Wang Chuan: After Investing in Storage Stocks and Seeing a Thirty-Fold Return, How to Remain Unanxious (Part 7) - A Quarter-Century Cycle
Wang Chuan: Reflections on Investment Anxiety and Market Cycles After Observing a 30x Gain in a Storage Stock (Part 7) – A Quarter-Century Cycle
This article examines the cyclical nature and inherent risks in technology hardware investments, using the storage and semiconductor sectors as examples. It criticizes the misleading practice of "annualized" Net Dollar Retention (NDR) rates, where short-term growth is extrapolated unrealistically. A key concept explored is "reflexivity" – demand driven by panic, exploration, and liquidity during market booms, which can vanish just as quickly when conditions reverse. This reflexivity exists both in product demand and among speculative stock buyers, creating powerful feedback loops that inflate prices during upturns and exacerbate crashes during downturns.
The author highlights a major risk for hardware sectors: unlike assets with defined cycles (e.g., Bitcoin's halving), there's no guarantee of a swift recovery post-crash. Companies like Micron, Intel, and Cisco took roughly a quarter-century to surpass their 2000 highs, enduring drawdowns exceeding 80%. This is attributed to the "bullwhip effect" in supply chains, where demand collapses instantly but过剩产能 persists, and a migration of narrative-driven capital. High-valuation stories吸引 speculative funds during growth phases, but these funds quickly depart for the next hot narrative once growth slows, leaving behind stronger companies with much lower valuations.
The piece warns of dangerous mental models formed during bull markets: 1) equating current strong demand with perpetual high growth, and 2) believing that making fast, large profits is easy. Citing巴菲特, the author notes that easy money undermines rationality, likening speculators to Cinderella at a ball with a clock that has no hands. The current phase presents an asymmetric risk-reward scenario: potential for further gains exists, but the downside risk is an 80%+ drawdown and a multi-decade wait for breakeven, which reflexive speculators cannot tolerate.
The hypothetical investor "老王" (Lao Wang), who achieved a 30x return, is used to illustrate potential pitfalls. Leverage could lead to a wipeout during a sharp correction. Even without leverage, ingrained beliefs in easy money would likely lead him to double down after losses, expecting a quick rebound. Instead, he might face a protracted decline, depleting his resources through frantic trading as the high-growth narrative fades. The conclusion references Schopenhauer, comparing those who have seen multiple market cycles to an audience seeing the same magic trick repeatedly—once the illusion is understood, its power is gone.
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