In today’s unpredictable world, we must analyze and make decisions regarding our investments, global asset allocation, and the education of our children with greater prudence. Each decision we make now could have a lasting impact and its importance cannot be overlooked.
We live in an era filled with comparisons. China, among many nations, has shown relative strength with its vast market size and depth. However, the global financial markets have been volatile due to the pandemic, and this period has not been fortunate for China. Although China cannot escape the global effects, the volatility of its A-share market is much less compared to international stock markets, which relates to the long-term stability of our stock market, especially in comparison to the U.S. stock market that has accumulated a massive bubble over the past 12 years.
When liquidity suddenly reverses, an overreaction in the market becomes inevitable. The Chinese economy, with its resilience and huge market potential, along with a variety of policy tools, avoids extremes. Despite the current capital market volatility and the uncertain future of Sino-U.S. relations, the reality of the American stock market bubble, as well as concerns over debt risks and defaults, are still not to be ignored.
When it comes to whether it is a good time to buy stocks at rock-bottom prices, our attitude should be cautious. Catching a falling knife often comes with great risk, and we cannot predict where and how fast it will drop. Some in the industry argue against taking risks in the face of potential danger. While I remain somewhat optimistic about this year’s stock market, I am more inclined to believe that opportunities will arise in the second half rather than the first half of the year.
For in the surge of the times, there are always opportunities and risks. Depending on our goals and stance, there will be different choices. There are no standard answers in life, and, for most people, it should be a process of continuous learning and self-improvement.