Private equity "grassroots leader" Chen Yu voices: The starting point of a 30-year super bull market is imminent, and there are "lying down to earn" opportunities even in a sideways market

In the Chinese private equity circle, "down-to-earth" fund moguls like Dan Bin and Lin Yuan always enjoy "high attention." Their distinct viewpoints often have various influences on retail investors.

Chen Yu from Shen Nong Investment is also a big influencer on social media, holding a certain level of influence in the investment community. At the same time, as a fund manager, Chen Yu's product performance in recent years has been quite outstanding, attracting much attention.

He even personally "sells goods online," immersing himself in the investment value of e-commerce live streaming platforms...

Recently, the private equity "evergreen" Chen Yu participated in an investor communication event, offering insights on A-share investments. We have organized the content as follows for readers (in the first person, with edits):

Exciting viewpoints:

1. The A-share market is currently in the latter half of a long-term adjustment phase, or perhaps at the beginning of a fluctuating upward trend. Once we achieve breakthroughs in key scientific technologies, a great bull market may emerge.

2. Everyone is familiar with the story of Buffett and Munger. Munger experienced a net worth drawdown of over 50% during 1973-74, but he quickly rebounded in 1975. Our current timing is very similar to that.

3. In terms of technical trends, the Japanese stock market also experienced an A-shaped trend, a sharp decline, and then sideways fluctuations. Although the drop was significant, it eventually reached new highs. I predict that A-shares are also about to see a similar rebound, possibly replicating the "519 market."

4. Many great stocks emerged during Japan's economic recession, particularly in high-end manufacturing and technology exports; the rise of new consumption; and healthcare and biotechnology.

5. Takeda Pharmaceutical rose sevenfold between 1996 and 2000, while the overall Japanese stock market was still fluctuating. This trend may reflect the development pace of innovative pharmaceutical companies in A-shares in the coming years.

6. "Extreme cost-performance ratio" will also rise. A representative company in Japan back then was Uniqlo, which successfully navigated economic cycles through simple, high-quality products and a high cost-performance strategy, with its parent company's stock price increasing by hundreds of times.

7. Once China achieves significant breakthroughs in computing power limitations, I believe that within the next three years, the AI field will experience a massive main upward wave, giving rise to a great enterprise similar to Tencent that can achieve a thousandfold return.

8. In a country like China, which still has a huge demographic dividend, a complete industrial system, and strong innovation momentum, structural opportunities are everywhere. New consumption, intelligent manufacturing, and life and health are three major trends that may be the most worthwhile directions to heavily invest in over the next decade.

The next 30 years is an excellent time to invest in the stock market

I believe that the A-share market is currently at a highly attractive investment point.

Looking back at American history, you will find that from 1965 to 1983, the U.S. stock market experienced a long "A-shaped trend" of significant declines followed by prolonged sideways consolidation, which is very similar to our market trends over the past few years But the key is that since 1975, the U.S. stock market has gradually shifted to a fluctuating upward trend, and from 1983 until 2020, it entered a nearly 40-year super bull market.

I judge that the A-share market is currently in a similar stage's latter half—or the early stage of fluctuating upward. Once we achieve breakthroughs in key technologies such as AI and semiconductors, coupled with the historic progress in our country, a great bull market may emerge.

From now until the next 30 years, I believe it is an excellent opportunity to invest in the stock market and accumulate long-term wealth. Everyone is familiar with the stories of Buffett and Munger. For example, Munger's net worth drawdown during 1973-74 even exceeded the decline of the S&P 500 (the S&P fell 48%, and he fell over 50%), but he quickly rebounded in 1975 and then fully bet with Buffett in 1976 to make a heavy attack. Our current timing is very similar to that.

The Future May Replicate the "519 Market"

Some may say that we cannot compare ourselves to the U.S., so let's look at the Asian markets.

For instance, the Japanese market also experienced a long adjustment period, falling for nearly 20 years. However, even so, it eventually welcomed a structural bull market. This indicates that the trends of large economies often follow a similar rhythm: rising for many years, adjusting for many years, and then starting the next upward cycle.

Since the reform and opening up, our country has experienced over 40 years of rapid growth and is now entering an adjustment period, which is a result of economic laws. After the adjustment period, the so-called "sunny days" will eventually arrive—this is almost inevitable in the economic cycle, as long as the Earth does not erupt into nuclear war. Moreover, as the world's largest industrial nation today, no one truly dares to initiate conflict.

In terms of technical trends, the Japanese stock market has also experienced an A-type trend, a crash, and then sideways fluctuations. Although the decline was as high as 82%, the volatility in the later period became much more stable, with a significant rebound occurring. I judge that we are also about to welcome a similar rebound, and it may even replicate the path of the "519 Market."

At the beginning of the "519 Market" in 1999, it was also during a period of internal and external changes, where A-shares once surged, then consolidated for 7 months, and subsequently welcomed an 18-month rebound. We are now in a similar state, with internal and external changes already digested, and the market is about to break upward.

On the policy level, various signs are also releasing positive signals. For example, the promotion of stablecoins implies a "liquidity injection" logic.

There Are Opportunities to Make Money in a Sideways Market

Therefore, I believe that the A-share market is likely to maintain an optimistic trend in the next year and a half. Of course, investment should also retain a contrarian mindset: even if it falls into a long-term sideways market like Japan, it is not a bad thing. Because even in a fluctuating market, structural opportunities to make money still exist.

For example, in the past six years, can you find any traditional business that can consistently earn 30% annually? The stock market may achieve that More importantly, Japan has also produced many big bull stocks during its recession period, concentrated in several directions:

Firstly, high-end manufacturing and technology going global: The automotive industry represented by Toyota, as well as companies like Keyence that focus on high-end sensors, represent the global expansion of Japan's technological strength;

Secondly, the rise of new consumption: For example, Fast Retailing, the parent company of Uniqlo;

Thirdly, healthcare and biotechnology: Under the trend of aging, companies focusing on high-end medical care, such as Terumo and Takeda Pharmaceutical, have emerged.

How to Find "Easy Money" Opportunities

Taking Japan's new consumption investment as an example, specifically, the rise of new consumption is showing several distinct directions.

The first is the rise of "extreme cost performance," represented by companies like Uniqlo, which successfully navigated economic cycles through simple, high-quality products and high cost-performance strategies, attracting a wide range of consumers, with its parent company Fast Retailing's stock price increasing by hundreds of times under this logic.

The second is "emotional value consumption" around IP, corresponding to the cultural trend of young people seeking "lying flat" and spiritual comfort. Represented by Bandai Namco, it has built a strong fan economy model through deep operation of anime and game IP, achieving a fivefold increase in stock price.

The third is the "lipstick economy," representing the upgrade of female consumption, such as companies like Shiseido, which have laid out plans around women's long-term pursuit of beauty, also achieving significant returns. These three new consumption trends demonstrate that even during periods of economic structural adjustment, consumer stocks still possess strong penetration and growth potential.

Looking at the pharmaceutical sector closely related to aging, its rise has stronger universality and certainty. The "sector certainty" of pharmaceuticals is particularly important. The market is currently in a state of "half sea water, half fire," and as long as the direction is correct, it is possible to achieve "lying flat and making money."

For example, Takeda Pharmaceutical rose sevenfold between 1996 and 2000, while the overall Japanese stock market was still in turmoil. This trend may reflect the development pace of innovative pharmaceutical companies in the A-share market in the coming years. Even if the overall market fluctuates, excellent innovative pharmaceutical companies may still continue to rise. Therefore, I judge that the next three years will be an important window period for innovative drug investment.

Thus, Chinese investors need to focus on structural opportunities, as even in a "stagnant" market, steady asset growth can still be achieved.

Looking for Another "Tech Giant"

Looking at a longer cycle, we are at the starting point of three major structural investment waves: intelligence, health, and consumption upgrade.

Firstly, intelligence. This is not only a technological trend but also a complete reconstruction of industrial and social structures. It is more profound than the information revolution and is pushing us from the "tool era" into the "intelligent era."

In this process, China and the United States form the "two poles" of the AI industry: the U.S. focuses on "0 to 1" original technological breakthroughs, while China excels in "1 to 100" implementation and scaling.

China has advantages such as a complete manufacturing chain, a large engineer dividend, and the world's largest consumer market. As long as it can acquire key underlying technologies, once breakthroughs are made, it can quickly scale up and then reverse export globally. This path has already been realized in photovoltaics, power batteries, electric vehicles, and even smartphones, and it is highly likely to be replicated in new fields such as humanoid robots and large models Once China's computing power limitations achieve a significant breakthrough, it is believed that within the next three years, the AI field will surely experience a massive primary upward wave, giving rise to a great enterprise similar to Tencent that can achieve a thousand-fold return.

The Future "300 Million" Dividend

China's largest structural dividend in the future will come from the aging wave of the 300 million people born in the 1960s and 1970s.

They propelled the automotive industry to take off when buying cars, created the prosperity of the real estate market when buying houses, and are now about to enter the "buying medicine" phase.

These 300 million people are the group that "can consume, is willing to consume, and must consume," which will continuously drive the demand release in the healthcare sector. Starting from 2022, our country will add more than 25 million retirees each year. Medical expenditures will enter a long-term rigid growth phase, while our total health expenditure has approached 10 trillion yuan and continues to expand by nearly 1 trillion yuan annually.

This scale and certainty are unmatched by any other industry currently. Even if medical insurance controls costs and prices, it cannot stop the trend of expansion, while the popularization of commercial health insurance will further open up space. This is a super track comparable to the starting point of real estate, and in the next ten years, this will be the core area for the emergence of large-cap companies.

In fact, China's pharmaceutical industry has completed its initial investment layout since 2015, especially from 2017 onwards. Starting from 2020, external licensing (BD) has begun to grow explosively, and by 2024, the cumulative BD amount will approach 50 billion US dollars, which means our innovative drugs have been recognized by the global market and possess the ability for industrial output.

A more tangible trend is: a group of scientists. They receive the most rigorous academic training domestically, gain experience in large overseas companies, understand the rules, return to start businesses, and develop globally leading new drugs with the support of policies and funding, then sell them back to the American market. This model has become quite mature and is accelerating the formation of a "China-US pharmaceutical commercial closed loop."

So, the era has truly arrived. The real question is not whether there are opportunities, but whether you can understand and seize those opportunities.

In a country like China, which still has a huge demographic dividend, a complete industrial system, and strong innovation momentum, structural opportunities are everywhere. If you haven't made money, it may not be because there are no windfalls, but because you weren't prepared to take off with the wind. New consumption, intelligent manufacturing, and life health are three major trends that are almost destined to be the most worthwhile directions for heavy investment in the next decade. We should be full of confidence in this era.

Today's Stock Market = The Real Estate Market 20 Years Ago

Today's young people, faced with new consumption choices, care more about emotional value. From Nezha, Black Wukong to Labubu, these new generation cultural symbols are forming one successful consumer IP after another, confirming the correctness of this direction. Meanwhile, the rise of the middle class has further accelerated the rapid development of retail models with extreme cost-effectiveness.

Our uncles and aunts from the 60s and 70s are now also starting to buy gold and luxury goods from Chinese brands. From these phenomena, you can see that although some industries or businesses may seem sluggish on the surface, if you observe carefully, you can still see the surging opportunities; the "new premium" era is quietly approaching In our growing years, figures like Ren Zhengfei and Liu Chuanzhi seized the opportunities of the times and created their own industrial legends. The entrepreneurs of their generation relied on courage and a spirit of hard work, along with a certain level of knowledge reserve. The generation of entrepreneurs we are investing in today consists largely of young people in their 30s. They not only possess an international perspective and have received top-notch domestic and foreign education, but they also grew up in a highly modernized national industrial system. This generation has vision, capability, and a large market base of 1.4 billion people, which gives them the potential to create the next wave of industrial miracles.

They may not yet have received full attention from the outside world, but I firmly believe that this generation will produce new heroes and new miracles. And we have the opportunity to be early witnesses and participants in this wave. So, with miracles, heroes, and opportunities, why not invest? In my view, today’s stock market is equivalent to the real estate market 20 years ago.

I believe there is absolutely no reason not to invest today, as long as you choose the right direction and the right companies.

Risk Warning and Disclaimer

The market has risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investing based on this is at your own risk