Original title: 12 Survival Strategies under inflation
This article is from Canghai Dog.
We can hear people talking about inflation all day, and there are often a lot of long speeches behind it, and I have written similar monologues.
Of course, there are still people who often come forward to talk about deflation and scare everyone.
I have been thinking recently, is the inflation we are talking about really inflation?
Literally,The original intention of inflation is the rapid growth of the amount of cash and its equivalents. Currency refers to cash and its equivalents.In reality, we do not directly discuss this "cause", but its "effect"--The rise in the price of a sample pool.
If asset prices rise evenly, the cause and effect is solid, and talking about PPI and CPI is talking about inflation. But in reality,Structuralization is the norm, uniformity is luxury.
From the perspective of large categories of asset allocation, we can clearly feel this difference:
From the point of view of the allocation subject, there are only two kinds of assets: one is high-yielding assets, the other is currency. Configuration subjectCombine your own liquidity preferencesThe ratio at which these two assets are manipulated.
Generally speaking, liquidity preferences are stable and will not change particularly dramatically.——Unless, like during the epidemic,。Therefore, the increase in currency will make each subject feel that his high-yielding asset ratio is too low, there is a kind ofAsset shortageTherefore, each subject increases the allocation of high-yielding assets.
However, the amount of high-yielding assets is given or the growth is slow.In the end, the system is balanced by rising prices of high-yielding assets.
Therefore, a corollary of the increase in currency is the increase in the total price of the pool of high-yield assets.
In reality, the government'sTrue demandThe price of a small category of assets can grow slowly, as shown in the following figure.
Assume that liquidity preferences remain the same.When the currency expands at the rate of growth v, the total price of the entire asset pool expands at the same rate. However, for the sake of people's livelihood, we need to limit the growth of certain asset prices. As a result, we have a somewhat eerie balance:
1. The currency is expanding at a high growth rate.
2. The whole asset pool expands at the same growth rate.
3. There is a structural differentiation in the growth rate within the asset pool.
I wonder if you have found that the government regulation and control in this era is very different from that in the past. the old era is total, while the new era is structural:
1. In the past, the government controlled the price growth of special assets N by changing the total valve to increase or decrease the rate of inflation.
2. At present, the government is no longer willing to adjust the rate of expansion v, they are worried about financial risks, and they use some structured means to adjust the price growth of special assets N.
In other words, the biggest difference between the past and the present isIn the past, the currency growth rate was volatile, but the current volatility is very small.
Don't underestimate this change, which leads to a huge fork in asset allocation:
In essenceTotal timing strategyIt is necessary to reduce the overall position from time to time and take a certain percentage of cash and its equivalents. However, this strategy is subject to macro conditions.That is, the currency growth rate is low and unstable.With the progress of the regulation and control technology of the central banks of various countries, the macro conditions have gradually evolved into——The growth rate of currency is high and stable.It is becoming less and less cost-effective to take cash, even if it is not necessary at all.
Accordingly, the total timing strategy has become very chicken, and everyone's strategy has gradually turned.Full assets + asset rotation.
Dario was keenly aware of this and called out the famous saying "cash is trash".
He made this remark before the outbreak in the West. After the outbreak, liquidity preference increased significantly.Short cashDonovan's strategy has been hit hard. It was once rumored in the market that Bridgewater had burst its position.
As a result, Dario's "principle" was thrown into the dustbin, and the phrase "cash is trash" seemed to be a joke.
But then what?
It is the large amount of currency put in by the central banks, and the stock and property markets of all countries have entered a new round of big bull market. Everyone had to admit that Dario's words smelled good.
Moreover, after this round of epidemic, various organizations have also discovered an astonishing fact:The responsibility for dealing with huge redemptions lies not with central banks but with central banks.Under this division of responsibility, there is no need for institutions to hold large amounts of cash and cash equivalents to deal with huge foreclosures. All they have to do is to go through the initial stage of huge redemption and wait for the government to complete the rescue process.
As a result, people have a lower liquidity preference-what are you doing with so much cash?
In other words, before the epidemic, people would hoard some money to deal with huge foreclosures in their own accounts (more or less), and now they will hoard them in the accounts of central banks.In the event of an event that leads to a sharp increase in liquidity preference, the central bank is responsible for it; the market only needs to carry a small increase in liquidity preference on its own.
In this different era, the ecological environment has changed greatly, which is mainly reflected in two aspects:
1, the currency growth rate remains high and stable; 2, the responsibility for dealing with huge redemptions falls on the central bank.
Accordingly, investment strategies have changed:
1. Cash has become a hot potato, and liquidity preference continues to decline.
2. The total timing strategy is dead, and everyone is playing with assets, trying to manipulate assets to exceed the average β of total assets, that is, the growth rate v
Specifically, residents and their agents-- investment managers-- toss back and forth in stocks, bonds, commodities and houses, shunning cash in order to exceed the average v; people are always full and no longer play timing, all playing with assets.
In reality, some people do not seem to be able to keep up with the changes in the environment, or based on timing ideas to participate in this market. I still remember that on July 2, the stock market plummeted, and many people felt that risk appetite had gone down and the stock market was hopeless.
As a matter of fact, this is still deeply rooted in us.Timing thinkingIt's a nuisance.
Whenever there is a change, I can't help but want to hold cash. In fact, this is a new type of financial market.Maladaptive behavior。
Mayflies use the reflective surface as a surface and put their eggs on the asphalt road, which is an example of maladjustment; sea turtles treat transparent objects floating in the ocean as nutritious jellyfish and instinctively eat plastic bags, is another example of maladjustment.
At some point, we do need to panic-- central banks are starting to cut back on currency growth, but this is extremely rare, that is to say,In the past, we may have to adjust our overall position several times a year, but now we only need to adjust it once a few years.
How can an investment manager be killed by his or her peers quickly and effectively? As long as you think about timing every day, you can adjust the overall position, which is a new type of maladjustment.
At the same time, we have to admit that, from the point of view of biological instinct, we are easily aroused.War flight reaction。Panicking from time to time, this is the basis on which our species can survive.
But the environment in the financial sector is very different, and some risks depend onReduce concentrationThe most common way to solve the problem, and to deal with environmental change, isAsset swap-sell a for bIt is not solved by the reduction of the overall position. Therefore, I always advise ordinary investors not to play by themselves, but to give the money to fund managers. This group has been shaped by this environment, and people who are always in a panic have long been caught in this market.Eliminated。
In fact, there is only one criterion for selecting managers-to live a long time in the fierce ranking competition, which shows that this person is extremely adaptable.
This is a cruel survival game, those high-sounding ideas are just gorgeous costumes for others to see, cats have cats and dogs have dogs, the most important thing to survive.
Unfortunately, in such an "inflationary" environment, the standard of survival has become very high--You have to outperform the average growth rate of large categories of assets v, not just make money.。
Earlier, I discussed the reasons for the sharp fluctuations in the stock index--Style rotationAccording to the changes of macro factors, investment managers change an assets into b assets in a group. in the process of replacement, the cash ratio of the system fluctuates, which externally shows the fluctuation of stock index.
As shown in the above chart, since July 1, the market has experienced a series of events: 1, the end of the celebration; 2, a comprehensive reserve reduction; 3, repeated economic expectations; 4, Q2 economic data landing; 5, semi-annual report forecast landing one after another. Wande whole an index twists and turns over and over again, if you just look at the Shanghai 50 index., gem index or small market capitalization index, fluctuating more widely.
However, after tossing about for a long time, since July 1, the Wande whole an index has only slightly dropped 0.23%, playing a lonely game.
As a matter of fact, everyone's positions are full, some do alpha and hold some stocks motionless, and more do beta swapping back and forth, but no one really says that they are not optimistic about the market and have substantially reduced their positions. The environment is different. What do you take after you subtract it? What can be used to help clients beat the beta of all assets?
Based on this logic, we can find another kind ofMaladaptationThe index fluctuation caused by the style rotation is attributed to the change of the total factor as the fluctuation of the total factor. All right, that's enough. It's time to make one.Summary了：
1. The inflation we usually talk about is inflation in a narrow sense. Both CPI and PPI are part of the aggregate asset pool.
2. For special reasons, we need to control CPI and PPI, but in generalWe have no reason to object to maintaining a steady growth rate of the currency.；
3. So, if there is a better oneStructural meansCPI and PPI can be controlled, and there are no substantial restrictions on steady currency growth.
4. If central banks attach great importance to financial risks, it will also occur.Dealing with the transfer of responsibility for great redemptionVarious asset regulators are becoming more and more like banks, maintaining very low cash ratios.
5. The progress of structural means to deal with inflation and the transfer of responsibility for huge redemption have led to two natural consequences.First, the currency growth rate is stable and high; second, the liquidity preference of residents and their agents continues to decline.
6. the valuation of high-yielding assets rises systematically.
7. People feel that there is a shortage of assets, and behind the shortage of assets is the high aggregate β return behind the high currency growth rate.
8 、 cash is trash
9. Total timing strategies become unattractive, and large categories of asset allocation or asset selection strategies become popularThe exchange of assets for assets is the mainstream, and the exchange of assets for cash can only be short-lived.；
10. There is really no need to panic often
11. There are only two people who can kill the stock market. First, the main floodgates are tightened. Second, other assets are too attractive.
12. Internal rotation creates only fluctuations.
Disclaimer:
The copyright of this article belongs to the third-party author. For licensing matters, please contact the original author. The views in this article all come from the original author and do not represent Jin Shi's point of view and position. Special reminder, the content of this article is for reference only, not as a practical suggestion, trading risk at your own risk.