Chapter 199: Plummet? NO, still the same script, still the same actors

However, Xiao Bo was just happy for two days. On March 11 and March 12, stocks of coal, oil, gold, nonferrous metals, shipbuilding, etc. began to plummet for two consecutive days.

He was a little dazed after the fall.

CNOOC first plummeted 4.71% and then 5.73% with large volume. In just two days, it fell from 30.88 yuan to 27.47 yuan. Tongling Nonferrous Metals also fell by about 7% in two days.

In particular, on March 12, China Shipbuilding Corporation plummeted by 5.92%, while stocks of banks, insurance, real estate, consumer goods, etc. rose against the trend.

The market trend seems to have changed.

Could it be that the funds chose other sectors?

"Li Feng, what are you doing? Why have coal, oil, nonferrous metals, shipbuilding, and other stocks been plummeting these past few days? Meanwhile, banks, real estate, and consumer goods—traditional blue-chip stocks—are soaring. Is the market trend changing?"

Xiao Bo called Li Feng and asked, "Especially coal stocks, they have been adjusting for many days and seem to be forming a top."

"besides…"

He frowned tightly and watched the speeches of various big Vs in the forum.

Some are claiming that track stocks will reign supreme again, some are saying that blue-chip stocks have made a comeback, some are saying that the real estate industry has bottomed out and is about to rebound, and some are saying that the high-yield stock strategy has not failed...

There is no consensus on this.

He looked at it and read it, and felt that it all made sense.

Indeed, every investment strategy has its own investment logic, and can list its own investment data to support it based on this investment logic.

Li Feng listened to Xiao Bo quietly, and after a while, he said:

"There's been quite a bit of news these past two days. For one, our CPI data has turned positive, and the Federal Reserve's CPI has also exceeded expectations at 3.2%. Also, Vanke has repaid its dollar bonds, and there are rumors that relevant financial institutions have prepared up to $11.5 billion in funds to resolve this crisis."

"Let's start with the first one. We can assume that either inflation in the US rises and interest rates stop being cut, or inflation falls and interest rates are cut and money is released, which triggers inflation again. However, no matter what is done, inflation will inevitably occur. So now US monetary policy is in a dilemma. This is why commodity futures like gold and copper have been ignoring the Fed's monetary policy in recent days."

"So, I think the overall logic of betting on the inflation cycle has not changed. These few days are just normal adjustments."

"What about China Shipbuilding? It's released a huge amount of stocks in the past two days, with two consecutive large negative lines. Will there be an intermediate adjustment?" Xiao Bo asked, "Especially on the 12th, the huge amount of 4.5 billion was released, which is more than double the previous day..."

“Could it be the top?”

Xiao Bo continued to ask.

"We've only just reached this point!" Li Feng sighed. "I once said that stock speculation generally follows three steps: speculation on expectations, speculation on performance, and speculation on growth. China Shipbuilding's performance hasn't even exploded yet, so how could it have peaked so quickly?"

"Shipbuilding is a super-long cycle. Although our market has a tradition of speculation, a major cycle often ends in one or two years, with prices rising three to five times, or even seven to eight times. Now it has only risen so much, and performance has not yet exploded. How can it have reached its peak? Don't worry, hold on."

"What do you think of real estate? Vanke, the leading real estate stock, has fallen from 30 or 40 yuan to 8 or 9 yuan now. Should I buy some? It should be at the bottom now, right?" Xiao Bo pondered. "I see many people saying it's already at a good value, so I should take the initiative to buy some..."

"Also, bank and insurance stocks have been rising quite a bit these past few days. I've noticed these stocks have been falling for two or three years now, and many have already bottomed out and are trending upwards. Should I keep an eye on them?"

Xiao Bo's words also represent the inner thoughts of many people and are also the hopes of many people.

Indeed, in the past three years, these blue-chip stocks have fallen too sharply. For example, Ping An of China was cut in half from its highest point, China Merchants Bank was also cut in half from its highest point, and so was Ningbo Bank. Only the performance of the five major banks was relatively ideal.

The blue-chip stocks of that year began to form a group in 2016, reached their peak in 2017, then bottomed out in 2018, rebounded in 2019, and rose again in 2020.

It paralyzed a large number of people.

This eventually led to a three-year continuous decline starting in 2021.

Li Feng thought back and said carefully: "When it comes to the real estate industry, we must understand the general policy at the Guo Jia level last year, which is 'establish first and then destroy'."

"Around this general policy, first second- and third-tier cities, then first- and second-tier cities, have loosened purchase restrictions. Then, major financial institutions have recently started lending to whitelisted projects, and recently, Vanke's debt issue has been resolved."

"Real estate is a highly cyclical industry, generally considered to have a 20-year cycle. Based on my own analytical framework, 2017 was a watershed year. That year, the national real estate industry reached its peak, and at the end of that year, purchase restrictions were implemented nationwide to regulate the real estate industry."

"So, roughly speaking, the next real estate peak should be in 2037. If we analyze the real estate cycle symmetrically, the trough of the real estate industry should be ten years after 2017, that is, in 2027."

"This year is 2024. The ideal scenario is that we keep cutting interest rates to stimulate the economy. By around 2027, inflation will pick up, which will support housing prices. This will achieve the goal of trading time for space, basically solving the real estate problem and achieving a soft landing."

"Right now, the CPI has just turned positive, inflation hasn't picked up, wages haven't increased, and egg-filled pancakes haven't seen a price increase. Talking about a real estate industry turnaround is premature and unrealistic, I think."

"What's more, not long ago, the government again advocated for a policy of 'housing for living, not for speculation.' Forget the real estate industry for now. Its glory days are over, and its future has yet to arrive."

"As for banks and insurance stocks, their PE ratios are very cheap, their dividend yields are good, and their valuations aren't high either. However, we speculate on expectations when we trade stocks. Long-term interest rates have been falling, which is bad news for banks and insurance stocks, especially insurance stocks, whose primary asset is government bonds. Look, Guo Jia's expected 10-year government bond yield has fallen to 2.345%, a 20-plus-year low..."

"In the future, interest rates will continue to be lowered. Some say the expected yield on 10-year government bonds should fall below 2.2%, while others say it should be below 2%. The government has also repeatedly emphasized that there is still room to reduce financing costs in the future... This is all real negative news, and it's bottomless... The potential risks involved are truly unpredictable..."

"Also, there are asset quality issues. So, there may be opportunities in these two sectors, but I don't think it's very likely. If you want to get involved, I still recommend waiting until the expected yield on 10-year Treasury bonds turns upward."

"Just like at the end of 2016, when inflation is rising, assets are boiling, and interest rate hike expectations are coming, the expected yield on 10-year government bonds will be the first to turn upward. That will be a good time for us to consider investing in banks and insurance companies."

"2016?!" Xiao Bo was stunned.

No one would have thought that when Li Feng analyzed the current market situation, he would bring up the stock market eight years ago, and he seemed to make a lot of sense.

It seems like he had just entered the market back then?

Li Feng smiled and added, "The economy, including finance, including the stock market, is like a skit that is performed over and over again. Each time is different, yet the same thing happens all the time. It's just that the timeline is stretched out, and many people forget about it."

"The hyperinflation cycle that's happening now happened as early as 2005-2007. The only difference this time is the international and domestic situation, the unexpected events, and the extended timeline. Nothing else is different."

"It's the same script, the same actors."

"In this script, some people act as sickles responsible for harvesting, some are responsible for collecting rent for the venue, and some are responsible for publicity, recruiting batch after batch of leeks to join."

—————

Fellow stockholders, please use your hands to make money and send one to your lover for free.

Your support is my motivation to update.