AI Enhances Efficiency, Value Investing Logic Unchanged, Says Ruiqun VP
1min read Xue Dawei, a partner and vice president of Ruiqun Asset Management, recently shared his insights on the impact of artificial intelligence (AI) on value investing and asset allocation strategies during the annual Berkshire Hathaway shareholders' meeting. He emphasized that while AI enhances the efficiency of market pricing, the fundamental logic of value assessment remains unchanged. AI allows active managers to identify investment opportunities earlier and with greater longevity. However, Ruiqun continues to prioritize fundamental analysis in its stock selection framework, despite leveraging AI to improve research efficiency.
Addressing the current market environment, characterized by the tail end of the debt cycle and the early stages of a technological revolution, Xue advised value investors to balance their portfolios between defensive and offensive assets. He suggested that investors should base their decisions on rational return expectations and their own capabilities, dynamically adjusting the allocation between defensive assets like high-dividend stocks and offensive assets such as technology-related industries. In terms of asset allocation, Xue highlighted the importance of focusing on the return on equity assets relative to the risk-free rate. He expressed optimism about the potential of China's technological advancements, particularly in semiconductors, AI applications, and innovative pharmaceuticals.
Xue also provided practical advice for ordinary investors, recommending the establishment of a "anti-fragile" investment framework. This involves diversifying investments, controlling concentration, and using derivatives to mitigate risks. He stressed that diversification should be strategic, focusing on assets within one's capability circle that offer a favorable risk-reward ratio. When asked about the impact of AI on traditional financial analysis, Xue clarified that while AI improves efficiency in fundamental research, it does not alter Ruiqun's stock selection framework. The firm remains committed to basic face-driven investment strategies.
Xue also discussed the current valuation of convertible bonds, noting that they offer a balance of offensive and defensive characteristics. He emphasized that the "bond floor protection" feature of convertible bonds remains a core advantage, especially in volatile markets. In response to questions about cross-market arbitrage opportunities between China Hong Kong and mainland China markets, Xue noted that while the AH premium index can indicate investment opportunities, individual stock valuations and sector-specific advantages should also be considered. He acknowledged that geopolitical risks are already reflected in market pricing and that foreign capital flows have been volatile in recent years.
Xue concluded by advising individual investors to set rational return expectations and choose investment products that align with their goals. He emphasized the importance of maintaining a long-term perspective and avoiding impulsive decisions based on short-term market fluctuations. Xue's insights provide a comprehensive view of how AI is reshaping the investment landscape and the strategies investors can employ to navigate this evolving environment.
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