Chapter 323: Investment requires an end-game mindset

Tuesday, September 10, 2024.

Jisilu temperature: 3.28, Shanghai Composite Index: 2718 points

Today, the Shanghai Composite Index hit a new low of 2718 points, just one step away from 2700 points.

According to the basic principle that "integers must be broken", it is highly likely that the Shanghai Composite Index will break through 2,700 points.

The index did not fall below 2638 points in February this year, but many sectors and individual stocks have broken through the points at that time.

1. For example, in the real estate sector, after the short-lived rescue policy, there was a mass exodus in a mess.

The Real Estate ETF (512200) is currently trading at 1.115, already below its February low of 1.187.

For example, the liquor sector (SZ: 399997) is now quoted at 8858 points, which is much lower than the quotation of 10582 points in February.

It can be said that it plummeted by 16%.

Many liquor stocks have plummeted and then plummeted again, and there is no end in sight to the plummeting trend.

Although the PE seems to be very low, the dividend is very high.

However, for many liquor stocks, the predicted double kill of revenue and profit has not yet come. It is still like a big thunder hanging over the heads of investors, and no one knows when it will explode.

Previously, the blogger once said that it is better to buy real estate stocks that have already gone bankrupt than to buy liquor stocks that have not yet gone bankrupt but are about to go bankrupt.

It is because you don’t know how big the future collapse of liquor stocks will be, and the risk is uncontrollable.

2. The strong cyclical stock sector also began to differentiate.

Against the backdrop of declining profits, the coal and steel sectors have broken through their February lows.

The non-ferrous metals sector also continued to fall amid recession expectations, heading towards its lowest point in February.

3. What is more worrying than the decline of indexes, sectors and individual stocks is the plummeting confidence among investors.

After all, the index continued to fall from more than 3,100 points in May for more than four months, until September.

As long as you are alone, your heart will be filled with despair and even become numb.

4. At this stage, whether it is looking at technology or value, there is no great reference value.

Due to the extreme loss of liquidity, market pricing has become distorted.

Looking only at the short-term fluctuations of individual stocks is like trying to get the skin of a tiger.

At this moment, we should believe in common sense more and have a final-game mindset and perspective.

For example, regarding the relationship between U.S. stocks, the U.S. dollar, and U.S. bonds, the blogger does not believe that the Federal Reserve can make U.S. stocks, the U.S. dollar, and U.S. bonds continue to rise.

It is impossible to have all of this and more. That is something only gods can do, and the Federal Reserve is not a god.

The blogger personally believes that after the Mid-Autumn Festival, the Federal Reserve is likely to cut interest rates, regardless of whether it is a real recession or a false recession.

At that time, the blogger personally believes that due to the sudden change in the interest rate gap between China and the United States, it will lead to new flows of international capital, thereby causing A-shares to strengthen.

Even if, by then, the market is still in a trading recession and commodity prices are still plummeting,

But what then?

The result of the Federal Reserve lowering interest rates and printing money will inevitably be more and more currency, while the currency remains unchanged, which will eventually lead to inflation.

Just like the scene in 2020 is repeated.

Unless the supply of goods is increased while printing money, the occurrence of inflation can be curbed.

However, against the backdrop of the Sino-US dispute, it is impossible for OPEC to increase oil production significantly and for my country to stop cross-cycle adjustments.

Therefore, after a short period of deflation in the future, there will be another period of high inflation.

This is the basic logic behind my continued bet on commodities.

Moreover, the blogger personally believes that it is very likely that the market will not price the same event again.

The recession expectations that are being traded now will most likely be reversed after the Federal Reserve actually cuts interest rates, and the so-called recession expectations will no longer be traded.

5. A set of data,

In 2023, the penetration rate of new energy vehicles was 35.7%, while in August 2024, the penetration rate of new energy vehicles had reached 53.9%.

By the end of this year, it will most likely reach 60%, and it is very likely to reach 75% next year.

In the future, my country's new energy vehicles will be exported on a large scale to seize the world market.

Whether you admit it or not, the era of new energy transformation in the automotive industry has officially arrived.

Great times will surely give birth to great companies.

In our era, world-class companies will surely emerge.

This is the ultimate thinking that bloggers consider when investing in smart cars.

Shareholders exchange:

1. "Chen Xiaotian":

Brother, will the restructuring of the shipbuilding and heavy industry sectors have any impact on the subsequent market? The news was so sudden that I was a bit caught off guard.

There is no particularly big impact, so you should consider paying more attention to the macro economy, industries and individual stocks.

2. "Duan Xu who loves braised thick kelp": Dear author, why do you prefer non-ferrous metals such as aluminum and tin instead of copper?

Copper's PE is now higher than aluminum's. Copper stocks are basically around 10PE, and aluminum stocks are basically around 8, so aluminum was chosen.

Another reason is that aluminum has a larger production capacity than copper, which creates a leverage effect.

Once inflation rises in the future, aluminum companies' profits will increase faster than copper companies'.

3. "Brother Jun loves to trade stocks": If the cycle comes, will lithium mines have a wave? Currently, the prospects for new energy vehicles are good and the demand should increase significantly.

Theoretically, the demand for lithium ore will increase significantly, but the supply of lithium ore will also increase significantly.

Personally, I think that lithium ore prices have fallen so much that there should be some rebound, but the chances of a reversal are not particularly great unless a monopoly trust like OPEC is formed, or production capacity is cleared due to long-term losses.

Moreover, the low difficulty of lithium mining (lithium is not scarce) and the short cycle (it seems to be about 2 years) need to be discussed, and there are too many uncertainties.

4. "The cold and indifferent Xiang Yunlue":

"We'll have to wait and see whether the future economic recovery can resonate with the global quantitative easing cycle. If so, then almost all cyclical industries will have a major opportunity. If the geopolitical situation deteriorates, then the story will be different. The government economic report rightly said, 'This is a major change unseen in a century.' We'll have to wait and see. The cycle may be delayed, but it won't disappear."

As long as the supply is controlled and the money is printed and flooded with liquidity, inflation will definitely rise in the future.

5. "Han Tianhu who likes fern seedlings": Today is 20240909, the market has fallen to 2730 points, where is the bull market?

Now, I still believe that a bull market is coming soon.

Otherwise, I would not be fully invested at this point.

I still hold the same view now. The bull market in a narrow sense has started since 2020. That is the bull market of the great inflation cycle, which has lasted for four years. For example, coal, oil, and shipping stocks have increased several times.

In the future, I still believe that the hyperinflation cycle will continue, and hyperinflation will return after the Fed cuts interest rates.

In a broad sense, a bull market should occur after the Federal Reserve cuts interest rates and due to the resonance of the US and Chinese monetary cycles, and is expected to begin between 2024 and 2025.

Of course, I may still fail to predict.

However, if you buy stocks at this point, you will most likely not suffer losses in the future.

Many times, when we invest, we just need to have common sense.

Because, as an amateur investor, you can only have the chance to make a profit by looking for those big opportunities that can be identified at a glance.

If you need to study a stock very carefully, it means that the opportunity is not particularly great.

In such a very narrow opportunity, it is impossible for amateur investors to compete with professional investors.

What's more, many professional investors are not professional and often underperform the index.

Fellow stock traders, how does it feel to be in this tiring market?