Chapter 189 How to Have a Good Attitude

Thursday, January 25, 2024.

After the Shanghai Composite Index surged 1.8% yesterday to break through 2800 points, it continued to rise at the opening. Near the close of the morning, it had risen above 2850 points, with the highest increase reaching 1.61%!

In the afternoon, the Shanghai Composite Index surged again, with PetroChina hitting its daily limit! The Shanghai Composite Index broke through 2900 points and closed at 2906 points, up 3.03% for the day!

Three big bullish candlesticks, thousands of troops come to meet.

The stock investors were very excited.

In the forum, all the stock investors were celebrating, looking forward to and praising as if they had been injected with chicken blood.

I have long forgotten the moments of despair on Monday and last Friday when the Shanghai Composite Index hit new lows.

People's hearts are fickle, that's all.

Most investors attribute the stock market surge to yesterday's three major positive factors.

First, the central bank announced that it would lower the deposit reserve ratio by 0.5 percentage points on February 5, far exceeding market expectations. This will bring one trillion liquidity to the market. At the same time, it also announced a 0.25 percentage point reduction in interest rates for supporting agriculture and small businesses.

Second, GZW announced that the research will include "market value management" in the assessment of the heads of central state-owned enterprises.

Third, zJH announced that it will build an "investor-oriented" capital market to give the majority of investors returns and a sense of gain, and to crack down on serious illegal activities such as fraudulent issuance, so that they will "lose everything they have and spend their whole lives in prison."

Stimulated by these three pieces of good news, the mid-cap stocks, high dividend stocks, and banks surged, while the consumer sector, especially the liquor and home appliance sectors, languished. The most prominent was Aier Eye Hospital, which bucked the trend and plummeted 4.78% intraday, falling directly below 14 yuan.

Until the closing, it still fell by 0.43%, closing at 13.95 yuan, failing to outperform the index and even losing money.

If calculated from the highest point of 92.68 yuan in February 2021, Aier Eye Hospital's price has been cut in half, cut in half again, and cut in half again!

"Why is this happening to this stock?" Xiao Bo asked while drinking tea.

During the three years of the epidemic, business was sluggish, so he simply closed the physical store and opened a computer assembly shop online. He assigned the purchasing and shipping to the store clerks, and used tens of thousands of yuan of capital to speculate in stocks. When he had nothing to do, he would go to Li Feng for tea and chat.

Li Feng explained:

"Look, even though the stock price has fallen by 15% now, its price-to-earnings ratio is still 37 times, and the dividend yield is only 0.57%!"

"Look at the coal stocks that are so popular in the market right now. Even after three consecutive years of growth and another big surge this year, their price-to-earnings ratios are still less than ten times, and many are only six or seven times, yet their dividend yields are around 6%..."

"Regarding the outlook, during a period of hyperinflation, coal stocks are equivalent to energy stocks, which are booming... As the hyperinflation cycle unfolds, energy prices will continue to rise..."

"As a typical medical stock, its performance elasticity is far less than that of strong cyclical stocks. At best, it can rise by 50% a year, and generally it's around 30%..."

"Let's talk about the chip game again..."

After a pause, Li Feng concluded:

"No matter how you look at it, now is not the time to buy it. Naturally, it has become a market outcast. This is what they say: when luck arrives, heaven and earth are on your side; when luck is gone, heroes are helpless..."

"That's what you said before, 'every new version, every new god,'" Xiao Bo said with a smile. "Anyway, I don't even bother looking at these fund holdings these days. Their previous rises are just as bad as their current declines."

"By the way, Li Feng, what do you think of those three pieces of good news released yesterday? Also, with such a huge increase today, why don't you seem excited? And even with the big drop a few days ago, you didn't seem particularly scared either. How do you do that?"

"They say your mindset is very important when trading stocks. How do you cultivate your mindset?"

Li Feng took a sip of tea, thought for a moment, and slowly analyzed: "Of these three positive factors, the most important is the news released by the central bank. Take a look at the complete speech from yesterday."

"It emphasizes the need to strengthen counter-cyclical and cross-cyclical adjustments, promote a steady decline in comprehensive financing costs, maintain price stability, and promote a moderate price recovery..."

"The mild rebound in prices is actually mild inflation, which is already clear."

After a pause, Li Feng continued:

"As for the mentality of stock trading, some say it takes long-term training to remain calm in the face of both praise and criticism, some say it requires good emotional management skills to go against human nature, and some say..."

"I think these are all one-sided, even wrong. Human nature has been passed down for tens of thousands of years, or even longer. As long as you are human, you cannot overcome human nature, because all those who do not possess human nature have been eliminated in history."

"To maintain a positive mindset in investing doesn't mean you have to go against human nature and put on a forced smile. Instead, it means you have to be able to foresee opportunities, grasp the direction of the macro-trend ahead of others, and be confident."

"Take the trends of the past few days, for example. We've already known that this is the end of a bear market and the beginning of a bull market. What we don't know is whether the market will fall first and then rise, rise first and then fall, or fall and then rise again... But no matter how the market fluctuates, it can't escape this trend. That's why we're not afraid or terrified, because we already know the answer..."

“People only feel fear when facing the unknown. If we know the future, what is there to fear?”

"So, if you want to cultivate a good mindset in the stock market, the right approach isn't to control your emotions or suppress your instincts, but to analyze the macro trends, the sectors, and the fundamentals of individual stocks. Only with a clear mindset can you ultimately maintain a good mindset."

"It's like when you're about to take an exam and you've already memorized all the material, you won't be terrified of the exam. But if you've studied terribly, no matter how hard you try, you won't be able to control the anxiety after the exam."

After listening to this, Xiao Bo nodded thoughtfully.

Then he asked, "Which sector do you think is promising in this round of inflation? You can't just invest all your money in shipbuilding, right?"

"My personal suggestion is to allocate some positions to the non-ferrous metal sector," said Li Feng.

"Is the lithium mining sector suitable for use in new energy? It is a major non-ferrous metal and also involves the new energy concept. There should be opportunities, right?" Xiao Bo asked.

"I don't think the chances are great, because lithium isn't scarce globally and is easy to mine. It can be mined in two to three years at the shortest, and four to five years at the longest. Most importantly, it's experienced a surge in prices, reaching 500,000 yuan per ton in the past two years. This surge in prices will greatly stimulate lithium mining, and a large number of lithium mines will be put into production in the next few years..."

"Look, now its price has dropped back to less than 100,000 yuan per ton..."

“Once supply and demand reverse, even if inflation picks up again, it will be difficult to see good performance…”

"More specifically, lithium mining stocks saw a crazy surge in the past few years, but have plummeted in the past two years, especially last year..."

"In this chip game, a large number of long leeks have been trapped. It is too difficult to find so many leeks to rescue those leeks... I personally think that there are not so many kind-hearted people..."

—————

Send one for free to generate love.

Your support is my motivation to update.