Chapter 224: Thoughts on Big and Small Cycles
Wednesday, April 3, 2024.
Last night was destined to be another sleepless night.
Due to the sudden incident in the Middle East (including the attack on the Iranian embassy), crude oil, gold and London aluminum prices soared again.
Among them, WTI crude oil rose above $85!
Gold once rose above $2,600!
Shanghai aluminum and London aluminum also hit new highs in recent days.
The prices of bulk non-ferrous resources continued to rise again and again, three times and four times, and continued to rise, finally shattering the faith of many investors.
Today, the Shanghai Composite Index opened low at 3074.89 points, and then fell all the way. Led by the ChiNext, theme stocks all went out of business, with low-altitude economy, Xiaomi Automobile, AI, and computing power leading the decline. A total of more than 4,000 stocks in the three markets fell.
Instead, non-ferrous resource stocks exploded across the board!
Oriental Zirconium hit the upper limit for three consecutive days, Northern Copper hit the upper limit for two consecutive days, Baiyin Nonferrous Metals hit the upper limit, and Zhangyuan Tungsten hit the upper limit...
Luoyang Molybdenum Co., Ltd. rose by more than 5%, setting a new high. Western Mining and China Aluminum Co., Ltd. rose by more than 4%, also continuing to set a new high in recent days. Shenhuo Co., Ltd. and Jiaozuo Wanfang Co., Ltd.
In addition, there are the three major oil companies, the three major oil shipping companies, and the two major shipbuilding companies...
The non-ferrous metals sector rose by more than 3% at one point.
The market is still hovering around 3050 points, but strong cyclical stocks have already set new highs.
In just a few months, the market shifted from trading deflation to trading inflation, and even skipped trading recovery altogether.
Xiao Bo sat in the VIP room, looking at his own selected stocks, which kept rising, and he actually felt a little numb.
Not far away, Old Liu looked at the Luoyang Molybdenum shares he had bought a few days ago, regretted it so much that he slapped his thigh and said, "Ouch! If I had known earlier, I would have bought more... It seems that the non-ferrous metals sector is the real dragon in the market! I need to study it more carefully..."
But, he just sat down.
In the market, the situation suddenly changed, and a wave of selling orders suddenly emerged. Stocks that had been closed for trading, such as Baiyin Nonferrous Metals, Northern Copper, and Oriental Zirconium, all opened their daily limit boards, and other nonferrous metal stocks also fell sharply.
This gave him a big shock.
This also scared Old Chen, who was trading stocks at home. He took a sneak peek and saw that the China Heavy Industry, which he had so desperately bought, had increased its price by two cents for its looms, not even catching up with the price of China Shipbuilding. He couldn't help but curse, "You useless guy, why did I choose you?!"
"Look at their copper mining stocks, look at their oil shipping stocks, or at the very least, look at our big brother, China Shipbuilding. Which one isn't better than you?"
"No, I can't stay in this dead stock anymore. It seems that no major investors are interested in this stock. I need to change to another stock!"
Thinking of this, Lao Chen opened the financial forum and studied the posts published by various big Vs. He became ruthless and directly sold all his shares in China Heavy Industry and bought China Aluminum at a high price.
Today, all the theme stocks of the past have gone out of business, and all the hot money has moved to the strong cyclical stock sector. The funds are using their own chips little by little to deduce the logic of the big inflation cycle.
Everything is cyclical.
Cycles can be big or small.
Large cycles, such as the inflation cycle and the real estate cycle, generally last about 20 years.
The financial cycle generally lasts about ten years.
The pig cycle generally lasts about three to five years.
In addition, there are also machinery cycles, chip consumption cycles, and liquor stock cycles...
And so on and so forth. Fellow investors are welcome to add to the discussion.
Compared with small cycles, large cycles are more flexible, longer in duration, and have a wider audience. From the imperial court to the shops, they attract attention everywhere, which will bring in more traffic and more funds.
Therefore, when we choose investments, we should give priority to large cycles and ignore small cycles.
The big cycle is not only highly elastic, but more importantly, it lasts for a long time and has a wide range of funds entering. This allows investors to easily buy at the bottom of the cycle and easily exit at the top of the cycle.
The cycle is small, the elasticity is small, the time is short, and the capital entering is small and short. If investors are quick, it's okay, but if they are not careful, they will be trapped for three to five years.
Therefore, when facing a major inflation cycle that occurs once every 20 years, don't miss the outdated things like liquor, new energy, and consumer stocks, and don't pay attention to the pig cycle or technology stocks.
The general is on the road, not catching rabbits.
The current big cycle is the best opportunity you can seize.
If you miss this big cycle, you will have to wait about 20 years for the next one.
Back to today's market.
The continuous rise in oil prices, the source of inflation, has led to a surge in gold and copper prices. The subsequent high energy prices have led to rising prices of chemical products and a surge in solid power - aluminum stocks.
If aluminum stocks rise, zinc and magnesium stocks, which are major electricity users, will also rise.
The rise of zinc stocks will drive up the prices of other minor metals.
The surge in the non-ferrous metals sector will bring about a surge in demand for commodity transportation, triggering a surge in shipping stocks, and the surge in shipping stocks will lead to a rise in shipbuilding stocks.
The transmission of inflation is closely linked one by one.
The relay of funds is orderly and reasonable.
The stock price rotates in waves.
(When selecting cyclical stocks, large funds will first choose gold, copper, and kerosene stocks with good liquidity, high certainty, and strong financial attributes. When the cyclical inflation concept is hyped in the middle and late stages, the hot spots will begin to spread, and retail investors, hot money, and large investors will begin to flock to other non-ferrous metal sectors, and even shipping and shipbuilding sectors...)
(Looking back at the hyperinflation cycle from 2005 to 2007, the stocks with the best performance during a hyperinflation cycle were oil, copper, aluminum, and other sectors, as well as shipping and shipbuilding. In contrast, coal, rare earth, steel, tungsten and other commodities did not see much growth that year.)
"The reason lies in the elasticity of supply. If it is easy to increase production capacity on the supply side, then the increase will be limited. If it is difficult to increase production capacity on the supply side, then the increase will be substantial."
(During this period of high inflation, stock investors are advised to consider supply issues when investing.)
While I was thinking, the lunch break started.
The non-ferrous metals sector started to soar again.
Baiyin Nonferrous Metals and Northern Copper hit their daily limit again, Shenhuo Co., Ltd. and Zhongfu Industrial Co., Ltd. suddenly hit the limit, and Xingye Silver and Tin Co., Ltd., Zhuye Group, Jiaozuo Wanfang Co., Ltd., and Yunnan Aluminum Co., Ltd. all rose by more than 7%...
After gold and copper, aluminum stocks began to explode and several stocks hit the daily limit.
Other nonferrous metal and shipping stocks also rose.
The Shanghai Composite Index almost turned positive at one point.
The cycle is far away but it will come.
The bull market with the theme of big inflation cycle has arrived, there is no doubt about it!
A good wind will help me rise to the sky.
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Your support is my motivation to update.
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