On Friday, the Shanghai and Shenzhen stock markets experienced a volatile rebound, breaking away from the continuous adjustments seen previously. Market confidence has somewhat recovered, but the overall market trading volume remains low, reflecting that there is still a significant divergence between bulls and bears. At the close of last Friday, the collective bidding broke below the 3000-point psychological barrier. This week, the market has seen a volatile bottoming-out trend. The 3000-point level is an important psychological threshold in the A-share market; below this level, many high-quality companies have been severely undervalued.

In the current situation where market confidence is still lacking, I have repeatedly called on institutional investors and the national team to increase their market entry efforts. Not only should they support the 3000-point level, but they should also lift it by 10%-20% to form an upward trend, completely reversing the market's downward trend. Once a profit-making effect is formed, investors on the sidelines may end their wait-and-see attitude and enter the market to make investments. It is easy to know but hard to practice value investing, especially after the A-share market has seen a continuous three-year decline, with many good stocks also experiencing significant drops, some even at 30% or 40% off. At this time, we should be more determined and seize this once-in-a-decade opportunity to lay the foundation at the bottom, welcoming the next round of market trends.

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Today, for the first time, I attended the Wuliangye shareholders' meeting in Yibin, which, like the Moutai shareholders' meeting I attended on the 29th last month, was very popular and could be called a thousand-person meeting. In recent years, the shareholders' meetings of leading companies like Moutai and Wuliangye have attracted nearly a thousand investors who come from far and wide to participate. This actually reflects everyone's recognition of value investing and their increasing focus on the fundamentals of the companies, which is a good thing.

At the Moutai and Wuliangye shareholders' meetings, I met many long-term value investors, including Mr. Lin Yuan. Every time we have tea and exchange ideas at the shareholders' meetings, we can deeply feel the charm of value investing. Many investors who have long been focused on these blue-chip stocks entered early and have always held them with a shareholder's mentality, not caring about short-term stock price fluctuations and rarely looking at the overall market trend. However, they insist on attending the shareholders' meeting on-site every year, firmly being value investors. The long-term return rate is much higher than that of investors who chase rises and cuts losses. As long as the holding time is long enough, investors in these good companies have basically made substantial profits, and some have even earned ten or a hundred times more. These examples once again show that for ordinary investors, only by treating stock investment as a long-term investment in good company equity can they truly achieve wealth growth, while chasing rises and cutting losses and frequent trading are often the root causes of losses, which has been repeatedly verified.

At the Wuliangye shareholders' meeting, I was also fortunate to get the first opportunity to ask a question. Mr. Zeng, the chairman of Wuliangye, personally answered my question. On behalf of the majority of investors, I asked the most concerned question: the recent decline in Feitian prices, and the significant drop, will it affect the sales of high-end baijiu including Wuliangye, and can the baijiu industry continue to grow in the future? Chairman Zeng answered these questions in detail and sincerely, responding to market concerns. He said that the future development prospects of high-end baijiu are still broad, especially for high-end baijiu with brands, there will still be a relatively large demand in the future. In fact, it cannot be simply said that consumption is downgrading or upgrading at present. High-end consumer goods still have their demand groups; low-end consumer goods also have appropriate groups. Different consumer groups have different requirements for consumer goods. In the long term, consumption upgrading is still the mainstream, especially the demand for brand baijiu is still relatively large. As for the current concern about the decline in Feitian prices, it should be a phase phenomenon, not a long-term phenomenon, and it is not a big problem for Feitian prices to stabilize above two thousand.

Baijiu, as an industry with strong profitability and stable performance in the consumer sector, has always been favored by institutional investors. The gross profit margin of many baijiu companies is as high as more than 50%, and Moutai's gross profit margin even reaches more than 90%. Many ordinary baijiu also have a gross profit of 40%-50% and a net profit margin of more than 30%, which shows that the profitability of this industry is still very strong. Because the formula of baijiu has not changed for hundreds of years, there is no need for a large amount of R&D investment, and even if the company's money is all distributed, it will not affect the company's future growth. Such an industry is a good industry.

The barrier of the baijiu industry is actually the brand. People drink not only for their own entertainment but also to achieve social functions, so its brand value is very high, and it enjoys a relatively high brand premium. In fact, the cost of baijiu is relatively low. Baijiu is simply grain mixed with water. Compared with many consumer goods industries, the gross profit margin, net profit margin, and return on equity of the baijiu industry are the highest. Although short-term consumption growth has slowed down, affecting the sales of consumer goods such as baijiu, in the long term, companies that can go through economic cycles and bull and bear cycles are often also in the consumer sector such as baijiu. Buffett has always loved consumer stocks, which is actually seeing this point.

The current A-share market has gone through a rapid downturn and has fully released risks. Market confidence has been affected in the short term. If there are more favorable policies at this time to promote everyone to improve their expectations for the future, especially expectations for economic growth, and the national team can increase its market entry efforts to reverse the market's delay, I believe that there is still a high probability for the A-share market to go up in the second half of the year, bringing opportunities to make money.

The famous value investor Li Lu has given many valuable suggestions to young Chinese investors. Let's share a few:

The first, start with the simple, really understand a very simple enterprise, start with a small simple business, and guide you to study more and more complex enterprises according to your own interests. At this time, knowledge is gradually established, and it is established honestly.Secondly, the circle of capabilities you develop is unique, not only to your best friends but to everyone else as well. The more distinctive your circle of capabilities, the more opportunities you will seize, and you will have a very unique and different perspective when others form a consensus. When this different perspective reveals a unique business opportunity, that is precisely when you truly shine.

Thirdly, the market exists specifically to uncover the weaknesses of human nature. When you overestimate your abilities and then happen to have exceptionally good luck in the market, such as suddenly winning, this is the most dangerous thing. You can easily fall into a vicious cycle, and ultimately, the market will defeat you. The market is extremely ruthless and very real.

Fourthly, no simple business is easy; they are all quite challenging. When you notice that some people perform better than others in difficult industries, you can then understand what competitive advantage is and where it comes from.

Fifthly, the situations for selling can generally be summarized into the following three categories. First, if you make a mistake, sell immediately. Second, when there are other better investment targets available, and the price-to-value ratio, as well as the risk-to-reward ratio, are not as favorable as the new target, you will also consider selling. Third, when there is a relatively extreme divergence between price and value, no matter how much the company may grow in the future, it would be hard to justify such a price. At this point, you would also need to sell because your opportunity cost has turned into cash.