The craze for AI still shows no signs of fading, but is accelerating even more.
The Chinese Spring Festival has not yet ended, and Open AI has launched a super king-the video generation application sora. You don’t need to know it, but it’s a surprise when you use it. The short video that can be generated in just one sentence is actually better than what a manual team could produce in several days.
I have to admit that the technological progress of AI is really rapid. Some big names in China have publicly stated that the arrival of general artificial intelligence (AGI) is much ahead of schedule.
If we compare today's AI applications to the Internet in 1996, there is no doubt that there will be a blowout later. This is not only the application level, it is the power to change the world, and it is also a blowout of wealth-making opportunities.
The question becomes, as you and I who are lucky enough to witness this era of great technological change, how can we seize this once-in-a-lifetime investment opportunity?
01Only primary school students do multiple choice questions
When researching U.S. stocks, the author discovered something quite interesting.
Among the top five shareholders of almost all large American companies, you will find BlackRock, Vanguard, and State Street.
For example, technology giants such as Apple, Microsoft, and NVIDIA:
There are also the extremely traditional Coca-Cola and Pepsi:
What is the concept?
To sum up the best-selling books about American Jewish conglomerates in the past few years, they have already ruled the world.
This is of course meant to attract attention, but American financial conglomerates, such as BlackRock, Vanguard, and State Street founded by Jews, as well as Rockefeller and Citigroup founded by Angsaans, have become the top forces in the world's financial markets.
However, today we are not going to promote the myths of these consortiums, but to share a simple investment philosophy:
If you are optimistic about an industry or several industries, the best way to invest is not to compare which company is good and which company is bad, but to buy all the powerful companies in the industry.
For example, Coca-Cola and Pepsi-Cola, ordinary investors are always entangled in whether Coca-Cola or Pepsi-Cola is better, and then rack their brains to do research in order to prove that they should buy Coca-Cola instead of Pepsi-Cola, or buy Pepsi-Cola instead of Coca-Cola. But among smart and capable investors, This kind of thing is a waste of time.
Since we are convinced that Coca-Cola is a good market, the best investment method is to buy both Coca-Cola and Pepsi. If you really think that Coca-Cola is better, then just give Coca-Cola more positions.
Because the demand, competitive landscape, growth prospects, corporate fundamentals, return on investment, etc. of Coke's track are all very public, it can be said that there are basically no secrets at all. The duopoly situation between Coca-Cola and Pepsi-Cola has been established for so many years, and there is nothing that can subvert them. The only possibility is that everyone stops drinking Coke, but this possibility is almost zero.
To use a now-popular meme, "only elementary school students take multiple-choice questions, but all adults do."
02 “Family Bucket” investment model
Going back to AI investment, I believe that some people have made a lot of money in the past year or so, while some people have been disappointed and regretful.
First of all, it is worthy of recognition that AI, a technological revolution that can change the world, has just begun. If I have to give it a time point, I prefer it to be similar to the Internet in 1996. The benchmark is the penetration rate of paying users.
Therefore, if we look at it over a long period of time, we are not talking about it in vain, because there is still a long time ahead and there are still many opportunities. Just imagine, in 1996, Amazon was not yet listed, and Google and Meta were not established. Even if you buy Amazon 10 years later in 2006, you still have an 80-fold increase.
This also fully shows that a technological revolution that is enough to change the world has such a long time span and so many opportunities to make wealth that there is no need to worry too much about not being able to get on the car.
The question is just, what strategy should be used to invest?
Applying the previous description, the strategy is actually very simple, that is: buy all the top AI companies in various fields.
You don't have to worry about whether GPT-4 is better or GEMINI 1.5 is better, in order to prove that one can defeat the other. Because in fact they are almost the same. Even if the spotlight is on open AI, it does not mean that Google has fallen behind. After all, Google's AI was once far ahead. Remember when AlphaGo defeated the human Go champion in 2016.
Some people say that Google's AI got up early and rushed to the late afternoon. At that time, it was clear that Professor Hinton, the most famous person in the field of AI, and Ilya Sutskever and other outstanding people were overtaken by its younger brother Open AI. What's even more ironic is that open AI can make chatGPT, relying on Google's epoch-making transformer architecture. The chief scientist of open AI is none other than Ilya Sutskever. Now, Hinton has resigned, and the eight people who wrote the transformer architecture have all left Google.
Therefore, Google is useless and not worth investing in.
Such a conclusion is actually equivalent to buying only Coca-Cola and abandoning Pepsi-Cola. Although there is nothing wrong with such an investment, for example, Buffett loves Coca-Cola but has no interest in Pepsi-Cola. However, BlackRock, Vanguard, and State Street have completely different strategies. , they just want everything, and they have plenty of money anyway.
There is no proof for what you say, just go to the data.
From the financial crisis in 2009 to now, Coca-Cola’s revenue has increased by 20%, net profit has increased by 55%, and its stock price has increased five times; during the same period, Pepsi-Cola’s revenue has increased by 111%, its net profit has increased by 54%, and its stock price has increased by 50%. 4 times more.
The earnings and stock price growth of the two are basically in sync. You can say that the quality of Pepsi-Cola's revenue growth is worse, but this does not affect your investment income from buying Pepsi-Cola.
Therefore, if you don’t want to miss the investment opportunity in AI, the best thing to do is BlackRock. BlackRock currently holds shares in AI companies in the US stock market, even small stocks such as Unity and Roblox.
Have they really figured it out? In the end, whether GPT is better or Gemini is better, or whether Microsoft's performance growth rate is higher, or Google has more growth potential, it doesn't matter at all. What matters is that you buy all positions. If Microsoft and Google win, you will be the winner.
This is called multiple bets and a sure win.
03 Turn stock trading into venture capital
In fact, BlackRock's approach is similar to venture capital, except that these are better than venture capital because these companies have already been listed and have a complete information disclosure mechanism. It is easier to research and prospect the company, unlike venture capital. That's such a high risk.
Understand their gameplay clearly. Hillhouse is one of the domestic investment institutions that completely replicates BlackRock's approach, and may be the most famous one. Their approach is also to invest mainly in the track. They are optimistic about the new energy track and have bought all the top companies in this track, such as CATL and BYD for power batteries, BYD and Wei Xiaoli for electric vehicles, and Biomedical companies.
The advantage of this "family bucket" mode is that you only need to find out whether the track is a good track. It is very simple for good companies to bet on these tracks to obtain profits, you just need to lie flat.
Of course, the final development of the companies on the track may be different. This company's performance is better, the stock price rises higher, and that company is relatively weaker. There are even companies that start high and then go low, and finally wipe out everyone. This is another issue, that is, the setting of the position ratio and the instant adjustment of the position.
Because after a period of verification, each company's development, performance, and fundamentals will change. If it does well, it will increase its holdings. If it does poorly, it will reduce its holdings. If it does too badly, it can be cleared.
Isn't this kind of operation much simpler?
Why is there always a saying in the stock market that there are 7 losses, 2 draws and 1 profit? And why is it that everyone understands the simple principle of making money, but very few actually make money?
Buffett sees this matter most clearly.
Amazon founder Bezos told a little story.
Once he asked Buffett: Your investment philosophy is very simple, why don't people just copy your approach?
Buffett replied: "Because no one wants to get rich slowly."
In fact, there is nothing particularly esoteric and difficult to understand about stock investment. If you dismantle the investment frameworks and investment logic of famous investors, you will find that they are all very simple and common sense. Moreover, what these people bought, when they bought it, at what price they bought it, and at what price they reduced their holdings are all public information. You can make money even if you don't understand anything or simply copy it.
It’s just that everyone wants to get rich overnight. When you are unwilling to get rich slowly, you are actually linked to losses.
The famous stock investor Peter Lynch once said:
"What bothers me very much is that people actually care about their money. For example, when people buy a refrigerator, they will read the reviews of the buyers. They will also read the reviews when buying a microwave. When buying a car, they will also be very selective and consult everywhere. , study carefully. But when they hear gossip about certain stocks just on the bus, they can’t wait to spend half their life savings and invest in them, for fear of not being able to catch up.”
This is actually the typical get-rich-quick mentality at work. I believe that neither Buffett nor the chairman of BlackRock would think this way when buying stocks.
If you are too anxious about investing, you will become addicted to catching loaches in a rotten pond. It seems very exciting and exciting, but in the end you will be covered in mud. Are those few small loaches enough for you to eat? Why not go fishing for whales in the ocean?
04 Conclusion
Breakthroughs in artificial intelligence technology may be a once-in-a-lifetime opportunity for many people, and there are many investment opportunities. We are lucky to be able to witness and participate in this great era.
Therefore, there is no need to be entangled unnecessarily, and you should actively participate in it.
I know that many people are still worried about whether there is a bubble. I cannot deny that this worry is unreasonable. After all, the price has risen too high. But there are ways to avoid it, such as choosing high-quality large companies, such as the seven major technology stocks. These companies themselves have very good profitability, and there may be some bubbles in valuations. But as long as the performance continues to be realized, valuation bubbles will be very It is easy to be squeezed out; for example, there are many hedging tools available. At worst, when the financial report comes out, just use options in the opposite direction to hedge.
If you are really worried, you can also do a good job in position management, don't hold a position too high, keep more cash, etc.
If the bubble really bursts and there is a big drop, as long as you have sufficient ammunition on hand, it will also be a once-in-a-lifetime opportunity to buy the bottom. During the two stock market crashes in 2000 and 2008, those who successfully bought the bottom made crazy profits.
As for whether there will be a technology stock bubble like the one in 2000, I don’t think the probability is high.
First, during the Internet bubble in 2000, many companies were newly founded, had no revenue, and relied solely on PPT to defraud money, just like Jia Yueting. It’s different now. AI concept companies are basically large companies, such as Nvidia, AMD, Microsoft, Google, Meta, and Amazon. They are all companies with very mature businesses and excellent financial data. Nvidia and AMD may be a little overvalued, but Microsoft's PE is less than 40 times, and Google's is less than 30 times.
Second, the capital market can also learn by itself. After the bubble burst in 2000 and 2008, investors will not blindly give money to those PPT companies to burn. Now, none of the AI companies with the best growth on Nasdaq are new. Created by experienced veterans.
If you don’t want to miss out on the big era, and at the same time strike a balance between risk and return, you might as well try the “family bucket” investment model. If you have more money, buy a larger “bucket”, and if you have less money, buy a smaller one.
Finally, let me tell you a little bit of history:
According to historical records, once Emperor Taizong of the Tang Dynasty walked to the end gate at the back of the palace and saw the Jinshi who had passed the new examination lining up one by one and walking out in an orderly manner, he was overjoyed and couldn't help but say:
"The heroes of the world have joined me!"