Predictions and Speculations about the US Stock Market | Q&A

1. Lao Ma also buys LiDAR and has started research. Relying solely on pure vision for autonomous driving feels less stable than the LiDAR and vision intelligent driving solution of Hongmeng Zhixing.

Tesla's solution does incorporate LiDAR, but overall it remains a vision-based intelligent solution. The way LiDAR is used in this solution is quite different from traditional LiDAR solutions.

A significant difference between the two lies in how data is processed.

My understanding is that the vision-based intelligent solution uses artificial intelligence to mimic the human brain's judgment of the environment and driving to address issues encountered during driving; whereas the LiDAR solution is more akin to traditional rule-based processing.

During this time, I have read several books on artificial intelligence and ChatGPT.

From my understanding, before ChatGPT, a series of other artificial intelligence (especially "natural language processing") solutions did not achieve the current level of success primarily because people have been adhering to a long-standing viewpoint in their research, which is:

To make machines learn, we need to feed them the rules and patterns summarized by humans, so that every time the machine processes data, it has to compare it against thousands of stored rules to select a solution.

However, the rules in the real world are infinite, especially a lot of "unwritten rules" that often exist only in our minds, which we can only "understand but not explain" ----- they are difficult to describe in words, let alone input into a machine.

The GPT solution, on the other hand, takes a completely different approach. It does not tell the machine the summarized rules; it simply feeds real data and results to the machine, allowing it to compare and adjust parameters on its own, thereby training its own "understanding" of the world.

The result of this approach is: we do not know why the machine can understand this world or what rules it has discovered. But we do know that training machines in this way can indeed bring them very close to or even surpass the human brain in terms of neural computation.

Therefore, I am more inclined to believe that the vision-based intelligent solution is a more suitable approach for autonomous driving, as its effects resemble human driving and can perform even better than humans.

2. Buffett has recently been frequently reducing his holdings in U.S. stocks. How do you view his selling behavior? Does he see some risks?

I have shared my understanding of similar questions in previous articles.

I believe many people overinterpret the actions of the old gentleman.

He has mentioned more than once in shareholder Q&A sessions similar statements:

I have said that I will not predict the market, nor will I predict macro risks, but people always do not believe it.

The reasons for the old gentleman selling stocks, which I have listed before, are the reasons he himself has stated. I can list them again:

• Because his insurance company needs cash to guard against risks.

• He believes a stock's price is too high, possibly far exceeding its intrinsic value.

• He has discovered other stocks that are more worth buying than the ones he sold, or he needs cash to acquire companies that are worth fully buying.

These are the reasons.

After reading some of the old gentleman's books, I feel that he often speaks about very basic principles, but most people do not pay attention to these principles, let alone believe them; they are more concerned with shortcuts, speculation, and taking the easy way out.

3. Currently, the overall level of U.S. stocks is at a historical high, with the Dow Jones index continuously reaching new highs. Once the U.S. stock market adjusts, will it lead to a widespread decline in individual stocks?

In the past, I would have been very concerned about potential financial risks in the financial market and would actively predict and speculate to try to avoid such significant declines.

However, after reading the old gentleman's books this year, I have become much calmer inside, and my fear of these potential risks has diminished significantly, along with the impulse to predict and speculate.

Sometimes, even if I do make some predictions and speculations, I treat them more as a casual activity and am no longer so persistent and serious about them.

This is perhaps the most invaluable treasure I have gained in my heart over the years.

Back to the question.

The U.S. stock market will certainly experience adjustments and may even face a stock market crash, but when it will happen and how much it will drop is hard to predict; it could be tomorrow, next year, or even several years later.

But I think that is not important. What matters is:

If investing in individual U.S. stocks, then consider whether the current value of the stock is being excessively overdrawn by its price.

If this is difficult to judge, then abstract a bit and think about whether this company has the potential to continue leading the pack and shine again in the future?

If this is also hard to judge, then look at whether the company's leader is a once-in-a-lifetime, century, or even millennium talent?

If investing in U.S. stock indices, then consider whether the current index performance greatly exceeds the actual state of the U.S. economy?

If this is difficult to judge, then think about what the long-term future of the U.S. economy might look like?

Whether it is individual U.S. stocks or U.S. stock indices, I believe the ultimate judgment standard is what the old gentleman Buffett has said, which I have also shared in the article and will share again now:

As long as the U.S. adheres to a market economy and upholds the rule of law, American companies will continue to create miracles and generate wealth.

Therefore, if we judge that the U.S. can achieve these two points, then even if the U.S. stock market encounters risks, it will be temporary, and one day it will shine again. Right now, we only need to consider whether we can bear this temporary risk; if we judge that the U.S. cannot achieve these two points, then we should leave the U.S. stock market without hesitation.

The several masters I have read only measure whether they can bear the potential risks, while largely ignoring when the risks will come and how severe they will be.