividend yield of banks is very high. Are you optimistic about banks?

Linyuan : We stopped paying attention to banks six or seven years ago. In the portfolio, high dividends are to increase account resilience, butTo make a fortune, you still have to rely on growth, and only by investing in growing companies can you change your destiny.

Bull market foundation three:

China's economy remains resilient

Editorial Department ：The Shanghai Composite Index has recently adjusted from 3,000 points to around 2,800 points. Now it is not a battle to defend 3,000 points, but how to get back to 3,000 points?

Linyuan : The main factor affecting the A-share market is the capacity issue, which isInsufficient effective demand.This is why Pinduoduo is so popular. The products are cheap! But businesses need to make money. Can the products sold on Pinduoduo make money? This is not an economic norm.

Editorial Department : What is your new judgment on the current economy?

Linyuan : China's economy has no problems, no inflation risk, and is resilient. It's just that many industries are still destocking. When production and demand reach a balance, the fundamentals of industries and companies will be truly corrected. I can't judge exactly when the balance will be reached.

Editorial Department : In this context, what do you think are good assets?

Linyuan : All good assets are related to the mouth,Our current strategy is “investing in your mouth”, assets related to the mouth are easier to correct. For example, textile products will become inventory once there is insufficient effective demand, and long-term backlogs will become worthless. Food is not like this, because it has a shelf life and usually does not have a large backlog of inventory. The same is true for medicines, and the automatic adjustment of enterprises or markets will be very fast.

As long as the economy maintains moderate inflation, assets related to food will rise. A fund manager who recently went to the leading dairy companies for research said that all companies with continuously rising stock prices have good corporate performance, which shows that the factors of rising stock prices include inflation. If there is a certain amount of inflation in the economy, the performance of the company must be good, which is also good for the stock market.

Regarding the assets of the mouth, I allocate them globally.

In the A-share market, some stocks with a par value of less than 1 yuan have been delisted, but have you seen a few food and beverage companies and pharmaceutical companies go bankrupt or delist? We will focus on this industry to select targets. You may say that a well-known local beverage company went bankrupt because the company's boss was not a businessman at all.

The opportunities in the pharmaceutical industry brought about by aging can also be said to be related to the mouth. , the aging population will reach its peak by 2049. This is certain.

Editorial Department : Pharmaceutical companies are a typical globally competitive industry. How do you allocate assets?

Linyuan : We are investing globally, because aging is not just a problem in China, but also in the West. Whether it is the A-share market or pharmaceutical companies in the European and American markets, we are investing in a package. In the aging pharmaceutical industry, there will be tens of thousands of opportunities, and Chinese pharmaceutical companies will definitely have a trillion-dollar market value.

Editorial Department : In addition to talking, have you invested in the AI ​​concept which has been very popular in the past two years?

Linyuan ：Didn’t invest in AI.Of course, some people have made a lot of money by investing in AI. But I still focus on population. People need to live, eat, drink and have fun. AI will eventually allow more machines to serve humans, but it will never replace humans. Any industry that can bring happiness to people is a good industry.

Investing in Hong Kong stocks

Now is a good time to buy assets

Editorial Department : Let’s talk about the Hong Kong stock market. The Hong Kong stock market has lower prices and higher dividend yields. How to invest in Hong Kong stocks?

Linyuan : There are many companies listed in the Hong Kong stock market, including Hong Kong stocks, US stocks and A-shares. The premium rate of Hong Kong stocks is much lower than that of A-shares. Again, I don’t know when the market will rise, but if it risesThe Hong Kong stock market is about buying assets, some stocks have a net value of 0.1% off. Now is a good time to sell.

Editorial Department : One of the pharmaceutical stocks you hold is more of an S stock listed and traded on the Singapore Exchange. Did you buy it because the stock was cheap at that time?

Linyuan : Yes. The S shares of this stock we hold account for a high proportion of its outstanding shares. It took us several years to complete the full position, and the price was very cheap. In the past two years, the company's profits were all distributed as dividends, and there was almost no capital expenditure, which is very friendly to our shareholders. After the profits are distributed, the company can continue to make money in the second year.

Editorial Department Q: How many years did it take you to build a position in this stock? Did the stock price fluctuations affect your operations?

Linyuan : We bought it for about ten years.In pursuit of investment resilience, both the long and short term need to be considered.We cannot say that we will not invest in this growth stock because we have lost money in the past three years. On the contrary, we should continue to invest and increase investment. One of the main products of this company is used for coronary heart disease and angina pectoris, and the effect is very good. This medicine is not only for emergency treatment, but also for people around me who take it on a regular basis, and the effect is also very good.

"Counting the Accounts" Investments Can't Make Big Money

The experience of being trapped at the end of the last century has made people more concerned about balanced allocation

Editorial Department : In terms of risk prevention, both Munger and Buffett have responded to the question of what to do if a nuclear war breaks out, and their answer is "nothing can be done." What do you think of this question?

Linyuan : Our investment is portfolio-based and risk-controlled. From an investment perspective, you have toTo protect your wealth, you have to allocate assets globally.

No matter what kind of world event happens, it is fair to every individual, because everyone is affected in the same way. If it is the same, don't consider it. Many people don't understand. When we talk about global allocation, some people think it means buying houses and cars overseas. I mean to allocate good companies around the world.

For me, it is a company related to the mouth, an addictive company.

For example, a tobacco stock in the Hong Kong stock market has huge market support in China, market growth abroad, and a strong parent company, so it definitely has growth potential. There are many stocks with a price-to-earnings ratio (PE) of one, two, three, or four times in the Hong Kong stock market, but this tobacco stock has a PE of 14 to 15 times, just because it is in a different industry.

Editorial Department : As Buffett said, a good company should be in a good industry. It seems that your ideas are consistent.

Linyuan : I don't like to comment on others. My way of thinking is completely different from that of many people. I recently chatted with a young man who does value investing. He would consider factors such as PE, PB (price-to-book ratio), cash flow, etc. before deciding whether to buy. This is an account, and he calculates it very clearly.

The way I think is that we all have to move forward, and companies have to look to the future. So I suggest that young man,First of all, we should consider the competitive status of the enterprise. This is the starting point of investment.

The core of value is return. High value must have high return. That young man grasped the core of value. I said that it is difficult for him to lose money in investment. He is also very good in his research scope, but he does not have high-return fund products. His advantage is that he is good at accounting, but his disadvantage is that he lacks vision. He will not be poor in his life, but he will not make a lot of money.

Editorial Department : Please give a specific example. Because of different accounting and perspectives, your understanding of the company is different.

Linyuan : For example, the young man of a leading company in the edible oil industry had a different “account” from us. We believed that, first, the company’s financial situation must be one of the best in the world. Second and most importantly, we recognized the founder of the company and thought he was a man who could get things done.

The company's stock price drop may have little to do with the company's fundamentals, and the PE seems to be relatively high. If we recover from a perspective of, say, several decades, it is not high, maybe just a dozen times, then there is no problem with our allocation.

Editorial Department : You once said before (2021) that if you don’t buy your products, you deserve the loss.

Linyuan : I said (this sentence) at that time. This sentence contains a layer of meaning, that is, the market position at that time was relatively high, and I felt it was difficult to invest. But many people who invest in the market do not feel this high risk.

Editorial Department : Are you still investing in your own products now?

Linyuan : We have been following the investment. The investor has given me the money. I can’t invest all of his money in just one week.

Editorial Department : The market will teach you. For example, when the net value retracement is relatively large, have you ever had an investment that made you feel very painful? If you have such an experience, what lessons or insights did you gain afterwards?

Linyuan : Yes, it happened a long time ago, during the Asian financial crisis in the late 1990s. It was very painful at that time because our holdings were very concentrated, not as balanced as they are now. With concentrated holdings, the heavily weighted stocks continued to fall, but there was nothing we could do. It was a headache.

At that time, there was no concept of fund net value, and all the money invested was our own, which was painful.Investment pays special attention to the balance of configuration.

Editorial Department : What advice do you have for maintaining a good attitude in the stock market?

Linyuan ：It is normal to have floating losses in the short term, but you must make money in the long term, which can ensure that you have a good mentality in the stock market. If you don't lose money, your mentality will be good and you will be happy every day. Why can't some people make (long-term) allocations? He suffered losses after just a few allocations, and his mentality changed, and he didn't dare to invest. Why do you sometimes chase the rise? Because it is riding the wind, chasing the rise is not necessarily wrong, what is important is the number of stocks you buy.

Editorial Department : Thank you very much for your communication!

Linyuan : I hope that this article will still be valuable when read again ten years later, and it will also be a verification of my judgment.

(The individual stocks mentioned in this article are for example analysis only and are not investment advice.)