A fan friend asked: "Teacher Meng, could you talk about the current environment, what big moves will there be after the United States stops raising interest rates?"

Another fan friend who read my article said: "You are talking about the long term, but for retail investors, the main opportunities in the short to medium term are still concentrated in small and medium-sized stocks."

There is a common point in the words of these two fan friends - they both pay more attention to "the present". One has "the present" in his sentence, and the other has "short to medium term". In their consciousness, "the present" and "the moment" are the most important. Long-term things are too far away, and it doesn't make much sense to talk about "the long term" now.

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Is it really more important to focus on and study "the present, short to medium term" in stock investment? Absolutely not!

I have many friends who are very good at studying the international economic environment. They like to study the current U.S. economic policies and the Federal Reserve's interest rate hike rhythm, the current economic and market dynamics, and other hot issues of the moment. I also have a few friends who are good at short-term trading and are particularly fond of speculating on small and medium-sized stocks.

However, I never communicate with them. In my view, what they do is meaningless. Warren Buffett, the stock god, said: "I have never seen an economist who can make a lot of money in the stock market! They are just guessing. Economics is just something to entertain the public, just like watching variety shows. I have never seen an economist who can make a lot of money in the stock market. As for the changes in the stock market, they are all guessing. But there are variables everywhere in the economy, and it is basically impossible to predict."

I agree with Warren Buffett's point of view. I have always believed that what is "the current U.S. interest rate hike, what big moves will there be, what will be the hot sectors in the next bull market" and so on are all variables, and it is fundamentally impossible to predict. Therefore, I never make short-term macroeconomic forecasts and short to medium-term stock market forecasts.

Whether it is the current market or economic policy, it is affected by complex variables in the short to medium term, and the essence is something that cannot be predicted. Just like predicting what I will do in the next second, tomorrow, or next month, it is absurd. Because even I am not very clear, my short-term behavior is subject to the influence of various variables.In 2022, a popular economist predicted that the U.S. economy would collapse in March 2023. Now, almost a year has passed, and his prediction has not come true. My friends who often trade in the short term and study the hot spots of the medium and short-term market have not made money in the market for more than 20 years.

People who participate in the speculation of medium and short-term market trends are essentially playing a game of hot potato. They can only chase the rise after the market rises, and it is a market that may suddenly end at any time.

The current medium and short-term market and events are full of variables, so they are not important for our investment. Things with fewer variables and a higher probability of occurrence are the direction that we investors should focus on. What are the things with fewer variables and a higher probability of occurrence in stock investment? Industries supported by national policies are likely to be prosperous for a long time in the future, and long-term investment in related index funds will likely make money. Industry-leading companies will likely continue to be excellent in the next five or ten years.

As for whether the stocks that hit the daily limit today will continue to hit the limit tomorrow, only the "god" knows. What the next round of market hotspots will be requires us to climb the mountain to ask for divination. The things that are easy to grasp and certain in the stock market are mostly long-term.

This is the reason why I always talk about "long-term" in my articles. Long-term things have fewer variables and are relatively easy to predict. For example, it is hard to predict who will win in a 100-meter race between an 18-year-old son and a 45-year-old father. However, it is almost 100% certain that the son will win 40 years later.

We cannot predict the test scores of an ordinary student in an ordinary middle school tomorrow, but it is a highly certain event that his college entrance examination scores in the next few years will not reach the scores of 985 and 211 universities, and we can make this prediction.

For example, in a war, it is hard to predict who will win when the battle is fierce. However, we can bet that the war will inevitably end in the long term. This bet has a higher winning rate.

Taking the investment in small and medium-sized stocks as an example, these companies' strength is far from comparable to that of industry-leading companies. In the long run, most of them will go bankrupt. Participating in the stocks of these small and medium-sized companies is actually participating in high-risk speculative speculation, which is originally a game with a low probability of success. Whether we can make money in the speculation next time, whether we can pass the red flower to the next person in time before the drum stops after participating next time, is really full of uncertainty.

However, in the long run, the more times we participate in the speculation, the more the balance of probability will eventually tilt towards the loss side. Sooner or later, we will find that the red flower falls on our hands when the drum suddenly stops.