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This topic has been translated from a Chinese forum by GPT and might contain errors.Original topic: tidb与康波周期论----人生发财靠康波，选择tidb 你就选对了康波周期。
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username: tidb狂热爱好者
For those who are not very familiar with economics and asset prices, understanding this content might come at a relatively high cost. I’ll try to explain it in simpler terms. Hello, let me introduce myself first. I am Lao Jiang, one of the only two people in the current market willing to talk about economic cycles and financial cycles.
Wealth in life depends on Kondratiev waves. The era we are born in determines the timing of major asset price opportunities we will encounter in our lifetime. The 70s generation fully caught the opportunity of China’s real estate market reform starting in the 1990s.
The early 80s and 90s generation, when they became the backbone of society, caught the entrepreneurial investment opportunities of the mobile internet. Some of these people followed numerous companies, received stock options, cashed out after listing, or made money by buying Chinese concept stocks of that time.
The 00s generation has not yet encountered any significant opportunities, but in the coming days, they are about to catch their first asset price opportunity. This is why, after more than a year, we are once again observing the current economic cycle and asset price cycle.
I spent more than a month writing this article, which includes my judgments on the long-term and short-term future asset prices and is one of my main research conclusions in recent years.
One of the conclusions is that the turning point of this asset price cycle is likely to appear around the third quarter of 2024, which will be the rise of a new round of wealth. The timing of your actions during this process will determine your wealth level in the next three to five years.
The second half of 2024 will also be the year when asset prices are the lowest in the next three to five years, which is our luck. This technical conclusion continues my judgment at the beginning of this year that asset prices will first benefit and then rise this year.
From the end of January to today, we have seen multiple markets first benefit, and many markets are still falling, especially Hong Kong. It is clear that the first benefit has not ended. So the root cause of all phenomena is actually the phenomenon that occurs during the depression stage of the Kondratiev cycle.
The current economic cycle is still in the depression stage of the Kondratiev cycle in the long cycle, and this period will continue for some time.
Looking back at the depression stage, the situation everyone has seen in the past two years is that there are almost no asset price opportunities, and global stock markets are falling. Of course, this situation will continue, so even if there are good opportunities this year, there will not be a big bull market like in 2015.
Looking at the recently released first-quarter economic data, the GDP growth rate reached 4.5%, which is beyond expectations, so we are talking about the recovery of the Chinese economy.
In fact, this is not a recovery because if there were no various restrictions in the first quarter of last year, we would have seen such restorative economic data last year, but it just happened to be delayed until this year.
Therefore, the economic data in the first quarter of this year is not a recovery under the normal economic cycle but more like an oversold rebound. So the current economy seems to be recovering on the surface, but in the larger economic cycle, it is still in the stage of economic recession and depression.
The difference between the two lies in the strength of the subsequent economic recovery. If it is a recovery in a normal economic cycle, the subsequent continuous recovery will be very strong, and confidence will become stronger and stronger. If this is not the case, then the subsequent situation will not be like this, but will remain stable, and may even fall back again.
Comparing the current economic environments of China and the United States, they are diverging. China is in the environment we just mentioned. The United States has just ended its last rate hike, with the latest April inflation data still at 5%, and the first-quarter GDP growth rate is only 1.1%, indicating that the United States is still in an economic downturn.
In today’s environment of sustained high interest rates overseas, inflation will definitely be suppressed in the future. However, the economies of the United States and many other regions overseas will inevitably enter a recession stage, and when the economy enters a recession stage again, asset prices will fall again.
So we should not be too optimistic about the recent good rebound in the three major U.S. stock indexes. There will be another significant decline around the time of the first rate cut.
In addition, today’s global economic environment is not synchronized, and asset prices are somewhat inconsistent, but this is temporary. Historically, under the background of globalization, regardless of the friction, the economic rhythms of various regions around the world are still more synchronized most of the time, and this time is no exception.
As the U.S. economy enters a short-cycle recession in the next few months, and China continues its current mild recovery, the global economy will eventually resonate again. Led by China and the United States, the global economic fundamentals are more likely to enter a short-cycle recovery stage next year.
What we just talked about are the changes in the economic environment under the short cycle, but from a longer-term historical process, every time asset prices generate a huge market, the force of the short cycle alone is not enough.
The surge in the U.S. internet in the late 1990s, the rise in Chinese real estate prices in the past decade, and the commodity and stock market boom from 2005 to 2008 were actually more driven by long cycles.
The economy operates cyclically, and so do asset prices. There is no economy that rises forever, and no asset that always increases in price. This includes China’s real estate market, the U.S. stock market, and even A-shares’ liquor stocks.
A Kondratiev wave is driven by technological innovation. Looking back at the last Kondratiev cycle, it was driven by internet technology. The widespread adoption of the internet first appeared in the United States. Starting in 1982, the Nasdaq began to rise.
As the internet continued to improve the efficiency of various industries, the capital market also began to reflect this. When internet companies entered a period of frenzied growth, which we refer to as the internet bubble from 1996 to 2000, even if you were a novice in the market, you could make a lot of money in such a market.
Talking about the U.S. might not resonate with you. In China 15 years ago, even if you knew nothing about real estate, as long as you bought a house at that time, the house prices would have doubled or tripled in the following 10 years.
So what I want to express is that when a major asset price driven by the Kondratiev cycle experiences a big market, it is the time for the vast majority of people to change their destiny and wealth.
The Kondratiev cycle operates in four stages: depression, recovery, prosperity, and recession, with each cycle lasting about 50 to 60 years. The depression stage of the last Kondratiev cycle was in the 1970s, which we have talked about before, also known as the peak of economic stagnation for a decade.
During that decade, represented by the United States, the economy experienced repeated cycles of stagnation, recession, and recovery. So at that time, we saw the Volcker moment.
Federal Reserve Chairman Paul Volcker raised interest rates by 100 basis points in one go because the U.S. economy was in such severe stagnation. Do you remember last year and this year? The Federal Reserve also had an extremely aggressive rate hike pace, raising rates by 75 to 100 basis points at a time.
So I say that history often repeats itself, and the economy is cyclical.
Similarly, asset prices also experienced ups and downs during the depression stage of the Kondratiev cycle in the 1970s. Inflation was suppressed repeatedly, and the U.S. stock market experienced significant fluctuations during that stage.
So looking at the depression stage of the current Kondratiev cycle, from 2015 to today, we find that many mainstream asset prices also experienced similar ups and downs.
We are now at the end of the depression stage of the Kondratiev cycle. At the end of the depression stage, we see that asset prices are already very cheap.
Although it is not the extreme low point I think, at today’s prices, no matter what you buy in the capital market, when you look back five years later, you will find that the third quarter of 2023 is a clear low point in the next three to five years.
In recent years, I have been committed to studying the operating rules of the economy and asset prices. After researching various major assets in many places around the world, including the United States, Japan, and China, I strongly agree with this view: there is nothing in the world that only rises and never falls.
So for asset prices, if you sold before the high point in early 2021, you would find that many things you thought were good at that time are now more than half cheaper than when you sold them.
This is the charm of asset price fluctuations. It has its rules, but most people are unaware of these economic and asset price fluctuations.
So we see that when asset prices are very high, most people are excited and greedy, but when many asset prices have fallen sharply today, most people are anxious and fearful.
2018 was the last wave of small and medium-sized real estate. Those who bought houses in small counties and other places are now facing the dilemma of having a house but no market. The rent-to-sale ratio of some properties around big cities has even reached the range of 50 to 70 times.
From the perspective of major assets, China’s real estate no longer has investment value in the coming years. This is not just because of the policy of “housing is for living, not for speculation,” but because in the three rounds of the real estate cycle in the Kondratiev cycle, the current cycle of Chinese real estate has ended.
Comparing other various assets, you will find that investing in Chinese real estate now will be one of the worst choices in terms of returns in the coming years. If there were no price restrictions and other policies, many real estate properties today should be falling.
2020 was the last wave of real estate in some core cities, so it will be difficult for Chinese real estate to recover until around 2025.
During the May Day holiday this year, we saw that the overall transaction volume of real estate nationwide was relatively bleak, which is actually the fact. So if you want to invest in Chinese real estate, wait a few more years.
We won’t talk much about real estate because there have been many videos explaining it in detail before. Those interested can refer to the two videos “The Difficult Triangle of Real Estate” and “How to Solve the Real Estate Problem in 2023.”
Looking at the capital market, in previous years, those who loudly advocated blue chips and the most valuable investment targets in the stock market, as well as those who believed that internet companies were the most valuable investments, what do we see today? These assets have also fallen.
Moutai has fallen by more than 30% from its high point in 2021 and has not risen back in nearly two and a half years. Chinese internet companies led by Tencent and Alibaba have fallen by more than 60% since early 2021 and have not risen back.
So today, are these things really worthless? In fact, they haven’t changed much, and their revenue and profit growth rates can still achieve year-on-year growth of 20%, but the stock prices have not risen back in more than two years.
So if you really value a certain company, it is best to follow certain cyclical rules under your original logic. I think you might get better results.
Summary: This article explains economic cycles and asset price cycles in simple terms, making it worth multiple readings. Understanding this content could significantly enhance your wealth level in the next five years.
Why it matters: For viewers unfamiliar with economics and asset prices, this content might seem complex, but I’ll try to explain it in simple terms. Hello, I am Lao Jiang, one of the few people in the market willing to delve into economic and financial cycles.
Kondratiev Cycle and Wealth: People often say, “Wealth depends on Kondratiev waves,” meaning our birth era largely determines the major asset price opportunities we will encounter in our lifetime. For example, the 70s generation caught the wave of China’s real estate market reform; the early 80s and 90s generation caught the entrepreneurial investment opportunities of the mobile internet. The 00s generation’s opportunities are still on the way.
Value of the Article: I spent more than a month writing this article, which includes my predictions on the long-term and short-term trends of future asset prices and is one of my main research conclusions in recent years.
Key Prediction: I predict that the turning point of this asset price cycle is likely to appear around the third quarter of 2024, which will be the rise of a new round of wealth. The second half of 2024 will likely be the year when asset prices are the lowest in the next few years, which is a fortunate opportunity for us.
Current Economic Cycle: We are still in the depression stage of the Kondratiev cycle, and this stage will continue for some time. Looking back at the past two years, global stock markets have generally fallen, with almost no investment opportunities. Even if there is some improvement this year, it is unlikely to see a big bull market like in 2015.
Economic Data Interpretation: The recently released first-quarter economic data shows that the GDP growth rate reached 4.5%, which seems to indicate the recovery of the Chinese economy. However, this is not a recovery under the normal economic cycle but more like an oversold rebound.
Comparison of China and U.S. Economic Environments: The current economic environments of China and the United States are diverging. China is in the environment we just mentioned. The United States has just ended its last rate hike, with the latest April inflation data still at 5%, and the first-quarter GDP growth rate is only 1.1%, indicating that the United States is still in an economic downturn.
Global Economic Outlook: Although today’s global economic environment is not synchronized, and asset prices are somewhat inconsistent, this is temporary. Historically, under the background of globalization, regardless of the friction, the economic rhythms of various regions around the world are still more synchronized most of the time, and this time is no exception.
Long-term Perspective: From a longer-term historical process, every time asset prices generate a huge market, the force of the short cycle alone is not enough. For example, the surge in the U.S. internet in the late 1990s and the rise in Chinese real estate prices in the past decade were driven by long cycles.
Impact of Kondratiev Cycle: The Kondratiev cycle is driven by technological innovation. The last Kondratiev cycle was driven by internet technology, which began in 1982 and led to the growth of the capital market.
Conclusion: The economy and asset prices are cyclical. There is no economy that rises forever, and no asset that always increases in price. We are now at the end of the depression stage of the Kondratiev cycle, and asset prices are already very low. Although it is not the extreme low point, at today’s prices, when you look back five years later, you will find that the third quarter of 2023 is a clear low point in the next three to five years.
War and Economic Growth: A Kondratiev Theory Perspective
When discussing the relationship between war and economic growth, we inevitably encounter Kondratiev theory. Kondratiev theory posits that technological progress and changes in economic structure are key factors driving long-term economic fluctuations. In this framework, war can be seen as a catalyst for accelerating technological innovation and economic restructuring.
The period between World War I and World War II, especially the Great Depression, showcased the characteristics of the depression and recovery stages in Kondratiev theory. The end of wars is often accompanied by a surge in technological innovation and economic restructuring, laying the foundation for economic growth.
However, wars also bring enormous costs, including the loss of human resources and the destruction of infrastructure. These costs suppress economic growth in the short term, but in the long term, wars often pave the way for economic transformation and subsequent growth stages.
When analyzing the relationship between war and economic growth, we must consider the cyclical fluctuations mentioned in Kondratiev theory. This means that although war may bring economic challenges in the short term, in the long term, it may also provide momentum for economic prosperity and development.
Overall, the relationship between war and economic growth is complex, and Kondratiev theory provides a useful framework for understanding this relationship. By considering the long-term impact of technological innovation and economic structural changes, we can more comprehensively understand the impact of war on the economy.
Kondratiev Cycle and the Stock Market
Binding the Kondratiev cycle to our personal investments can significantly grow our assets. For example, losing money in 2018 but making money in the following three years, losing money in 2022, and making money in 2023 and 2024. In fact, 2020 had a black swan event with the COVID-19 pandemic causing a market crash in March, which the U.S. government immediately intervened in. Today’s economy is becoming increasingly fragile, with a cycle roughly every four years. Today, I will first talk about the cycle, and later I will write code to test whether we can make money using the Kondratiev cycle. In earlier years, 2008 was an economic crisis, 2015 saw a significant rise and fall in the A-share market, and 2018 saw the collapse of China’s P2P industry, with Phicomm cutting a lot of leeks. Many telecom stores had to compensate investors because they sold the routers. Normally, looking at this four-year economic crisis cycle, an economic crisis is expected to occur in 2026. Few people can see through the economy; everyone is a part of the drama. To know how to break it, listen to my next explanation.
Comparing TiDB to the Kondratiev cycle in the software industry, it corresponds to the four stages of software development history. Microsoft started by selling Windows, which was licensed software without source code for users. Later, personal shareware became popular, where you could develop and sell your own software.
Back then, Huajun Software Park was very popular. I received hundreds of thousands of registration fees because I developed software like internet TV. This was the second stage, called shareware. It was free to use, and you paid if you liked it.
Now we are in the third wave, led by Microsoft with open-source software. Microsoft acquired GitHub. As described in “The Cathedral and the Bazaar,” Linux defeated Microsoft’s Windows, and free open-source software grew up. Microsoft couldn’t beat open-source software, so it became open-source software itself. The young man who slew the dragon became the dragon himself, becoming the most common promotion model in the software industry. TiDB belongs to this category, and later software like OB are imitators.
The fourth wave is coming, with AI computing becoming mainstream. TiDB also supports vector functions. I personally think TiDB’s leadership has a broader vision than OB’s leadership. Wealth in life depends on Kondratiev waves, and choosing TiDB means you have chosen the right Kondratiev cycle.
In fact, every war is the best time for technological progress. Modern warfare has seen aircraft carriers defeated by drones. Russia’s
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