After more than three years of the super bear market led by Big A, the director has become more and more convinced of an idea, that is, it is necessary to significantly increase the proportion of index/ETF in his own position, such as the Huaxia ChiNext Index Initiated Securities Investment Fund (A: 020870, C: 020871, E: 020872) and other typical indices.

During the bear market, it is easy to hold the tickets, but it is still too much of a test of human nature to add positions against the trend, and in fact, the vast majority of excess returns actually come from adding positions against the trend.

But the index is different, we may not be able to grasp the individual companies, may be affected by the true and false ghost stories during the decline, may make a big mistake in judgment, may not dare to bet heavily, but the index basically will not have such problems, most people can still do the index to buy more as it falls, because the index is a portfolio of companies, especially like the ChiNext index, which can be said to represent the overall technological progress and economic growth in the country, and basically does not need to worry too much about the long-term upward trend, as long as there is money in hand, you can buy some, both at ease and the income is not small, more importantly, the index's high and low valuation range is much easier to judge than individual stocks...

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Technology is the core driving force of economic growth.

However, in recent times, perhaps because the decline of Big A has been too long, many people have doubts about the broad-based index, and the biggest ghost story in the market at present is "whether the decline of population/aging will have adverse effects on it."

In their view, the decline of the population means a decrease in demand on the one hand, and a decrease in the labor force of working age on the other hand, that is, a decrease in supply, both supply and demand decline, then the economy naturally has to bear pressure, and naturally nothing can be good.

But in the director's view, everyone seems to have confused the cause and effect relationship, from the above logic, we can easily find that everyone unconsciously equates the number of people with economic growth, as long as there are many people, then the demand is strong, as long as there are many people, then the supply is no problem.

Oh my God, if this logic were to hold, shouldn't India be one of the richest countries in the world?

In fact, whether the economy can grow and the strength of the level of economic development is only strongly related to one indicator, that is, the degree of development of science and technology, so Deng Xiaoping said "science and technology is the primary productive force".The following is the translation of the provided text into English:

The chart below depicts the per capita GDP levels of the world's major economies from the year 0 AD to 2015. It is not difficult to observe that around the year 1700, there was almost no difference in the per capita GDP among the main countries, and there was essentially no growth; everyone was on a flat line without any waves.

It was precisely because the economies of the time had never experienced "growth" that the total societal cake was limited. As long as there was a period of peace, and the population grew to a certain extent, it was inevitable to touch the maximum ceiling of natural resources that could be utilized under the technological level of the time. Then came the great social recession, which had to be resolved either through disease or war. In short, a certain portion of the population had to be eliminated in order to restore order in human society and start a new round of "growth." Therefore, the development of human civilization has always followed a cycle of rising, peaking, and declining.

In other words, in ancient times with limited productivity, population growth was never a good thing. Once the population grew to a certain extent, it was inevitably accompanied by disease and war.

However, all of this began to change in the year 1700. In 1763, the Industrial Revolution broke out, and the global economic growth pattern underwent an unprecedented change. Industrialization started from the United Kingdom and spread to the whole of Western Europe, then to the United States and Japan. The per capita GDP of all countries began to grow significantly, and it was only after this that the global population experienced explosive growth.

The Western world has been leading the world for 500 years due to continuous innovation, not because of the size of the population.

When domestic companies talk about going overseas, their subconscious targets are developed countries such as Europe, America, Japan, and South Korea, rather than India, Vietnam, and Africa.

Why choose Europe, America, Japan, and South Korea with fewer populations, rather than India, Vietnam, Thailand, and Africa with larger populations? Isn't it because the former is richer, with more money in their pockets and stronger purchasing power? Take the United States as an example, with only 4.17% of the world's population, it accounts for nearly 24% of the global GDP, and the per capita purchasing power is 6 to 7 times ours, so it is naturally more likely to find gold.

Even in the field of innovative drugs with extremely high customer unit price, not going to Europe and America is basically synonymous with having no future. For example, the market value of Legend Biotech, which targets the United States, is more than ten times that of WuXi AppTec, which targets the domestic market.

Therefore, the number of people and the total economic volume and growth are not strongly correlated. Even if the population is smaller, if the per capita profit is higher, the economic big cake is still strong, and it can still give birth to many super large companies with huge market value.Suppose that several decades from now, our country's population is halved, but the per capita GDP has increased tenfold. Wouldn't the overall economic pie still have increased by five times?

Therefore, in recent years, the focus of everyone on the number of people is considered to have missed the point. What we should really be focusing on is technology, innovation, not population.

Technology is the most worthy of investment.

As we discussed earlier, technology is the primary driving force of economic growth.

The United States, across the ocean, has demonstrated with its many years of history that the long-term return rate of the innovation-led NASDAQ is far higher than that of the Dow Jones. Currently, the world's most valuable companies are also technology companies such as Apple, Amazon, Google, and Microsoft...

So, domestically, the answer is actually telling you that the ChiNext, which is mainly focused on hard-core innovation, will be much stronger than the main board in the future, and future large-cap companies will inevitably appear more in the ChiNext.

The Huaxia ChiNext Index Initiation (A: 020870, C: 020871, E: 020872) is a broad-based index that tracks the ChiNext. Under normal market conditions, the absolute value of the daily tracking deviation of its performance comparison benchmark will not exceed 0.35%, and the annual tracking error will not exceed 4%.

And now is just the absolute bottom range of the Huaxia ChiNext Index Initiation (A: 020870, C: 020871, E: 020872), and the valuation percentile is currently in less than 1% of the range since the establishment of this index, and even the dividend yield has reached 1.02%. You should know that ChiNext represents growth, but now the growth sector is about to fall into the value sector, and the dividend yield can actually reach 1%.

In other words, at present, the Huaxia ChiNext Index Initiation (A: 020870, C: 020871, E: 020872) is strong enough in both certainty and future growth potential. As long as you have confidence in China and in China's industrial upgrading, in the next 10 years, the Huaxia ChiNext Index Initiation (A: 020870, C: 020871, E: 020872) will be one of the best choices for the vast majority of people.