This year's Berkshire Hathaway annual shareholders' meeting carried a tinge of melancholy compared to previous years. The legendary investor Warren Buffett, now 95, announced at last year's meeting that he would step down as CEO of Berkshire Hathaway at the end of the year, transitioning to Chairman and passing the baton to Greg Abel. At that time, it felt like Berkshire's golden era might be over; once Buffett stepped down, the "Buffett premium" would likely fade. Indeed, since Buffett announced his retirement last May, Berkshire's stock has underperformed the S&P 500 by approximately 40 percentage points. This reflects the market's reverence for Buffett; without him, Berkshire is unlikely to replicate its past miracles. Although retired, Buffett still reports to work daily, and Abel consults him on major investment decisions. Abel's current strategy appears to be "following established rules." However, once Buffett is no longer involved, questions remain about whether Abel can match Buffett's exceptional insight, overcome human tendencies of greed and fear, and navigate future crises smoothly. Some Berkshire shareholders have sold their shares in the secondary market to adopt a wait-and-see approach, contributing to the stock's underperformance. Another reason is that the recent market rally has been primarily driven by the "Magnificent Seven" U.S. tech stocks, and besides Apple, Berkshire's portfolio holds few of these names.

Currently, Wall Street holds significant diverging views on AI technology. Many are optimistic about the AI revolution, and I share this view regarding this industrial transformation—it represents the fourth technological revolution, potentially impacting work and life more profoundly than the previous three. It is inevitable that this sector will produce great companies. However, a thriving industry does not guarantee continuously rising stock prices or prevent a bubble from bursting. Even the best assets have a price. NVIDIA has reached new highs, with its market capitalization exceeding $5 trillion, and some bulls even project $10 trillion. Yet, there is considerable debate over whether such valuations can be justified by future earnings. Buffett prioritizes earnings certainty, preferring companies with predictable returns over those surviving fierce competition. This explains his reluctance to invest heavily in the AI-focused "Magnificent Seven." Whether AI applications can deliver on their earnings promises and when any bubble might burst are unpredictable; the bubble could also inflate further. The presence of a bubble is not necessarily negative, as it can attract substantial capital inflows. The U.S., leveraging national resources to bet on AI, faces this path partly out of necessity due to manufacturing hollowing out and high labor costs, with much production shifted to emerging markets like China. This AI revolution is now intertwined with America's national trajectory.

In a discussion with a Bloomberg executive, it was noted that the Federal Reserve's unlimited quantitative easing in recent years has, on one hand, fueled the AI tech bubble, driving stock prices higher and vastly increasing the wealth of the affluent class holding U.S. stocks, leading to greater wealth concentration where the top 1% hold the majority of assets. On the other hand, the ordinary middle and lower classes suffer from rising prices without significant wage increases, experiencing costs several times higher. Recent visits to Omaha and New York revealed noticeably higher prices for groceries and dining compared to a few years ago. Dining at Chinese restaurants in the U.S., the cost in dollars feels similar to using yuan domestically, with dishes priced at several tens of dollars. From a consumption perspective, the exchange rate seems almost 1:1, though actual U.S. prices are roughly seven times higher. Some experts argue that based on purchasing power parity, the yuan-to-dollar rate should be around 4, not 6.8. Calculated at 1:4, China's GDP would already surpass that of the U.S. The widening wealth gap in American society means many ordinary people face harsh survival realities. An unexpected event or major illness could cause many Americans to fall down the social ladder, lose jobs, and become homeless. Homeless individuals are common on U.S. streets, often not due to laziness but economic hardship. According to the Bloomberg executive, the average lifespan of these individuals is only 3-5 years, often ending due to hunger, cold, or drugs. This highlights the plight of ordinary people behind America's economic prosperity.

For wealthy Americans, real estate investment opportunities are limited, leading many to crowd into the AI tech bubble. In discussions with Morgan Stanley, we explored this: Are U.S. investors unaware of the tech bubble's size? They are aware, but many adopt a "take-the-money" approach, seeking high risk and high returns. No one wants to exit before the bubble bursts; instead, more capital flows in chasing even higher returns. I shared Buffett's analogy from this year with the Morgan Stanley executive: A bull market bubble is like a dance party where everyone is handsome or beautiful, drinking champagne and dancing, with no one wanting to leave. Everyone knows that after midnight, everything turns into mice and pumpkins, but no one wants to leave early; all aim to leave at 11:50 PM. Unfortunately, there's no clock in the room to tell the time. This metaphor vividly captures investor greed—everyone wants to exit just before the bubble bursts, but few manage to do so unscathed. Leaving early might mean missing part of the rally, a difficult choice indeed. The Morgan Stanley executive humorously noted their approach for clients is to "dance as close to the exit as possible," implying a readiness to exit immediately at signs of a bubble burst—a wishful strategy for many investors.

A key concern for many investors is that if the U.S. stock bubble bursts, it could trigger significant declines in A-share and Hong Kong-listed tech stocks, particularly those linked to U.S. giants, such as Tesla's supply chain, NVIDIA's ecosystem, Apple's supply chain, and Google's network. If the lead companies' stocks fall sharply, related firms in their supply chains are likely to follow. One useful indicator is to check the overnight performance of U.S. stocks, especially the Nasdaq, each morning. If U.S. markets are stable, it's a good sign; if there's a sharp overnight decline (e.g., the Nasdaq dropping over 10% in a day), consider whether to significantly reduce positions or even exit to avoid risk. Of course, repeated false alarms may lead to complacency; exiting prematurely once or twice might require buying back at higher prices, missing some gains. But getting the final exit right could preserve most profits and capital. If one stays invested with侥幸心理 during a burst, gains from the bull market could be wiped out. Hence, Morgan Stanley's analogy is insightful: dance near the exit when a bubble might burst to avoid being trapped if it suddenly collapses.

On another note, risk can be mitigated through diversification. This includes allocating to tech stocks as well as "HALO assets." HALO assets encompass sectors like non-ferrous metals, coal, power, wind, solar, and energy storage—infrastructure essential in the AI era, characterized by heavy assets, limited new entrants, and potential for垄断收益. These sectors also benefit from economic transformation. Further diversification through asset allocation can involve precious metals like gold and silver to hedge against dollar depreciation, alongside fixed-income products such as bonds.

Discussions with Wall Street financial institutions clearly indicate that U.S. stocks remain in a bullish atmosphere, with the "Magnificent Seven" even experiencing accelerated, parabolic rises—a characteristic of late-bull-market squeezes forcing those who missed out to chase the rally. In contrast, A-shares and Hong Kong stocks are relatively undervalued, with overall valuations less than half those of U.S. stocks, some even only a third. From a valuation perspective, A-shares and Hong Kong stocks are likely to attract more capital inflows. International capital's interest in these markets has noticeably increased compared to before, and more foreign inflows are expected over the next six to twelve months, which could support the development of a steady, long-term bull market.

(The author is the Chief Economist and Fund Manager at Qianhai Kaiyuan Fund.)

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