Rebirth of the Capital Legend

"Investing is about investing in the future. That's a very good statement." Song Shaopu nodded with a smile. "So, once the future development trend of core stocks in emerging industries is determined, the market valuation will be relatively good, and it will be easy to see a Davis double-click scenario."

Jia Yongxiang responded: "That's right, so we must firmly hold our positions and must also adhere to some layout ideas in the direction of emerging industries, such as liquor, white appliances, real estate, building decoration, building materials, nonferrous metals, steel, coal... These relatively traditional industries, although the trend of fundamental reversal is relatively clear, are mature traditional industries after all. The future development space and the ceiling are easy to see, and it is difficult for the entire industry to undergo technological innovation. Therefore, even if the performance will usher in sustained growth under the reversal of the industry cycle, the market valuation of these stocks will always be limited, and it is difficult to see the so-called Davis double-click situation.

Of course, it is actually the best investment target in the market.

Or they are core targets that are in emerging industries and are showing signs of reversal of difficulties.

However, it is difficult to obtain effective logical verification and certainty for this type of target, and the probability of grasping this type of stock is relatively small."

"That's true," Song Shaopu responded. "Relatively speaking, it's easier to hold on to some core leading stocks in traditional industries. It's too difficult to predict the future of technology stocks. Moreover, many technology stocks have the technology, but it's difficult to convert it into terminal sales profits."

"Yes," Jia Yongxiang said. "Take LeTV, for example. It's at the forefront of various industries, and the market valuation is high. However, it's difficult to expand its sales scale, and the profits it can generate are very limited. Furthermore, its capital expenditures are constantly increasing. I don't think this stock has a bright future."

Song Shaopu smiled and said, "LeTV has expanded its business quite a bit, and each of its businesses is a huge money-making beast. I heard that the company is now moving into the new energy industry and is preparing to manufacture electric cars."

"No way?" Jia Yongxiang said in surprise, "Boss Jia is really too ambitious."

Song Shaopu said, "I feel this road is not easy to take. Manufacturing cars is a huge investment with heavy assets. If it is not done well, the entire group will easily fall into trouble. If the capital chain breaks, I am afraid the entire group will be finished."

"It depends on whether this company, with its massive investment, can survive until the industry's technologies mature and the consumer market opens up," Jia Yongxiang said. "I think it's going to be quite difficult. After all, it's incredibly difficult to change consumers' decades-, even centuries--old mindsets, and to disrupt the market and wrestle market share from the world's leading auto giants. I don't think LeTV has the scale or the technological expertise to do that yet."

Song Shaopu nodded and said, "I think so too. So, no matter how many people inside Boss Jia's company are optimistic about it, no matter how many investors urge me to buy it, I won't touch it. Generally speaking, companies that continue to diversify rarely have a good ending."

"Not necessarily," Jia Yongxiang said. "Isn't Midea's main focus now a diversified development strategy? I see that the stock's performance is as stable as ever, and its scale and performance have already significantly surpassed Gree Electric and Haier. It seems that among the three major home appliance giants, Midea is clearly on track to secure its position as the top player."

Song Shaopu smiled and said, "You use Midea Electric Appliances to compare LeTV's stock. Isn't that a bit irresponsible? Although both are diversified, LeTV is diversified across many industries. Midea Electric Appliances, although it now has more and more product lines, its diversification is limited to the home appliance field. It is constantly expanding the home appliance market, that is, it is diversifying within a large industry.

This kind of diversification is naturally very beneficial to the development of the entire group.

After all, enrich more product lines.

More product users can be cultivated. When the user base grows on a large scale, other service revenues will naturally increase. Moreover, after user cultivation, other products will also drive the development of some of the original products. After all, if users feel that a product is good after using it, they will definitely subconsciously buy other products of this brand for trial.

From this perspective, I support the diversification of Midea Electric Appliances Company.

But I am more pessimistic about LeTV's diversification. My intuition tells me that it is very easy to fail if you rashly cross industries and enter a field that you are not familiar with.

It’s really hard to say whether LeTV’s diversification may drag down the entire group in the future.

In fact, I think there is still a lot of room for development in the field of online video in the future. If we cultivate it carefully and deeply, we may get even greater benefits.

In sharp contrast to Midea Electric Appliances is actually Gree Electric Appliances.

I really feel that the current Gree Electric Appliances is no longer the leading and star enterprise in home appliances that it was yesterday. It has lost its enterprising spirit and the ability to continuously innovate and deeply cultivate core technologies. I feel that the gap between this company and Midea will only get bigger in the future.

Therefore, the layout in the home appliance industry.

Our fund's position in Midea Electric Appliances is becoming increasingly heavier, while its positions in Gree Electric Appliances and Haier Electric Appliances are gradually decreasing.

Of course, overall, the overall holding weight of the entire home appliance sector has not changed much."

"Well, in the air-conditioning industry, Gree Electric's flagship product has indeed reached its market share ceiling. It's difficult to continue to penetrate the industry, and its market share is unlikely to grow further," Jia Yongxiang said. "Under this situation, its future revenue and performance will certainly not be as good as those of the diversified Midea Group. On this point, I completely agree with Mr. Song's strategic change."

"It's not just the industry ceiling and product line issues," Song Shaopu said. "Looking at the market trends over the past six months, Midea's stock has consistently outperformed Gree's. When the market is rising, Midea's stock rises more than Gree's, and when it's falling, it falls less than Gree's. Now, the valuations and market capitalizations of the two companies are starting to invert."

Jia Yongxiang said: "It seems that many investor groups in the capital market have begun to vote with their feet on the development strategies of these two companies."

"That's normal," Song Shaopu said. "It's relatively easy to analyze who can make investors money and who has better potential for future growth."

"What about Lixun Precision?" Jia Yongxiang paused and asked, "What does Mr. Song think?"

Song Shaopu thought for a moment and said, "The recent trend of Lixun Precision's stock is indeed very strong. It is basically a unique existence in the main trend of the entire smartphone industry chain. However, due to the influence of the upcoming Apple conference, the core stocks in the main line of the entire smartphone industry chain have been hyped up by the market. The sentiment is a bit too high and does not reflect the fundamental situation.

Therefore, it is necessary to determine whether there is a clear fundamental reversal in the entire smartphone market.

We still have to wait and see how the market reacts after Apple’s press conference.

Just looking at the current fundamentals of Lixun Precision's stock...

After this stock entered the Apple industry chain, its development has been very good, with its performance and revenue scale increasing step by step. In a sense, the development of this stock and this company is closely related to the development of Apple and the future scale of smartphone shipments.

I am actually quite optimistic about the future of this stock.

After all, as the smartphone market becomes increasingly mature, several major domestic mobile phone manufacturers will most likely use a number of OEM companies in the Apple industry chain to produce. From this perspective... these Apple OEM companies still have considerable room for growth.

At least, it is still very far from the ceiling of its industry development.

Furthermore, with the technological updates of each generation.

Smartphones will become terminal devices for Internet services in the future. As people's demand for them increases, they will definitely continue to maintain a high ownership rate.

Therefore, the development of space and the stable scale of ownership.

It is beneficial to the development of these OEM companies and the corresponding technological innovations.

Overall, the future prospects of Lixun Precision are not bad, and the future development space is also not bad. It is no wonder that this stock has been hotly pursued by various capital groups recently, and there will be continued institutional main funds and large-scale increase in positions. However, the same thing still applies...

Short-term sentiment on this stock is a bit overheated right now.

Even if this stock has good future prospects and future development, it is a stock that is worth investing in.

Therefore, this time point is not suitable to continue chasing positions and going long.

We have to wait until after Apple's press conference, when emotions have calmed down and the internal chip structure of this stock has further settled, before it is suitable to intervene.

The smartphone industry chain...

If Apple's subsequent press conference is successful and this generation of products is recognized by the consumer groups in the terminal market.

So, we can also follow up on some positions in the smartphone industry chain to diversify our investments.”

Jia Yongxiang said: "I didn't expect Mr. Song to have such a profound understanding of the smartphone industry chain. I feel the same way. There's a saying that goes, 'You should always believe that the market is right.' I think that in this round of market trends, since various capital groups in the market have worked together to choose the main lines of large-scale infrastructure, the smartphone industry chain, and the new energy industry chain as the breakthrough points of the market, then this is not a random choice or speculation.

It is certain that these three main lines all have extremely strong hard-core logic.

In this case, we must respect the market’s choice and always believe that the market’s feedback is correct.

I am also very optimistic about the stock of Lixun Precision. And it is obvious that with the concentrated efforts of a number of major capital groups in the market to go long on the stock of Lixun Precision, it has become the leading stock in the smartphone industry chain. It has the momentum of the initial outbreak of Oriental Yuhong stock and the guiding role it played in the development of the large-scale infrastructure market. I even suspect that among the major funds that dominate this stock, there is a high probability that the institution "Huayi Capital" headed by President Su may also be present.

However, this stock has not been listed on the Dragon and Tiger List so far, and we cannot see the specific buying and selling data after the recent rapid increase in trading volume, so we don’t know who the specific institution that dominates the stock market is.

But no matter who is leading this stock market.

Its performance is much stronger than other Apple industry chain stocks, and the phenomenon of institutions being highly clustered is very obvious.

Since the main capital is so deeply involved in this stock, there is no reason not to believe that this stock will not be able to perform well. There is also no reason not to choose this stock when laying out the smartphone industry chain.

In fact, there are many core leading stocks in the entire market.

It is the main institutional funds in the market, and it is unavoidable when trading.

For example, Oriental Yuhong, Beijiang Communications Construction, Anhui Conch Cement, Qianzhou Moutai, as well as Midea and Gree Electric Appliances mentioned just now, and Lixun Precision, and LeTV... Every move of these stocks will affect the trends of related main sectors that are highly correlated with these stocks, and form a linkage trend.

Therefore, we don't need to exclude these stocks at all, and we can follow and participate in them according to market trends.

I agree that after this round of Apple's press conference, we should wait for the market hype to cool down a bit and then increase our fund's layout in the main line of the smartphone industry chain. I also agree with increasing our holdings in Lixun Precision.

"Okay," Song Shaopu said. "Then it's decided. We'll see how the market further recognizes the smartphone industry chain. If the market recognizes it well and everyone's expectations are relatively consistent, then we won't hesitate. As you said, since the market has chosen major infrastructure, new energy, and smartphone industries as the core breakthrough points and has formed a preliminary consensus, what else can we say? Respect the market's choices, respect the development of market trends, and respect the consensus expectations of the main market capital groups. I believe that the market created with real money must have its reasons and underlying logic."

As the two continued their discussion...

This is also accompanied by the continued discussions and analysis and outlook on future market trends by institutional fund managers similar to Nuoan Capital and Huarui Fund Management.

As market time goes on.

Positive news has been emerging all the time. Obviously, in addition to the majority of retail investors and hot money who are greatly affected by emotions, many major institutions, as well as the "national team" and even regulatory agencies, are still more protective of the market and are more concerned about the development of market trends. They really want to get the stock market out of the continued downturn.