Dan Bin: The outbreak of AI is just the first day, it will be a cycle of more than ten years, and it cannot end in two years

Recently, Dan Bin, Chairman of Dongfang Hongyuan, delivered a keynote speech titled "Rooted in China, Moving Towards the World" at the "2025 Golden Yangtze Private Equity Fund Development Forum and the 10th Golden Yangtze Private Equity Award Ceremony," organized by the Securities Times and co-organized by Changjiang Securities.

The investment representative summarized the key points as follows:

1. Investment should focus on the main causes and not be disturbed by secondary factors or noise. Concerns about a U.S. economic recession or the yen's interest rate hikes are all noise. Even Buffett selling stocks is just noise.

Investing must be done by standing on the shoulders of giants. However, we cannot blindly follow what he (Buffett) says.

1. When opportunities appear before us, we are often easily overtaken by fear. Historically, after the first nine (market crashes), the market has risen significantly one year, three years, and five years later. Each time has been the best historical opportunity.

The current sharp decline in the U.S. stock market (April this year) is likely to see a historical bottom; persistence is key to victory.

1. What has been the annualized return of the S&P 500 over the past 98 years? It's around 6.6%. If a child had been buying the Nasdaq since birth, or investing in the S&P, the Nasdaq's annualized return is even more impressive. Since its establishment in 1971, the Nasdaq's annualized return is about 11%.

2. If we believe that the era of artificial intelligence is upon us, then the previous three eras each lasted over ten years. Therefore, the era of artificial intelligence is likely to last over ten years as well; it cannot end in two years.

3. Choosing is far more important than effort. Are there good companies in Japan? Of course, there are, such as Uniqlo and Toyota. However, these are structural opportunities, not systemic opportunities.

We say that investments should be chosen in grand directions.

1. The opportunity of the last decade has undoubtedly been artificial intelligence. Who are the biggest beneficiaries of artificial intelligence? Undoubtedly, companies like NVIDIA and Meta.

Moreover, from a business perspective, we are only at the very beginning of the AI explosion; everything has just started.

If you want to choose some companies with a long-term investment perspective of ten, twenty, or thirty years, this is the only way to truly achieve the possibility of earning 100 times or even more.

Dan Bin has been involved in the securities investment industry since 1992 and founded Dongfang Hongyuan in 2004, possessing unique insights into value investing with relatively stable long-term performance.

Dan Bin stated that over the years, there have been many moments when others did not understand him, even ridiculed and mocked him, but those voices have quieted down now. He emphasized that investment requires independent thinking and should not blindly follow market noise.

In the past two years, Dongfang Hongyuan has fully embraced the era of artificial intelligence, currently focusing its holdings on AI infrastructure, but Dan Bin stated that it is a choice that can advance or retreat Dongfang Gangwan Overseas Fund's U.S. Stock Holdings at the End of Q1 2025

Data Source: U.S. Securities and Exchange Commission, compiled by Private Equity Ranking

The following is a summary of key content organized by the investment notebook representative (WeChat ID: touzizuoyeben), shared with everyone:

Every time U.S. stocks plummet, they reach new highs, making it a good time to buy

On August 5th last year, it was Black Monday, and the Nasdaq plummeted. Why did it crash? There are three reasons: the first is the yen interest rate hike, the second is concerns about a U.S. economic recession, and the third reason is Buffett selling stocks. These three reasons led to a significant drop in the Nasdaq.

In fact, I have been emphasizing for the past two years that investment should focus on the main causes and not be disturbed by secondary factors or noise. Concerns about a U.S. economic recession and yen interest rate hikes are all noise. Including Buffett selling stocks, this is also noise.

Many friends ask me, "Your role model Buffett is selling stocks, right? With such a light position, why are you still fully invested and buying?" This is a very realistic question. I have always believed that investors must grow by standing on the shoulders of giants.

However, we cannot be rigid in our approach. For example, Mr. Buffett says he does not invest in tech stocks. If he does not invest in tech stocks, would you invest if Tencent appeared before you? Would you invest in NVIDIA?

If you only do what he says, then of course you might not choose to invest. But I think what we should learn from Mr. Buffett is his way of thinking about value investing, business models, corporate competitiveness, and economic moats, rather than just following his words.

In April of this year, when U.S. stocks plummeted, many people online insulted me. From April 3rd to 4th, the S&P 500 fell by 10.5% over two consecutive days.

Statistically, this ranks fifth in history. However, we see that in the nine previous instances, one year, three years, and five years later, the market had all risen significantly.

So, is this a position to buy, or should you hold on? At that time, I said the return rate was quite astonishing, with no exceptions, and I wonder if this time will be the same.

I made a judgment that the current plummeting trend of U.S. stocks is likely to see a historical bottom, and perseverance is victory.

Investment sometimes requires not only wisdom but also strong willpower and the courage to overcome difficulties. This was my judgment at that time. Looking at the fear index, except for 2008, in 2020 when I suggested buying U.S. stocks including foreign exchange reserves, it was also a reference. This time is no different, with the fear index exceeding 50 Every time is the best historical opportunity. But the problem is that when this opportunity appears before us, it is often occupied by fear.

How many people do you think dared to bottom out at that time? It's too easy to look back in hindsight, right? At the lowest point, NVIDIA dropped to 87, and yesterday it reached a new high of 153. I see it is rising again in pre-market, probably around 155. If you had invested a large sum at that position, you would have actually made a lot of money. But often at that time, our judgment may have significant issues, right? This is what we mean by a picture is worth a thousand words.

Moreover, I heard a friend say yesterday, I don't know if it's true. The day before yesterday, I had dinner in Hong Kong with a friend from Morgan Stanley, and they said the U.S. is preparing to let children, upon birth, take out $1,000 themselves, and then the government will subsidize another $1,000. What to buy?

Buy the S&P 500, buy the Nasdaq. What has been the annualized return of the S&P 500 over the past 98 years? It's about 6.6%. If a child buys the Nasdaq from birth, or buys the S&P, the annualized return of the Nasdaq is even more impressive than the S&P. Since its establishment in 1971, the Nasdaq has an annualized return of about 11%.

Bitcoin is similar to U.S. stocks, how to overcome the fear of a crash, look at the "data chart since its establishment"

A few days ago, I was talking with a group of young men and women interning at our company, and one of them said: "How do I overcome the panic when Bitcoin drops?"

Because we have an intern who said he invested in Bitcoin. We all know that Bitcoin's volatility is much greater than that of stocks, dropping 70% at times, and more than 90% at others.

I said: "You should create a chart of Bitcoin's data from its inception to now and put it on your bedside. Every time Bitcoin crashes, just look at that chart on your bedside, and you will overcome your fear."

Interest rate hikes, cuts, and recessions are secondary causes; the main reason affecting the Nasdaq is technological progress

In my own research on the U.S. capital markets and global capital markets, I have come to a realization.

In fact, interest rate hikes, cuts, and concerns about recessions, I personally believe are secondary reasons. The real main reason, if you look at the Nasdaq from its inception to now, what has truly driven global wealth is technological progress.

We have just experienced so many years, going through several eras—the electronic hardware era, the internet era, and the mobile internet era.

The artificial intelligence era is likely to last over ten years; it cannot end in two years, fully embrace AI

If we believe that the era of artificial intelligence is upon us, then the previous three eras all lasted over ten years. Therefore, the artificial intelligence era is likely to last over ten years as well; it cannot end in two years. The span of this cycle, and if we consider that the artificial intelligence era represents a more disruptive technological advancement than the previous three eras, theoretically, it should last even longer and create even more wealth For us, this is actually a matter of choice. The era of artificial intelligence has arrived, so what should we do? Should we fully embrace a new era?

In fact, investing is an industry that accumulates experience. From youth to maturity, and now as I approach old age, nearing 60. In this process, shouldn't you turn your valuable experience into valuable wealth?

When we welcomed the mobile internet era 20 years ago, we didn't recognize the importance of that era or the need to fully embrace it. Of course, we tried to do something, but it wasn't as clear as it is now.

Now, 20 years later (counting from the establishment of Dongfang Hongwan in 2004), when a new and more important era arrives, shouldn't we fully embrace it?

In the past two years, Dongfang Hongwan has wholeheartedly embraced the era of artificial intelligence. Of course, we can't invest heavily in one or two stocks like before. If I were to invest heavily in leading liquor stocks or Tencent as I did in the past, Dongfang Hongwan might have earned hundreds of billions in the past two years, but we didn't, because regulatory requirements are stricter now. However, we can honestly say that we have fully committed to this endeavor.

It is also because we have done this in the past two years that we have achieved a hundred billion-level championship and broken the industry's curse. This is indeed a strategic choice.

Choice is more important than effort; Japan has good companies, but not systemic opportunities

Another saying is that choice is more important than effort.

Let's assume that in the 1990s, I was a Japanese asset management company. If I managed 10 billion, at the peak of the Japanese economy in the 1990s, we welcomed the internet era.

If I were a global investor with a global perspective, I would know that the internet era was not closely related to Japan, but to China and the United States. At this time, should I convert this 10 billion into RMB or USD to embrace the internet era?

I believe that as a strategist, this should be the case. In the 1990s, if you converted this 10 billion into USD, and assuming you were not very smart and could only buy indices, how much did the index rise from 1990 to 2000? It rose 13 times, so your 10 billion would become 130 billion, just a simple calculation.

Later, we welcomed the mobile internet era. The mobile internet era was also not closely related to Japan, but to China and the United States. Over these 13 years, the index rose another tenfold, so my 130 billion became 1.3 trillion. If the artificial intelligence era rises another tenfold, then I would have 13 trillion.

However, if I had always remained in Japanese assets, what would the situation be over these 35 years? How much has the Nikkei index risen in 35 years? Less than 1%, and during these 35 years, it first fell and then recovered, and this does not account for changes in exchange rates, because 35 years ago the exchange rate was 1 to 80, and now it is 1 to 150 In other words, after 35 years, your assets have still lost nearly half.

So we say that choice is much more important than effort.

Of course, you might ask if there are good companies in Japan; there certainly are, like Uniqlo and Toyota. However, these are structural opportunities, not systemic opportunities.

Therefore, we say that investment should be directed towards grand and sweeping directions.

Additionally, I once said that we should invest in companies that change the world and those that are not changed by the world. In the past, when we were rooted in China, we mainly chose directions that were not changed by the world. Today, as Dongfang Hongyuan moves from China to the world, our current direction is to change the world.

In fact, in the past two years, Dongfang Hongyuan's strategic choices have proven to be correct in terms of performance.

Our overseas fund was ranked first globally among asset management companies managing over $1 billion last year, with 520 companies.

I have roughly sorted out the global publicly available performance of overseas Chinese investors whose management scale has reached the $1 billion level, and there are actually only five: the first is Mr. Li Lu, the second is Mr. Duan Yongping, the third is Mr. Zhang Lei, the fourth is Mr. Jiang Jinzhi, and the fifth is Dongfang Hongyuan (Mr. Dan Bin), who reached the $1 billion management scale last year. In fact, there are not many Chinese investors, especially in public settings.

We are only on the first day of the AI explosion

My third personal insight is to invest in clear and highly profitable business models.

Looking at the past ten years and the past 70 years, there are traceable patterns in global core themes and their asset performance.

If we look at the last ten years, there is no doubt that it is artificial intelligence. Who are the biggest beneficiaries of artificial intelligence? Undoubtedly, companies like NVIDIA and Meta.

Additionally, as I mentioned earlier, from a business perspective, we are only on the first day of the AI explosion; everything is just beginning.

For example, in April, what was the noise at that time? It was the trade war. At that time, people overlooked the main cause of artificial intelligence. Recently, what is it? It is the Iran war.

In fact, we see that any of the seven giants in the U.S. stock market are experiencing leapfrog and disruptive development.

Moreover, I tell my friends that if you want to earn 100 times, you must use an industrial perspective and look at it from a 10-year, 20-year, or 30-year horizon.

We see that the internet cycle has been about 30 years, and it has reached this point now. Smartphones have been around for 20 years, and artificial intelligence has just begun. If you want to choose some companies with a 10-year, 20-year, or 30-year perspective for long-term investment and holding, that is the only way to truly achieve the possibility of earning 100 times or even more In addition, for Dongfang Gangwan, we are currently still focused on AI infrastructure, which is the stack below. Of course, in the vertical application layer, we have also held Palantir before. Currently, we believe this direction is a choice that can both advance and retreat.

Source: Investment Workbook Pro Author: Wang Li

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