Chapter 246 This market is becoming more and more efficient
Last night’s news was very unfriendly to strong cyclical stocks.
First, the price of gold futures plummeted by 2% last night, and the price of silver futures plummeted by 4%. It was a bloody storm. I believe that today's A-shares will also be a bloody storm.
Success and failure are all due to Xiao He.
The Middle East geopolitical crisis caused a short-term surge in gold and silver prices, followed by a sharp drop.
Second, the performance of the coal sector collectively plummeted.
Lanhua Science and Technology's revenue in the first quarter fell sharply by 25.03%, and its net profit plummeted by 82.55%!
Panjiang shares' revenue in the first quarter plummeted by 31.91%, and its net profit plummeted by 93.91%!
Shanxi Coking's revenue in the first quarter plummeted by 26.18% and its net profit plummeted by 91.37%!
To backtest the trend of the entire coal sector, we must focus on the second half of 2021.
That year, domestic coal stocks were tight and electricity was in short supply, leading to severe power outages and a short squeeze in the coal industry.
Against this backdrop, starting from the second half of 2021, the entire coal industry began a great leap forward, with coal production and prices rising in both quantity and price, which also gave rise to a three-year bull market in coal stocks.
It is for this reason that even in the context of the Federal Reserve's interest rate hikes and relatively tight domestic monetary policy, the coal sector has shown an upward trend different from the non-ferrous metals sector.
Back to the present, with the lifting of the ban on coal imports, coal prices have gradually fallen. Coupled with the reduction in production due to government intervention, the performance of many companies has declined significantly.
Third, the European Central Bank's Governing Council stated that the EU may cut interest rates by more than 100 basis points this year.
Finally, there is some good news.
As soon as the market opened today, the direction of the entire market seemed to be wrong.
The Shanghai Composite Index opened at 3038 points, and then began to fall, dropping to 3021 points in one breath.
During the trading session, real estate stocks were attracting investors, liquor stocks were attracting people, and bank and insurance stocks were relying on people. However, on the strong cyclical stocks side, there was panic and everyone was on edge, with stocks plummeting and plummeting, making investors look green in the face.
Lanhua Science and Technology was pressed on the lower limit at the opening, and it has fallen by nearly 20 points in two days.
Shanxi Coking fell to the lower limit in one breath from -6% at the opening, and also dropped more than ten points in two days.
Panjiang shares plummeted more than 7%...
The entire coal sector fell by more than 3% at one point.
Gold and copper sector stocks are also having a hard time.
Zijin Mining plummeted by more than 4%, Luoyang Molybdenum fell by more than 5%, Shandong Gold, Zhongjin Gold, and Yintai Gold all fell by more than 5%...
In addition, China Aluminum Corporation fell by more than 4%, China Zinc Corporation and Jiangxi Copper Corporation fell by more than 5%, China Tin Corporation, Zhuzhou Iron and Steel Group, Western Mining and Zhongfu Industrial Corporation fell by more than 6%, and China Tin Nonferrous Metals and Northern Copper Corporation, which were involved in hot money, directly hit the limit down.
The entire non-ferrous metals sector fell more than 4%.
It can be said that there is a wailing sound in the entire market.
In the VIP room, Lao Chen's face almost turned green from the fall, and Xiao Bo's face was also not very good. With just such a drop, the profits that had increased for more than half a month were directly wiped out.
On the other side of the VIP room, a group of veteran stock investors also looked unhappy and were discussing whether the market would break 3,000 points again.
Has the market changed?
Is the future of strong cyclical stocks over?
Thinking of this, Lao Chen felt a little panicked and couldn't help but sigh: "Oh, it collapsed, it collapsed, the strong cyclical stocks collapsed, coal is finished, gold, copper and aluminum are also in trouble, and other minor metals and shipping have fallen into a mess..."
"What should I do? What should I do?"
Hearing Lao Chen's complaints, Xiao Bo pushed him and said, "Why are you panicking? There are no stocks that only go up and never go down, and there are no stock markets that only go down and never go up. If you don't have a big heart, don't play with strong cyclical stocks. These stocks fluctuate by more than ten points during the trading session, and it's the same as playing with them."
Old Chen glanced at Xiao Bo, clearly distrusting him, but then he looked at Li Feng and asked, "Hey, hey, Li Feng, what do you think?"
Li Feng glanced at the market, thought about it, and couldn't help but sigh: "This market is becoming more and more efficient."
"The coal industry's first-quarter report wasn't ideal, and the market opened at the limit down... The dynamic price-to-earnings ratio went straight from single digits to over ten times, directly transforming low-PE stocks into high-PE stocks... Therefore, when we invest in stocks in the future, we must be forward-looking and stay away from stocks with declining future performance or even a sudden change in outlook..."
"Perhaps, this will become a rule of the game in the future..."
"When earnings plummet, the stock price plummets... Of course, when earnings soar, the stock price should also soar..."
After a pause, Li Feng continued, "The coal sector is good, but it has risen too high. Although it may continue to rise in the future, no one can predict how long this future will last. Therefore, a lot of funds have begun to flee this sector."
"By analogy, we can apply the same analysis to other nonferrous metal sectors."
"On the one hand, we need to take a long-term view, looking at the broader logic of whether the price of this industry or this product is on a clear upward or downward trend within one or two years. On the other hand, we need to take a short-term view, such as quarterly and semi-annual reports, to analyze specific company profits to see whether they are increasing or decreasing, and the reasons for this."
“And ultimately make an investment decision.”
The three chatted for a while, and suddenly the market rose by more than ten points, and many strong cycles began to rebound.
Old Chen was so nervous that his palms were sweating.
Li Feng operated it for a while, raised his brows, and said with a smile: "Xiao Bo, we haven't fished for several days. I heard that the river has been flooded recently and there are many big fish. Let's go and try our luck."
"This... is fine." Xiao Bo hesitated for a moment and agreed.
"Old Chen, are you going?" Li Feng asked.
"Me? Alas... I, I have something else to do, so I won't go..." Old Chen looked at the red and green market, hesitated, and refused.
Li Feng smiled, pulled Xiao Bo out, got into the car, and headed straight for the fishing spot.
1. "Chen Xiaotian":
The cycle has already occupied more than 70% of the positions. There was a pullback today. Let’s see if there is still a chance in this wave.
No matter what we do, we must have a bottom-line mindset, especially when it comes to stocks.
Because stock trading is a game of probability.
In the stock market, no matter how prepared you are, unexpected events will inevitably occur, leading to unavoidable losses. Therefore, when making investment decisions, while being strategically cautious, you must also be tactically cautious. Consider all negative news, even black swan events. Ask yourself: If these worst-case scenarios occur, how low will the stock price fall? Can you accept it? Can you afford the losses?
This is also the reason why I repeatedly emphasize that when investing in stocks with spare money, do not use leverage.
Because once you borrow money to invest in stocks and use leverage, if you fail, there is no way back and there is no possibility of recovery.
Uh, I forgot something just now, and now I remember that I forgot to tell everyone to send free love electricity. Brothers, don’t forget, grab the wool.
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