Since the 2020 epidemic , The world’s major economies are issuing currencies to stimulate the economy. It can be said that it was an unprecedented monetary release after the 2008 financial crisis span>, the most representative and the core of the global currency system, the currency printed in the United States reached astronomical numbers within one year: One-fifth of the total currency since the founding of the United States!
In such a collective water release environment, almost everyone is in danger. The sense of urgency surrounds people all the time. A common problem is beginning to be considered by the Chinese:What is the configuration? What asset can not be submerged by the flood?
With this question, I’ll talk to you about”the next 30 years, What is China’s most risk-resistant asset“, the answer may subvert many people’s perceptions of life and society.
PS:The article is slightly longer and involves multiple data comparisons. Please be prepared to read it patiently.
I. Consequences of over-issued currency
What impact will the large currency release have on the lives of ordinary people? The overall view will tend to two aspects:inflation and wealth transfer.
For the term inflation, many people only know that it can cause their money to become worthless, but they don’t understand its inherent laws. I will give you a brief introduction here.
To give a simple example, ideally the currency and products in the market. It is balanced. It can be regarded as 100 products corresponding to 100 yuan. If the currency on the market increases to 200 yuan at this time, the extra 100 yuan will be digested by the original 100 products. At this time, the price of each product Will rise from 1 yuan to 2 yuan. Prices are rising, but people’s cash has not increased. This is inflation.
With regard to currency causing inflation, there is a” in finance. Transmission mechanism“. The central bank issues currency, and commercial banks can lend more money. Enterprises are easier to borrow from banks This will increase total output, drive corporate profits up, and then increase employee benefits and wages. On the other hand, in order to alleviate the pressure of increasing labor costs, companies will increase the price of commodities to hedge, which leads to an increase in commodity prices on the market.
Through this transmission mechanism, we can see that this is a cycle of rising wages and prices. The final result is:Wages will never increase in prices.
2, Redistribution of wealth
Every time a currency release is a redistribution of wealth, it is also a plunder of ordinary people.
The increase of currency in the market will eventually form two directions:consumption, investment. Today’s emphasis on credit, even though it has effectively hit Lao Lai, has also made it easier for the rich to make loans. Therefore, most of the money issued will flow into the hands of enterprises and the rich.
Enterprises stimulate people’s consumption by expanding production (circulation of the above transmission mechanism), and the ultimate beneficiary is still the enterprise. Money is reinvested and the infinite cycle of production is expanded. Through consumption and The combination of investment completes the accumulation of wealth and allows the public’s money to flow into the enterprise.
It’s easier for the rich to invest directly in real estate, stocks, etc. Reap the funds of civilians and retail investors.
Enterprises and wealthy people have a large amount of loans based on it, and it is easier to accumulate wealth and promote The redistribution of social wealth, so the poor will become poorer and poorer,The rich is getting richer and richer.
Inflation and the redistribution of wealth are eternal themes in the process of money release, so ordinary talents need to find ways to avoid being harvested.
2. How do ordinary people allocate assets
How to prevent asset shrinkage?
Many people’s thinking is stuck in the bank for regular deposits and interest; the more advanced ones will buy Bonds; more advanced investmentGold, after all”GoldHolding valuehigh-yield” ads are not uncommon in certain treasures; the most popular ones are probably real estate and Foreign exchange, this is roughly what ordinary people think, let’s explore these four types of Value-added method.
1, time deposit
time deposit is the minimum Level of value-added method, especially in China. Many people are staring at the safety of deposits and the annual interest rate of about 3%, but ignore the”inflation“, China’s average inflation in the past 30 years has been around 6%, which means that money stored in banks will not only make no profit, but will also shrink its purchasing power by 3%every year.
Of course, this is China. If depositing regularly in developed countries in Europe and America is a way of value-added, their economic development is slow, inflation is low to negligible, deposit interest rates are greater than inflation, and they can make money in the long run.
2, bonds, gold, foreign exchange
The University of Pennsylvania has studied the 210-year bond, gold and U.S. dollar changes, Bond yield 3.6%, gold 0.7%, USD -1.4%. (After deducting inflation)
The book”The Future of Investors” also made a similar analysis of the US dollar, gold, and bonds. The time is from 1802-In 2000, according to statistics, the value of holding 1 U.S. dollar 200 years ago and investing in gold and bonds in 2000 are respectively :US$0.7, US$1.39, US$1072. (after deducting inflation)
The U.S. dollar is the world’s hegemonic currency, and it is also the most stable in foreign exchange but has suffered a tragic depreciation; gold is usually respected by everyone, but only It can maintain value without yield; instead, bonds have higher yields.
The above two pictures are the bonds of the United States and China in the past 30 years.Yield, it can be seen that the United States has fallen all the way in recent years, but in most cases it is also higher than China. In fact, the US Treasury bond yield exceeded 15%when it was the highest. It was only in the late last century. Start to fall back. In other words, in the long run, the yield of Chinese bonds is lower than that of the United States, and the expected return of investing in bonds in China is also lower than that of the United States.
3. Real estate
University of Pennsylvania’s House prices statistics show that:Yields are almost the same as bonds, but China is different, and housing prices have risen by the sky is the consensus of everyone.
Here Lao Niu found a piece of Chinese real estate in the past 30 years The trend chart (national average price), The average price in 1987 was about 250 yuan, in 2019 it was about 9,000, and the 32-year compound rate of return was 12.25%. The yield rate of 3.6%, which is much higher than that of bonds, is a particularly good investment tool.
Is real estate really the best asset? the answer is negative!
3. Stocks, the best assets
Stocks are China’s best assets in the future. This concept is difficult for most people to accept Yes, we might as well look at a set of data.
China’s Shanghai Stock Exchange Index was 100 points in 1991 and is currently 3690 Point, at 2320 in July 2019, annual compound rate of return 20.32%, the compound of house prices from 1991 to 2019 The rate of return was 17.27%, the market beat the price trend.
The stock market beats the property market, not only in China, but also in the United States, the United Kingdom, Germany, even Japan, which has a sluggish economy. In a study conducted by the University of Pennsylvania in the United States over the past 210 years, after deducting inflation, the rate of return on house prices was 3.6%, but that of stocks was 6.7%. This is the performance of the world’s most mature capital market.
Look at China , If someone bought a house with 1 million in 1991, there will be about 20 million today, while the index fund has 37 million. This person is only buying an index. It is possible if the stock assets of an excellent company are invested by 100 times.
China’s future lies in the capital market.
Looking back at the past, real estate has supported China’s economy and occupies an absolute center of gravity in GDP. /strong>” the high pressure continues to heat up, real estate will also enter a bottleneck in the future. Can struggle a little.
From the national level”Let funds flow into the real economy “, from the perspective of increasing the proportion of direct financingthe future focus will be on the capital market, especially for registration in 2020 The direction of the full implementation of the system is clearer. Under the registration system, China’s capital market will become more and more standardized. The past boom and fall will become history. In the future, it will be a mature market in order to promote direct financing of enterprises.
Real estate is coming to an end, the capital market’s spring is coming, and the currency release will continue for several years. In the future, the capital market will be the best refuge for ordinary people, and stocks will become the best asset allocation. Ordinary people who can catch up with this ride can not only avoid wealth shrinking and asset harvesting, but also hope to achieve class leaps.
Write at the end:
Nowadays, many people’s thinking still stays at the level of gold and real estate, especially the soaring housing prices in 2020 will strengthen everyone’s views. Today I tell everyone that real estate is not the best asset, but the riskiest stock. It may subvert the inherent thinking of many people, but it is a fact today. In the past, scholars from all over the world were studying the economy, and they all came to a conclusion:stocks It is the most worthy asset.
Because the essence of the stock is a company, the development of an excellent enterprise will definitely exceed the national average and exceed the appreciation of real estate. For example, Huawei’s development history and becoming a world giant effectively interprets this truth.
This article is just to give you a thought-level cognition, not a brainstorm To buy stocks, Lao Niu is just a thinking based on the economic level. Friends who want to enter the capital market can look at the index. The gap between the rich and the poor continues to widen. Where is the way out for ordinary people? This article has a more detailed explanation of the index.