Rebirth of the Capital Legend

"The market's investment style change is so unpredictable." Trading team leader Li Shangfeng, who was also closely watching the changes in the two markets, responded, "But if you think about it carefully, after the bubble of small-cap concept stocks burst, as market investors gradually mature and the money-making effect of small-cap concept stocks is lost, it seems that the market's investment style is gradually turning to large-cap stocks and blue-chip stocks with good performance, which is also logical and predictable.

Moreover, I think that the current market investment style is the correct one.

This is a sign that our A-share market is gradually maturing.

The original logic behind the rise in market stock prices is driven by fundamentals and performance expectations, and emotional speculation should not be the dominant force.

There is only a market investment style that is driven by fundamentals and performance expectations.

Only in this way can we avoid excessive fluctuations and bubble speculation in the market, gradually form the gene of long-term bull market, and enable numerous investor groups in the entire market to form the thinking logic of "value investment".

In fact, looking at the U.S. stock market...

The reason why the U.S. stock market has been able to embark on a long bull market that has lasted for more than ten years and has formed a trend pattern of long bull and short bear.

The fundamental reason is that the investor group in the U.S. stock market is relatively mature, forming a core logic with institutional investment as the main body and driven by fundamentals and performance expectations.

Although we cannot expect the future A-share market to be able to create the investment atmosphere and ecology of the U.S. stock market.

It has entered a long bull market that has lasted for ten years.

However, this consistent change in investment direction among the on-site fund groups will reshape the investment thinking and logic of many on-site investor groups.

Form a market trend dominated by institutional groups and a correct investment perspective driven by fundamentals and performance expectations.

I think there is still hope, right?

Only by forming this correct investment perspective and this consistent and correct investment thinking logic can we achieve this.

I think that in the future, our A-share market can get rid of the atmosphere of capital speculation on the difference and small stocks, and get rid of the market pattern of short bull and long bear. "

"I'm afraid the ecological transformation you mentioned is still quite difficult." Wang Shujie smiled and said, "After all, more than 80% of investors in our A-share market are retail investors with relatively small capital. Retail investors are limited by their cognition and news, so they are easily affected by emotions and cannot avoid the inertia of chasing ups and downs. After all, it is human nature to seek profit and avoid harm, and it is difficult to overcome.

Furthermore, there is the current group of institutional investors in our A-share market.

First of all, the amount of funds, as a percentage of the entire market, is relatively limited. Secondly, the structure of many institutions in the industry is also very limited.

In fact, many institutions also like to chase rising and falling prices and engage in short-term trading.

In other words, the level of cognition of some institutions in the industry is not much different from that of most retail investors in the market, and they are also greatly affected by emotions.

In this market, there are very few institutional investors who truly follow the concept of "value investment", are able to hold shares for a long time, and are guided by fundamentals and performance expectations.

There is another more important reason...

In our A-share market, many institutions in the industry like to make predictions in advance.

With this kind of advance prediction, when the performance is good, the stock price has often been overdrawn a lot, so it is naturally difficult for the performance and stock price to rise simultaneously.

Just like the current main line of "big infrastructure".

The offline real estate and property markets in major cities have only recently officially recovered, and many institutions in the industry have already raised their expectations for the direct beneficiary stocks in the "real estate" sector and related sectors of the real estate industry chain to a very high level, and have begun to calculate performance by computer.

This causes the stock price to overreact long in advance of performance.

After all, this is actually a kind of hype.

Moreover, this kind of hype is also showing one thing to the vast number of retail investors in the market, that is, the rise and fall of stock prices actually have little to do with business performance.

This is the case for many institutions in the industry, not to mention hot money.

Therefore, it is basically impossible and unrealistic to change the market's investment ecology, the cognition of the vast investor group, and investment thinking through a change in the market's investment style.

Whether we admit it or not, our A-share market is an active capital speculation market.

More than 95% of the capital groups in the market are speculating in it. They make money not from the growth of enterprises, but from the fluctuation of stock prices.

I believe that this ecological structure will continue as the market is still dominated by retail investors.

Whether in a short period of time or a long period of time, it is basically impossible to change.

Even if the remaining 5% of the capital group has the concept of "value investment" and intends to do so, they will be swept away by the tide of market speculation, causing the concept of "value investment" to become ineffective in the market, forcing them to make short-term investments or even emotional speculation.

Of course, whether it is speculation or investment, I think this is a normal market ecology.

It cannot be said to be healthy, but it cannot be said to be unhealthy either.

Moreover, I believe that it is precisely because more than 80% of the investors in our A-share market are retail investors that there are relatively large opportunities in the market on a regular basis.

After all, the largest group of market participants are highly susceptible to emotions.

This means that the market trend can easily change towards two extremes.

That is to say, it is very likely that when the market is generally optimistic, various expectations for the future and stock price trends will be overly optimistic, which will cause the corresponding stock prices to have a certain degree of bubble chance, or even a serious bubble chance.

When the market is generally pessimistic, the stock prices of many stocks in the market will be underestimated, creating opportunities for severe undervaluation.

Whether it is an opportunity for a serious bubble or an opportunity for serious undervaluation.

If grasped, this can bring excess market profits to participants.”

"Mr. Wang, what you mean is..." Li Shangfeng paused and continued, "Is the current market's general investment style shifting towards large-cap blue-chip stocks and white horse blue-chip stocks also a kind of collective speculation by funds, and also a concentrated speculation behavior of funds in the market?" Wang Shujie nodded slightly and said, "Indeed, in my opinion, the current phenomenon of funds preferring large stocks to small stocks and speculating on large stocks instead of small stocks is essentially a behavior of funds huddling together for warmth, and also a speculative operation. The so-called 'value investment' is still far away from our A-share market, but there are many trend investors.

So, if this market investment style continues...

We still need to stay calm at all times, not get carried away, and not focus on the macro narrative and forget the underlying logic of the market ecosystem.”

"Okay, I understand." Li Shangfeng nodded, and then turned his gaze back to the two market conditions.

Just as the two of them were talking...

In the market, the core weighted stocks related to the "big infrastructure" theme and the leading stocks with popular concepts are still continuing to strengthen.

And related concept stocks in other sectors of the market, especially small-cap concept stocks.

The liquidity on the market is still being lost.

The large capital groups in the market are still continuously cutting losses from the "technology" sectors such as film and television media, new energy industry chain, Internet software, and electronic information, and then adjusting their positions to the relevant weighted core stocks of the "big infrastructure" main line, and continue to chase the hot stocks of the "big infrastructure" main line.

At the same time, on the current online platform, there are many retail investor groups gathered on major stock investment exchange platforms.

At this moment, we are also constantly cutting positions in low-priced and weak stocks, and chasing the main line stocks of "big infrastructure" that continue to lead the market.

"Damn it, luckily I cut my position. I chased the real estate leader 'Capital Group' in the morning trading and have made more than 6 points. I think it will rise tomorrow and the day after tomorrow. Everyone... In a weak market, we still have to focus on the core leaders and the main line. It's time to cut positions."

"I'm stuck with 50% of my money, and I really can't cut it. Besides, the main line of 'big infrastructure' has also risen a lot at this time. What if I stop loss and chase high, and chase it at the top again?"

"The core theme of 'big infrastructure' is the long-term trend, and the market will not end so soon."

“It is correct to switch to core leading large-cap stocks as early as possible.”

"Yes, small-cap concept stocks with no volume, no matter how much loss, should be cut. I took a look and found that basically all the big funds are fleeing from all the small-cap stocks in the market."

"Isn't it 'high-low switching'? Why is there no money to do the high-low switching?"

"There is no such thing as 'high-low switching'. This is not a bull market. Now there is only group buying, and only funds are concentrated in the group to continue to speculate on the core main line. There is no high-low switching."

"Why can the 'big infrastructure' line break out smoothly and continuously, but other main line stocks can't do the same?"

"Because there is not so much money in the market, we can only focus on one main line of speculation."

"Isn't it because the logic of the core theme of the market, 'big infrastructure', is strong enough? The real estate market has recovered, and house prices have generally risen across the country. There is no reason why the core theme of 'big infrastructure' has no market."

"The key is that the price has increased quite a bit, so I don't dare to chase it anymore."

"There is no such thing as a cheap product. This is the same in real life and in the stock market. Moreover, are the share prices of the core leading stocks in the main line of 'big infrastructure' really high at this position? Compared with some better leading stocks in the liquor, white appliances and pharmaceutical sectors, the share prices are obviously still at the bottom, right?"

"Compared with liquor, white goods, and pharmaceutical sectors, it is indeed cheap."

"The three major market indexes are clearly out of sync. I don't think this market will last long, right?"

"If the market keeps going this way and the Shanghai Composite Index and the ChiNext Index keep diverging like this, the market will definitely not go far. But I think... after the emotional reaction of the 'big infrastructure' line is completed, I feel that the ChiNext Index should have a wave of catch-up gains. At that time, it should be a good opportunity to stop losses in small-cap technology concept stocks in the ChiNext Index field and adjust positions in the core leading stocks of the 'big infrastructure' main line."

"That is to say, the 'big infrastructure' line should have reached its peak in the short term, right?"

"I don't care about that. I thought it had peaked in the short term, but I never expected that after yesterday's divergence, today the market's sentiment towards the core theme of 'big infrastructure' is more consistent."

“Follow the market, don’t predict the market, just buy the leading stocks, and don’t care how the market goes, because the leading stocks won’t turn down easily.”

"In a market dominated by institutions, the market's leading stocks at this time should be the leading stocks in several major industries, right?"

"Without a doubt, it is the leading stocks in several major industries."

"Kewan Real Estate, Poly Real Estate, Gemdale Group, Conch Cement, Shenhua Coal, Huaguo Construction, Huaxin Building Materials... Which of these companies do you think has more potential and is better?"

"If we talk about the most undervalued, it should be Shenhua Coal, right? After all, it is a stock with a negative net value."

"Why do I feel that China Construction is undervalued? After all, the future macro-strategic plan of 'New Era Road, Maritime Silk Road' should benefit this stock the most. Moreover, the recovery of the real estate market and the property market will also be a big long-term boon for this company."

"What about Conch Cement? I think the fundamentals of the cement sector should have reversed, right?"

"Cement and steel prices have indeed increased recently, and the futures market has been rising, but I don't know if it will be sustainable. I remember that cement and steel prices rebounded briefly last year, but after the rebound, they hit a new low within a month or two."

“It feels like this time is different because there’s a real surge in demand.”

"If you're not sure, just lay it out evenly. Buy a little of everything. You can't go wrong."

"From the trend point of view, these stocks are actually related. I think it doesn't matter which one you buy. As long as the core theme of 'big infrastructure' can continue to rise, these stocks will not be too bad. If the sentiment of the core theme of 'big infrastructure' obviously cools down and the fundamental reversal is finally proved to be a false logic, then these stocks should find it difficult to have independent trends."

"Well, it seems that I should just lay out my position flat. At this position, betting on one or two stocks is really risky."

As the discussion among many retail investors continues...

As the market trading hours progress, the polarized trend of the Shanghai Composite Index and the ChiNext Index continues. The pattern of the market being led by industry sectors, concept sectors and many related stocks related to the main line of "big infrastructure" is also continuing. This pattern trend seems to become more and more obvious after 10:30.

At the same time, under the core theme of "big infrastructure", the strong money-making effect continues to be demonstrated.

The market, which had originally been short of volume and had seen a gradual decrease in buying, has begun to gradually increase its active buying power. It seems that new incremental funds have been re-attracted by the strong money-making effect of the "big infrastructure" main line, the spread of emotions, or the publicity of institutions and financial media.