Why do I only touch U.S. stocks? I’m not jealous of A-shares!

1/ The gap between China and U.S. stock markets isn’t a few percentage points in short-term ups and downs—it’s that the underlying rules are a whole era apart.
A-shares aren’t hard for value investing; the underlying logic simply doesn’t support value investing.

2/ U.S. stocks let you be a shareholder. You have voting rights, can bring collective lawsuits, and major shareholders’ share reductions must be disclosed—so the cost of violations is painful enough.
A-shares let you be “chips.” Many companies go public mainly to raise funds; major shareholders treat the company like a cash machine, and the voice of minority shareholders is effectively zero.

3/ The delisting rate is an attitude. In the U.S., 2% to 7% of listings are delisted each year, so junk companies are naturally weeded out.
In A-shares, the long-term average delisting rate is 0.33% per year, and shell resources are worth more than the main business. You buy good companies expecting value to revert—yet bad companies don’t die, and they’re even occasionally pushed to the sky on merger-and-restructuring expectations. How do you do value investing?

4/ The evaluation cycle for public-fund managers is one year, or even shorter. If you buy an undervalued stock and it takes three years to rise—sorry, if you’re last in rankings in your first year, you get fired.
The payoff cycle of value investing doesn’t match the professional cycle. This isn’t that fund managers are irrational; it’s the mechanism forcing them to chase hot spots and trade in waves.

5/ What about the U.S.? The rules make long-termism rational. 401(k)s and pensions are long-term capital; institutional evaluation cycles are long; and buyback culture and dividend culture are mature. Most importantly: the S&P 500 and the Nasdaq 100 constantly refresh—junk companies are eliminated and good companies get added. When you buy an index, you’re buying America’s ability to evolve its economy.

6/ Since 1985, the Nasdaq 100 has annualized 12% to 13%, and the S&P 500 about 10% since 1926. They’ve endured 80% drawdowns, the 45% financial crisis, and 30% pandemic pullbacks—and all hit fresh highs. This isn’t luck; it’s compounding from institutions and company quality.

7/ Many people mock A-share retail investors as “leeks,” but leeks are a result of the system. In A-shares, the market’s positioning is first and foremost a financing tool, and only secondarily an investment venue. Investor protection always comes after the financing function. In this environment, short-term speculation is actually a rational choice.

8/ So the gap isn’t because Chinese people lack patience, or because Americans are smarter. It’s that rules shape behavior. In the U.S., long-term holding can make money, so more people hold long term; in A-shares, long-term holding will likely get you坑, so more people speculate.

9/ What’s the most ironic? Many of China’s best companies aren’t in A-shares—they’re in the U.S. stock market and Hong Kong. I won’t spell it out here. When you buy the Nasdaq 100, you’re effectively buying Apple, Microsoft, Nvidia, Tesla, and Google; when you buy the S&P 500, you’re buying more than 700 of the world’s top-tier enterprises in the global economy. What about A-shares? Among the “core assets” you buy, many don’t even touch the door to global competition.

10/ For ordinary people, the conclusion is simple: don’t hand your fate to a market that doesn’t support long-term holding. Your salary can earn RMB, but your long-term capital should be allocated to a place where time becomes your friend. The S&P 500 and the Nasdaq 100 are that place.