Let me share an intriguing tale that reflects on contemporary consumer behavior and the socio-economic dynamics at play in modern society.Recently,during the double eleven shopping festival,I made a rather mundane purchase—a television.Thirty years ago,such a feat would likely be construed as a symbol of affluence,eliciting envy from peers; however,the prevailing reaction in today's context would typically be a quizzical look paired with a question,“Oh,did something happen?” The disparity in perceptions around consumer goods paints a vivid picture of our changing socio-economic fabric.


Indeed,something significant happened.During one school session,children were asked to watch a television program discussing children's self-protection.My daughter raised her hand to announce she couldn’t participate because we didn’t own a television.This prompted disbelief from the teacher,who assumed she was just being mischievous.Yet,it turned out,indeed we didn’t own one due to our financial difficulties.This revelation sparked the teacher’s curiosity,leading her to reach out for a home visit to witness what a ‘poor’ family who couldn’t afford a television looked like.It was a rather odd scenario,but it highlighted our need for a television in this digital era.

What followed my purchase was an unexpectedly chaotic series of events.The television brand,the logistics company,and the installation service provider began to point fingers at one another regarding who would handle the installation.Each party accused the other of deceitful practices,alleging that they had learned of my television purchase through leaked information resulting from the online transaction.It was puzzling to witness such a lack of accountability among companies that were supposed to provide cohesive service.Eventually,this contentious relationship boiled down to a fight for the installation fee—a crucial lifeline for their dwindling profits,constituting nearly ten percent of the television's price.Unfortunately,the technician who installed my television made an error while setting it up and promptly cut off all communication once he received payment.

This excessively convoluted supply chain resembled a carcass on the savannah,stripped of any flesh—each entity operating in a state of desperation,treating their clientele with an unmistakable sense of urgency.Economists have likened this phenomenon to a state of lucidity triggered by dwindling profit margins.When companies anticipate little to no profit,they become reluctant to reinvest and tighten their lending to customers,which,in turn,causes consumers to pull back on spending,creating a ripple effect down the chain.

The growing scarcity of profits leaves ordinary investors feeling uneasy.This condition is often referred to as ‘investment droughts’—an echo of declining consumer confidence that bespeaks broader economic trends.As we look forward to 2024,this sentiment remains palpably evident,especially in the first half of the year.Interestingly,there exists no need for panic among investors.Much of this sentiment stems from collective pessimism rather than actual scarcity.Young individuals reminisce about just two years ago,looking down upon elderly citizens who queued at dawn to purchase savings bonds yielding nearly four percent with zero risk and no taxes involved.

Fast-forward to present—surged by banks and insurance companies,people are scrambling for investment products barely yielding three percent annually.A significant realization strikes: whether one secures a three percent or a mere two-point-five percent return,the long-term contribution to wealth remains almost negligible.Consequently,at this juncture,issues surrounding asset allocation take precedence over mere investment rates.

Macroeconomic policies mirror past tendencies; they often appear as a yoga instructor,contrary to the instinctual desires of individuals.When expansion is a goal,policies tighten; when businesses tend toward contraction,liquidity is released to coax them into growth.These trends have only grown increasingly pronounced throughout 2024,encouraging more proactive monetary and fiscal policies and administrative guidance in the days ahead.Yet,a palpable sense of fading efficacy has surrounded macro policies since 2019.This phenomenon isn’t exclusively Chinese—it pervades major economic giants worldwide.Traditional models of macro regulation falter due to governments accumulating vast debts while striving to maintain both their economic growth and social welfare obligations.
What humanity potentially requires is an overhaul—a transformation akin to the organizational restructuring of the early 1980s,advancements through technology,or perhaps a synthesis of both initiatives.

The housing situation remains unresolved

In 2024,authorities are seemingly poised to prevent the further deterioration of the real estate sector—and early signs indicate some success.The mechanism to facilitate this isn’t complex; it involves incrementally lifting restrictions on real estate purchases in economically developed urban areas to realign housing prices and leverage back to market-determined levels.However,it poses a broader dilemma: should we aim for a more balanced regional development or grant more freedom to these areas?While equity promotes comfort in people’s minds,economically advantageous cities invariably attract significant capital and human resources.Even with strong balancing policies from decision-makers,mega-cities effortlessly outpace their smaller counterparts,as disparities between regional development continue to widen.

Historically,China’s emergent mega-cities have seen fluctuating rankings since modernization prominence took root,with only cities like Shenzhen recently rising to the forefront.Indeed,the oscillation between striving for equilibrium and loosening restrictions may signal a sophisticated institutional design philosophy—gradually digesting growth can sustain accelerated economic momentum for a country of such immense proportions.

In 2024,it is observed that while housing prices in mega-cities have stabilized,it remains premature to declare the end of the real estate crisis.The underlying debt issues persist,highlighted by the need for colossal real estate corporations to navigate their respective liquidity traps with regulatory support without jeopardizing the entire financial system or sparking social unrest.

In the foreseeable future,I maintain optimism about Earth’s ongoing rotation,with economic revival gradually surfacing.The underlying logic governing housing values remains fundamentally unchanged.Cities that recover briskly and provide attractive employment opportunities will inherently have housing prices with investment potential.

Surrounding China's mega-cities,various locations exhibit stronger real estate elasticity—when economic conditions falter,property values dive; conversely,during robust economic periods,prices may soar dramatically.Such niche markets often serve as investment paradises,albeit retention of the core principle that houses are primarily for living,not for speculation.

Stocks Gain Significance

The spotlight on the stock market is intensifying among decision-makers,not merely due to its expanding scale but due to its unique financing approach—equity financing does not necessitate repayment.Against the backdrop of growing national debt,this renders the stock market notably appealing.

Attracting greater interest in the stock market has become paramount in governmental work over the past two years,albeit it struggled to break free from a context of suspicion,akin to a ruler wary of subversive dissenters.Whether under previous or current regimes,efforts seem obsessed with identifying ‘bad actors’ disrupting the market.In less than a year,major indices stagnated,while trading volumes declined markedly.

Recent interventions by the central bank,which resumed liquidity and introduced targeted tools for the stock market by late September,mark a shift.This highlights that,in capital-driven domains like the stock market,financial backing supersedes bureaucratic control—an affirmation sure to please investors.
Statistically,the major indices of A-shares have never recorded three consecutive annual declines,a streak that can likely continue,thanks to the central bank's remedial actions.It’s also evident that many publicly listed companies in China are undervalued.Even after September,this sentiment persists due to widespread pessimism regarding future market conditions,which has fueled an ‘investment drought.’ In both domestic and Hong Kong markets,several companies display outrageous stock valuations,particularly in the property and fundamentals-based sectors,where strong companies remain undervalued while performing well.

For long-term investors,these conditions may present a unique opportunity.The current exaggerated sentiments in the market can be likened to beautiful seashells revealed when the tides recede—you just need to bend down and pick them up to gather wealth over time.

Conversely,certain companies embellished with glamorous branding still reveal shocking statistics on closer inspection—they frequently pivot industries,survive on fleeting trends,lack clarity in their main business,and perpetually incur losses yet enjoy inflated valuations due to their market image.These entities often rise dramatically during trending times only to plummet drastically when facing performance realities.Moreover,these stakeholders may manipulate price through their actions,posing considerable risks to regular investors.Scouting out these seemingly favorable stocks has proven elusive,and no long-term successful investors have yet surfaced under such speculative brackets.

The question remains,how should ordinary investors engage with the stock market?In my opinion,index funds stand as the most worthwhile method for regular investors—they are cost-effective and comparatively secure,ensuring potential participation in the rewards of China's economic growth over time.

Gold,A "Faith-Based Investment"

In recent years,gold has shone brightly among investment options,with global gold prices increasing approximately sixty percent from periodic lows.Quite impressive,indeed!
However,predicting gold's future trajectory remains nebulous compared to equities or real estate.The volatility in gold valuations opens the door to speculation,as it lacks the cash flow generated by other assets.Investing in gold ultimately centers on comparative assessments of its appeal versus competing investment forms.

Some analysts mistakenly assume a direct positive correlation between gold pricing and inflation due to historical misconceptions,particularly influenced by depictions from inflationary episodes in 1940s China.While soaring gold prices were witnessed at that time,they were relative to the then-currency system and didn’t reflect true international gold market movements.A more recent paradox occurred in 2022 when U.S.inflation peaked yet gold hit a relative downturn.

Fundamentally,gold's price movements can often hinge on economic outlooks; during times foreseen economic instability,it competes with safe-haven instruments like the dollar or U.S.Treasury bonds.It functions somewhat like a beauty contest among various speculative instruments—at certain points,the winner emerges,but none ultimately outpace inflation through the long haul.The past two years saw the dollar pressuring gold values as faith in the dollar soared in the midst of interest hikes,while shifts pivoted to gold with subsequent rate cuts.

Looking ahead to 2025,I anticipate equilibrium between these two forces.Although predicting gold price fluctuations presents a challenge,strategic approaches for investment can be crystallized.Investors should ideally adhere to the principle of “avoiding reality in pursuit of the ideal.”

The most pragmatic step involves acquiring physical gold; however,even with accurate market forecasts,returns typically fall under sixty percent once storage costs are factored in.Alternatively,paper gold presents a midsize option—generally cheaper and designed to provide gains roughly proportional to gold’s price increases,pivoting closer to virtual realities.

The most compelling strategy may look into public companies that claim to mine gold.Details surrounding their extraction capabilities tend to be secondary,as demonstrated by premium gold mining stocks that rose dramatically—exploding two to three times in value during a period where gold climbed just sixty percent.