Chapter 244 Why am I so fond of strong cyclical stocks?
In the past few days, many stock friends have left messages asking about other sectors and other stocks. I always reply like this: "As passionate as I am, I only have my eyes on strong cyclical stocks now."
I guess many stock friends started cursing in their hearts:
"There are tens of thousands of stocks in the market, so why is this guy so obsessed with strong cyclical stocks? Aren't many stocks in other sectors doing well these days? In the future, I think some other sectors will perform well. Isn't that worth paying attention to?"
"This guy is a bit rigid and stubborn. If he's not careful, he might fail."
Indeed, in the past few months, many sectors in the market have seen very good growth, such as home appliance stocks, overseas concept stocks, and even the banking sector has performed well.
However, what I want to say is that compared with the strong cyclical sectors, these sectors are like ants in today's extremely fragmented market.
The reason why the strong cyclical sector is called strong is that the elasticity of its performance and stock price is extremely large, very large, beyond everyone's expectations!
This is not an exaggeration at all.
Now, let’s look back at the super bull market from 2005 to 2007, which was also the last major inflation cycle, and see how these strong cyclical stocks performed.
Let’s first look at the performance of copper stocks. Yunnan Copper, the star stock among copper mines at the time, jumped from less than 4 yuan in 2004 to 98.02 yuan in just two years, a 25-fold increase!
Another copper mining stock, Jiangxi Copper, also performed well. Its share price soared from around 4 yuan in 2005 to 78.50 yuan in 2007, nearly 20 times!
If you are still not satisfied with the increase in copper mining stocks, then let's take a look at the performance of aluminum stocks back then.
After China Aluminum merged with Shandong Aluminum and Lanzhou Aluminum, it went public in 2007. On the day of listing, its stock price soared from the issue price of 6.6 yuan to a high of 20.10 yuan. Then, just four months later, it set a historical high of 60.60 yuan! It increased more than 9 times in just a few months.
Jiaozuo Wanfang's stock price rose from less than 2 yuan in 2005 to a record high of 67.98 yuan in 2007, just two years later, a 34-fold increase!
For example, the inconspicuous Zhongfu Industrial has also risen from around 3 yuan to 75.60 yuan, a full 25-fold increase in two years!
If you are still not satisfied with the performance of copper stocks and aluminum stocks.
Now, let’s take a look at the performance of strong cyclical stocks such as kerosene, gold, silver, zinc, tin, and shipping.
Chihong Zinc and Germanium, a major lead and zinc stock at the time, started at around 10 yuan and soared to 154 yuan in one go, a 15-fold increase.
That year, the price of Tin Industry shares rose from around 5 yuan to 102.20 yuan, a full 20 times increase.
That year, China Shipbuilding's stock price soared from around 10 yuan to 300 yuan, a 30-fold increase, making it the undisputed king of the two stock markets.
That year, Shandong Gold’s price rose from 6.77 yuan to 239 yuan, a 35-fold increase!
Also, back then...
besides……
Back then, any strong cyclical stock saw gains of several, ten, twenty, or even thirty times. There was no maximum, only more! The scenery was endless.
Back then, countless investors became rich overnight and achieved financial freedom...
Naturally, there are also countless retail investors who fall into the dust and turn into powder.
It can be said that during the great inflation cycle of that year, the performance of these strong cyclical stocks was legendary, making every investor dazzled, infatuated, and unforgettable. It was not just one or two times, but more than a dozen or dozens of stocks collectively increased by more than ten times!
Whenever an investor buys one of them, the principal will explode exponentially, truly achieving overnight wealth and becoming extremely wealthy in two years.
"Really? Can you really come again?"
Zhao Xinyue stood behind Li Feng at some point, her eyes wide open, unable to believe it.
You know, in the past few years, stock investors have only lost money, and few have made money. They either stepped on this landmine or were hit by that bomb. The Shanghai Composite Index has been above 3,000 points for 17 years.
If you say now that a bull market is coming, who would believe it?
If you say now that a major inflation cycle is coming and many stocks will increase tenfold or even twentyfold, who would believe it?
No one will believe it.
Only people will say that you are dreaming.
Li Feng knew what she was thinking, so he turned around and said, "A soldier who doesn't want to be a general is not a good soldier, and a stock investor who doesn't want a bull market is not a qualified stock investor."
"Why can't the bull market come again? Why can't the big inflation cycle come again?"
Li Feng continued, "I have clearly explained the cornerstones of the bull market in previous chapters. The three major logics behind the arrival of a major inflation cycle—currency, supply and demand, and anti-globalization—have not changed at all and are even approaching."
"In the future, once a bull market and a period of high inflation arrive, why can't we see the glory of strong cyclical stocks again?"
Li Feng's words made Zhao Xinyue unable to refute, and she was also fascinated and couldn't control herself for a long time.
Li Feng continued, "A major inflation cycle is a cycle that occurs once every 20 years. In a person's lifetime, it can only occur three times at most."
"Generally speaking, when you first encounter someone, you should be in your twenties or thirties. At this time, you and I should be newcomers, with limited experience and capital. We can't understand or touch it at all, and can only miss this opportunity. When you and I meet for the third time, we should be in our sixties or seventies. At this time, you and I are old and weak, and we no longer have the courage and determination of our youth to embrace it. Therefore, you and I can only seize an opportunity when we are forty and know our destiny."
"During the last period of high inflation, I didn't take a gamble and missed the opportunity to achieve complete financial freedom. If I miss it again this time, I'm afraid I will definitely feel uneasy for the rest of my life."
"This is why I am so fond of strong cyclical stocks."
Zhao Xinyue blinked when she heard this and gently poured a cup of tea for Li Feng.
Li Feng took a sip, said nothing more, and continued writing the manuscript.
Perhaps, seeing this, some old friends have already started cursing, saying, "Stop rambling on, kid. I'm tired of hearing what you're saying."
However, I still want to give you one more piece of advice:
"Just treat it as a story you've read again, because many of you skipped through the chapters, and many of you have already forgotten what you read. Just treat it as a review."
Back to now, looking back at the beginning of the year,
Read Chapters 176-180 again, the initial outlook and understanding of the great inflation cycle, as well as Chapters 186-188's deduction of investment in 2024, and even the narration in the opening Chapter 36.
You will find that
In fact, everything is slowly shining from the future into reality.
History is a cycle, and cycles are a kind of destiny.
Only if we have a broad vision and a long-term perspective, standing at the height of the entire stock history and overlooking the development of the entire market, can we identify and utilize this almost fateful cycle.
Q&A with stockholders:
1. "The Ancient Emperor Who Loves Fried Rice in Chicken Soup":
Dear author, what are your thoughts on the recent Vanke A news story? Is Vanke at risk of delisting? A colleague of mine has a large Vanke stake and feels listless every day, as if something bad is about to happen.
When the time comes, heaven and earth are on your side; when luck is gone, even heroes cannot be free.
I believe that Vanke A is now and has always been a benchmark company in the real estate industry. However, now that the real estate cycle is going down or even collapsing, more and more problems that were previously insignificant or not even problems will become huge problems.
Therefore, whether Vanke delists or not is no longer so important.
Because the big real estate cycle is gone, and the glory of Vanke A is gone too.
As for your colleague's situation, if he used his spare money to invest in stocks without using leverage and his losses were not too big, then I think it is a good thing that he failed in Vanke A.
I once said that it is a good thing for new investors to lose money, or even suffer huge losses, when they enter the market, because this kind of pain is the best risk education for new investors. It will make them respect the market and remain vigilant at all times in subsequent investments, so that they can accumulate strength and make great achievements.
The most worrying thing is that new investors enter the market during a bull market, make huge profits, and invest everything at the peak of the bull market, even borrowing money and leveraging investments, so that they make unforgivable mistakes and lead to irreversible consequences.
This is why I used 50 chapters and 100,000 words in this book to describe in detail the reasons why Liu Bin went bankrupt and Wang Dongdong was separated from his wife and children and jumped to his death during the bull market of 2014-2015.
Here, I repeat again, please use your spare money to invest in stocks, do not borrow money, and do not use leverage.
When we invest, it is like looking up at heaven from hell. We must see both hope and despair, both profits and risks.
When you choose a stock, you must calculate how much room it has to rise and how much room it has to fall, whether you can bear the risk of such a fall, and objectively calculate the probability of the two situations occurring.
Don't take risks that you cannot afford, and only earn money that is within your knowledge. Because you cannot earn money beyond your knowledge, and you cannot keep it even if you earn it.
There is a dynamic balance between your cognition and the money you have.
Only by constantly improving your own cognition can you achieve stable compound interest.
Having said so much, I guess I’ve disturbed everyone’s meals and Douyin again. In this regard, I can only shout out, brothers, it’s time to grab the Tomato wool and give away free electricity for love. ^_^
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