Chapter 182: Ice and Fire, Two Worlds
"Hey, Mr. Liu, why did you have time to call me today?"
Li Feng was lying on the swing by the lake in the community, holding his child in his arms. He was swinging on the swing and admiring the rippling blue water of the lake.
These days, the epidemic has been rising and falling across the country. For the sake of the health of the whole family, several people basically rarely go out. They usually live between home, community and work.
With more free time, Li Feng would check the stock market, take walks in the community, or stay at home to study cooking. He learned how to make dumplings, pancakes, and steam buns. He ate well and slept well, and before he knew it, he had gained several pounds of weight.
Liu Jihua gathered his thoughts in his office and said, "It's been a while since we last met. I wanted to give you a call to see where you're at now."
"Me? Hey, you're just staying at home," Li Feng laughed. "No one comes to visit you for no reason. Mr. Liu, are you going private?"
"I knew I couldn't hide it from you," Liu Jihua said. "I thought going private would be easier, but I didn't expect it to be even more tiring than working in the public sector. I made a lot of money last year by bottom-fishing, but this year I'm a little lost. The market is getting more and more confusing."
"If you don't understand, just clear out the inventory and take a break for a while."
"I want to liquidate my positions and take a break, but I can't do that sitting in this position. I can't explain to my investors. I have to hold positions. What do you think of the market conditions in the past few months?" Liu Jihua continued helplessly.
Li Feng held the child in one hand and took out his mobile phone with the other. He skillfully opened the Snowball APP, swiped a few times, and browsed the market.
Indeed, in the past few months, the market styles have been extremely polarized, and it is no exaggeration to say that it is like heaven and fire.
The liquor sector, which saw a sharp rise last year, has begun to stagnate and even decline.
Kweichow Moutai's price plummeted from 2,627.88 yuan on February 18th to around 2,000 yuan in March and May, then plummeted below 2,000 yuan in August and September, hitting a low of 1,525 yuan, a 40% drop.
Wuliangye’s price plummeted from 357.19 yuan on February 19 to around 200 yuan in October, a drop of 43%!
Ping An of China also fell from more than 80 yuan at the beginning of the year to below 70 yuan in one breath, and then broke through 60 yuan all the way to more than 50 yuan, a drop of about 35%.
Vanke's share price also fell from 29 yuan at the beginning of the year to around 19 yuan in the middle of the year, a drop of 34%.
Gree Electric Appliances also fell from a high of 69 yuan at the end of last year to 29 yuan in April and May, and reached a low of 28.49 yuan, a drop of 59%!
Cut in half!
There are many more examples like this.
It can be said that 2021 is a year of drastic differentiation in investment styles.
It can be said that one thought is heaven and one thought is hell.
If you make the right choice, your investment returns may double or even multiply several times. If you make the wrong choice, your investment returns may be shattered or even cut in half.
This is the power of the alternation of old and new cycles.
Against the backdrop of massive money printing at home and abroad in 2020, blue-chip stocks and track stocks can still take advantage of the situation and continue to rise with inertia driven by funds. However, once 2021 arrives and the new cycle arrives, a large amount of funds will turn to invest in the new cycle and abandon the old cycle.
Because the new cycle brings about a surge in performance.
The decline of the old cycle has led to a decline in performance.
Under the common aesthetic concept that performance is king, capital will naturally embrace the new cycle and abandon the old cycle.
Not to mention, domestic financial and monetary policies are tightening silently.
The concept of "cross-cycle" was first proposed at the ZZJ meeting on July 30, 2020, as a supplement to "counter-cycle".
As we all know, "counter-cyclical" means tightening when the economy is booming and easing when the economy is sluggish, while "cross-cyclical" goes beyond "counter-cyclical". Simply put, it means predicting your prediction and requiring that when the economy is sluggish, the easing should be moderate and not flooding the market with money, which will lead to overcapacity and the recurrence of the "four trillion sequelae."
The main theme is that there will be no flooding.
In order to control imported inflation, the invisible hand launched a combination of punches, and market interest rates rose a lot unknowingly. The expected yield of ten-year Treasury bonds rose from the lowest point of around 2.5 in 2020 to around 3.0 unknowingly.
This series of combined punches is numerous, extensive, and complex, with extremely profound impacts. The timing nodes are extremely exquisitely chosen and are breathtaking.
What attracted the most attention of investors was the dumping of tens of thousands of tons of copper ingots, aluminum ingots, and zinc ingots in mid-2021 to suppress the skyrocketing prices of non-ferrous metals in the futures market.
In addition, in 2021, the government also punctured the three major bubbles of online finance, education and training, and real estate. The de facto tightening created not only released the pressure on residents' consumption and life, but also indirectly suppressed inflation.
This directly led to the collapse of education and training stocks.
New Oriental’s stock price was cut in half from over HK$30, then cut in half again, cut in half again, and then 20% off, falling to HK$4 at the end of the year. It had to find another way to sell goods through live streaming and changed its name to Oriental Selection.
A plunge of 87%!
Xueersi's listed platform, New Oriental, went straight from its highest point of 90.96 yuan at the beginning of the year, and then it plummeted all the way, getting cut in half again and again, and then cut in half again and again. By the end of the year, it was only 3.93 yuan left!
A 96% plunge!
Tencent Holdings' stock price plummeted from 775.5 yuan to 456 yuan by the end of the year.
A plunge of 42%!
Alibaba also plummeted from its highest point of 319 yuan to 118 yuan at the end of the year!
A 63% plunge!
It can be said that the scene was a river of blood and extremely tragic.
And this is just the beginning.
Li Feng took a deep breath and said, "Mr. Liu, only when the tide recedes can we see who is swimming naked. The cycle for blue-chip stocks and track-track stocks has passed, and the cycle of hyperinflation has arrived. We should give up what we should give up, and let go of what we should let go of."
"I know that, but if I want to buy pro-cyclical stocks now, I can't afford it at this price!" Liu Jihua sighed as he looked at the strong cyclical stocks that had doubled or even several times in value.
Entering at this point is a right-side transaction, and the risk-reward ratio is very low. If you enter rashly, you may end up being the one taking the blame and repeating the same mistakes.
Li Feng thought for a moment and suggested, "During a period of strong inflation, the performance of each stock will also vary. Generally speaking, energy and nonferrous metals stocks will rise first, followed by the shipbuilding sector. You might consider investing in the shipbuilding sector."
"Shipbuilding sector?"
While thinking, Liu Jihua called up several stocks in the shipbuilding sector, but he felt they were all unfamiliar.
He had basically never been involved in these stocks, including other energy and nonferrous metal stocks, as they were outside his circle of competence. But at this moment, the blue-chip stocks were almost wiped out. The actual failure forced him to grit his teeth and study hard to catch up on the courses in these industries.
"That's all my advice. If you have any questions, let's contact each other on WeChat."
"good."
"goodbye."
Li Feng hung up the phone, shook his head and sighed.
This is the difference between left-side trading and right-side trading.
Left-side trading usually involves buying at the bottom of the market when others are abandoning it, thereby gaining a huge advantage in terms of stock cost and holding mentality.
Trading on the right side seems to avoid a crash, but in fact, due to the increase in buying costs, the risk of buying is much greater than that of traders on the left side, not to mention the unstable trading psychology caused by the increase in costs.
When trading stocks, left-side trading comes first.
However, achieving this is easier said than done. One must be one step ahead of others, analyze the macro trends, identify the sectors that will lead the trends in the future, and buy related stocks.
This is a strategic competition.
Rather than a tactical fight.
This is the essence of Li Feng’s trading system.
Since retail investors do not have an advantage in technology, capital, or channels, if they want to win, they must defeat their opponents in macro strategies.
Use wisdom rather than brute force.
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