NDRC advisor Guo Shiping shocks with advice: sell your houses now. The stock market and the housing market are the two investments people care about most, but this year's trends are still “tangled”. Yesterday, Yangzi First Financial Lecture Hall, together with Alchemy Investment Education Group, went to Suzhou and Wuxi. Professor Guo Shiping, special researcher for the National Development and Reform Commission and director of the Shenzhen University Financial Research Institute, deeply analyzed the stock and housing markets. He made a shocking statement: this year you must sell excess houses and buy stocks! This year will be a turning point for real estate, and the stock index range will be between 2800 and 3200 points. The correct investment philosophy is to sell high-position assets and buy low-position assets.

　　"Bearish" on housing market: a 50% drop in real estate this year is normal; buying a house now makes you the "last fool"

　　In his view, where will the housing market go? Guo Shiping once predicted that Hong Kong housing prices would fall 30% in 1997. No one took it seriously then, but they eventually fell 80%. "In 2007, I called on Shenzhen residents to sell their excess houses," while a professor in Beijing said housing would rise for another 20 years. In the end, Shenzhen housing prices fell 30% in 2008.

　　Yesterday, Guo Shiping again "talked down" the housing market: "This year real estate will perform poorly, and even a 50% drop is normal. Cities like Wuxi will fall to 5,000 yuan, and Nanjing housing prices cannot avoid falling either." He believes that this year's real estate "turning point" will soon be clear.

　　Comparison: Japan and Hong Kong housing markets are similar; after peaking, they fell for years

　　Guo Shiping said that generally, once the housing market falls, it falls for five years. But mainland China's housing market started rising in 2002, and first-tier city housing prices peaked in 2007. They hit bottom in March 2009, and due to "bailout" measures, a rebound quickly appeared. For the trend after 2010, he drew two dashed lines: one upward, one downward. Which way will it go?

　　He compared housing price trends in Japan, Hong Kong, and mainland China, and found striking similarities: Japan's housing prices began to rise in 1982, peaked in 1987—when no one believed Japanese housing prices would fall—then hit bottom in 1993, rebounded in 1994, but began falling again in 1995, plunging 70%. Hong Kong housing prices rose in 1992, peaked in 1997, hit bottom in 2003, rebounded in 2004, and began falling again in 2005. From these similar trends, the probability of housing prices falling this year is much greater.

　　Expectation: Property tax to be rolled out next year; no more profits from housing investment

　　"Many people now think housing prices won't fall, and real estate developers don't think so either," Guo Shiping said. However, it's like boiling a frog in warm water, gradually increasing investment costs. Of course, regulation won't want housing prices to fall straight down, but to fall slowly. If next year the preferential treatment for existing homes is canceled and interest rates are raised three times, a 1 million yuan loan plus interest would total about 2 million yuan. Another "heavy punch" is the property tax. Once introduced abroad, no country could make money from housing; the investment value of housing basically disappeared, as in France and Germany. "In Tokyo, you see vacant houses converted into parking lots everywhere because they don't have to pay property tax. In Detroit, USA, a 300-square-meter house sold for $10. I was tempted at the time. But a colleague said you'd be 'killed' by monthly property management fees and property taxes." He said the property tax rate would be between 0.6% and 6%. Once levied, the entire housing market pattern will change. "Chongqing villas fell in price after the pilot, and Shanghai high-end residences also dropped." This year, Shenzhen and Beijing are likely to pilot it, targeting mid-range housing, and by year-end Guangzhou and Hangzhou will pilot it. He expects the property tax will definitely be levied next year. "Once the property tax is rolled out, housing prices will fall immediately." While curbing housing prices, the tax can also increase local government revenue.

　　Warning: someone bought 680 houses; now is the time to wait and see

　　"The worst habit of Chinese investors is buying whatever is expensive. Now that houses are expensive, they desperately buy houses. One of my students bought 680 houses in Dongguan," Guo Shiping said. The typical feature of Chinese people's investment is that they don't buy when prices fall, but buy more when prices rise. He does not agree with this kind of investment. "Now restaurant owners and clothing makers are also doing real estate development; money from all over the country has flowed into real estate." Guo Shiping suggests that ordinary investors should absolutely not buy houses now, otherwise they may become the last fool, "standing guard" for others. If you buy a house now, you should wait and see. You should wait until prices fall to "bottom-fish."

　　Stock market "easy": buy agricultural stocks when the situation is unclear

　　B-shares may be spectacular this year

　　While not optimistic about the housing market, Guo Shiping believes that according to his philosophy of "must sell high-position assets and buy low-position assets," stocks are actually "easy" this year.

　　This year's range is 2800-3200 points

　　He expects this year's index to be between 2800 and 3200 points. "Retail investors can't eat both the fish head and the fish tail." The simplest way is: when the market reaches 3080 points, don't be greedy, just cut and run; when it reaches 2890 points, start building positions and buy. He also reminds that the easiest way to lose money is in a bear market. In a bear market, good news doesn't push prices up, but bad news always pushes them down. So you must buy sectors without bad news. Whenever he sees a bear market or a bad situation, he resolutely buys agricultural stocks, because agricultural stocks never have bad news. Retail investors always sell low and buy high; actually, they should buy the stocks least likely to fall. Another point: last year there was sector rotation in the stock market, but this year opportunities are in small and medium-sized sectors. "Buy whichever has fallen the most." However, he thinks you shouldn't buy ST stocks; the risk is very high.

　　Don't touch "state-owned" stocks, bank stocks, or resource stocks

　　It seems this year the stock market will fluctuate within a range. How can retail investors avoid "minefields"? He suggests not buying several types of stocks: first, "state-owned" stocks, because their market capitalization is too large to move; second, bank stocks, because after the reserve requirement ratio is raised above 20%, bank performance won't be good; third, real estate stocks—don't think they've hit bottom; there will be another turning point at the end of this year; fourth, resource stocks, because a resource tax may be levied; and also new energy and new materials—although they are now supported, in the 1990s the whole world supported internet technology, but internet stocks had no earnings support and still fell. If a stock has several of these five situations, it's best to avoid it.

　　B-shares will have a big rally this year

　　Professor Guo Shiping said that most of his personal assets are now in stocks, with 35% in foreign exchange funds. He is very optimistic about B-shares this year. "The international board will be launched soon, and B-shares will be spectacular." Moreover, the combined B-share market in Shenzhen and Shanghai is not even as large as PetroChina alone; the chips are very small.

　　■ Anecdotes

　　Be careful of a resource bubble burst this year; gold and silver may fall

　　"Why are oil prices high now? Because the dollar has hit bottom," Guo Shiping said when talking about resources. All resources are priced in dollars. From 1990 to 2000, the dollar was very expensive, yet a barrel of oil was as cheap as $10, and an ounce of gold was $35. The US sold high-position assets and bought 170 days' worth of oil. Europe used dollars to buy gold; Belgium bought 1,600 tons of gold. From 2000 to 2010, the US borrowed desperately and ran the printing press, suddenly devaluing the dollar by one-third.

　　However, he believes a turning point is coming soon. The US may soon announce an interest rate hike, all investment banks will pull the dollar up, and then assets will fall. "I suggest everyone be careful this year; the resource bubble will soon burst," he said. Recently, international investment banks tested the waters, and silver fell 30%. If the US raises interest rates, gold will fall from $1,000 to $700. Silver may fall 80%. A Goldman Sachs report says a barrel of oil could fall to $30. He also thinks resources will soon plummet. Ordinary investors should now resolutely sell gold and silver.

　　He even wants to sell his own home to "bottom-fish" stocks and foreign exchange

　　During the exchange, Professor Guo Shiping also revealed his investment philosophy and asset allocation: "There is no asset in the world that only rises and never falls. Assets that rise for a long time must fall, and those that fall for a long time must rise. This is a prerequisite," Guo Shiping said. His investment philosophy is the safest—sell high-position assets and buy low-position assets.

　　"I've sold all my houses." Starting in 2007, he sold a total of 5 houses. He originally wanted to sell his own home to "bottom-fish" stocks and foreign exchange, but gave up because his family disagreed.

　　Investment quotes—stock trading "Wudang Sect" eventually beats "Shaolin Sect"

　　● In 1997, the world's biggest short seller, Soros, went to work in Hong Kong, shorting Asia. At the end of last year, Soros returned to work in Hong Kong with 8 funds. All the world's short sellers have already gone to work in Hong Kong. If ten years ago we mainly worried about credit bubbles, now we worry about asset bubbles.

　　● I didn't dare buy stocks at 5,000 points because behind was a bottomless abyss. But at 2,000-plus points, behind is just a small ditch.

　　● Stock trading is divided into two schools: the technical school, or "Shaolin Sect," which trades every day; and the fundamental school, or "Wudang Sect." The former is an ant-like way of making money; the latter is a lion-like way, solving a year's food in one bite. At first, "Wudang Sect" can't beat "Shaolin Sect," but later "Wudang Sect" will have deep skills.