Chapter 139: Sowing the Seeds of Hope in Winter (Part 2)
Li Feng pondered for a moment and said, "It's actually very simple. Just remember that interest rate cuts are bad for the banking and insurance sectors, while interest rate hikes are good for them."
"It turns out to be so simple." Zhao Xinyue suddenly realized.
"It's very simple," Li Feng said. "However, this is just industry analysis. We haven't yet reached the crucial stage of analyzing individual stocks. Since the banking and insurance sectors are highly leveraged and indebted, and each company has different operating strategies, performance varies greatly! If you don't choose the right stocks, you might only earn index returns without making any money."
"Then just tell me, which stock should the bank choose, and which stock should the insurance company choose." Zhao Xinyue continued to ask mindlessly.
Li Feng couldn't help but frown and said, "Xinyue, don't always adopt a copycat approach. If you have time, you should study the fundamentals of the company more and accumulate some investment knowledge."
"It's not like I haven't looked before," Zhao Xinyue muttered, retorting, "There are more than seven or eight bank stocks on the market, and the bank's financial statements are simply too numerous and too complicated for me to understand. Besides, didn't you once say that often individual stock financial reports are embellished? Sometimes even falsified? Why would I read them so carefully then?"
"Besides, the market capitalization of banks is in the hundreds of billions, even trillions. How high can it go? It's better not to look at it and not waste my investment opportunities and time."
Zhao Xinyue's words made Li Feng laugh out loud.
It's true that even laziness has its reasons.
They invest tens of thousands or even hundreds of thousands of dollars in stocks without even reading or believing the financial statements released by the company.
Not only that, they also look down on the upcoming financial cycle. They have made too much quick money and look down on small amounts of money.
Li Feng shook his head helplessly and said, "It's fine if you don't study other sectors, but if you want to make good investments, you must always pay attention to the banking sector, even if you don't invest. If you can't do this, you will definitely not be able to invest well."
"Why?" Lin Menghan asked.
Li Feng explained:
"Because, in the A-share market, bank stocks generally play a ballast role. Their valuations directly affect the overall market level. Furthermore, looking at it from a broader perspective, whether it's Hong Kong, Japan, or even the US decades ago, during the golden age of economic development, banks were the backbone of the economy, the lifeblood of the economy. They controlled the issuance and receipt of currency and directly influenced the economic cycle."
"When we invest, we must look at the big picture, and we can't avoid banks when looking at the big picture."
After a short pause, Li Feng sighed and said:
"Let me talk about the banking sector in our A-share market.
"Before 2010, all operations were simple and extensive: financing - loans - dividends, refinancing - reloans - dividends again, and so on and so forth. Dividends were never as much as financing. Bank stocks were like a black hole, devouring funds in the market."
"During the last bear market, the A-share market was afflicted with a fear of bank financing. Whenever there was a rumor of a bank raising funds, the stock market would inevitably plummet the next day."
"Only China Merchants Bank began reforms in 2010, aiming to become a 'light bank' and not rely on financing to achieve normal dividends. Now, demand deposits account for 63.16% of China Merchants Bank's total. This ensures that during interest rate hikes, the yield curve of assets will far exceed the increase in the cost of liabilities. Furthermore, without financing, the bank has achieved an increase in its capital adequacy ratio."
"At the same time, both bank and insurance stocks are sectors that can accommodate massive amounts of capital and are the most favored by large funds. This year, driven by the banking and insurance sectors, there is a high probability of a rally."
As Li Feng was speaking, he opened the 2016 interim report of China Merchants Bank with great interest and wanted to say something.
But it was obvious that Zhao Xinyue and Su Xiaoxia had no interest at all.
Even Lin Menghan was somewhat uninterested.
Only then did Li Feng realize that he and they were not on the same level in terms of cognition.
What you feel is very valuable and important may be a very insignificant thing in the eyes of others, and they may not even glance at it.
It’s like, you think studying is useful, but many people think studying is useless, and they give many examples to explain, such as some people cannot find a good job after graduation and are still moving bricks and screwing screws; some people have not studied, but have become bosses, surrounded by luxury cars and beautiful women, and have reached the pinnacle of life.
Don’t you know that for ordinary people, studying is the biggest opportunity to change your destiny? Those who have not studied but become bosses are, after all, a minority among the minority.
There is a probability issue here.
If the probability of becoming successful through studying is 50%, then the probability of becoming a boss without studying may be less than 10%.
Since our cognition is not on the same level, there is no point in saying more, otherwise we will end up arguing.
When it comes to stock trading, you can only learn from it slowly over time and through losses in your capital account.
"If you want to buy a bank, buy China Merchants Bank. If you want insurance, buy Ping An Insurance," Li Feng concluded. "I recommend Ping An Insurance because it not only invests heavily in government bonds but also has equity investments in several companies, particularly Country Garden, where it is the second-largest shareholder. As the destocking policy in third-tier cities is implemented, Ping An Insurance's performance is sure to rise."
After hearing this, Zhao Xinyue smiled and immediately opened her account and bought 1,100 shares of Ping An of China at a cost price of 36 yuan.
Su Xiaoxia took a look and asked curiously, "Why don't you study the K-line pattern of China Merchants Bank today and the intraday trading situation? Don't you even check the volume or the trend line? Aren't you being too hasty?"
"Oh, Sister Su, how do you usually pick stocks?"
"Of course, we'll look at the K-line trend first. Let's take China Merchants Bank, for example," Su Xiaoxia said, looking at the market trading software Zhao Xinyue had opened. "Look, China Merchants Bank has been falling continuously since December 12th of last year, breaking through the 5-day, 10-day, and 20-day moving averages. The trading volume first shrank, then expanded. It opened high today. If it closes with a big positive sign, it's very likely to enter an upward trend..."
Li Feng shook his head and advised sincerely:
"Sister Su, you took care of me a lot in the hospital back then, and we are not strangers."
"Let me tell you the truth today. I really don't understand these technical indicators like moving averages, volume, and MCAD. I never use them, and I don't recommend you use them. They're really useless."
After hearing this, Su Xiaoxia widened her eyes in surprise. She didn't believe it and said, "Really? No way? Impossible!"
"You're not lying to me, are you?!"
"I really didn't lie to you." Li Feng said.
————
————
Move your lucky hands and send a wow for free for love.
Your support is my motivation to update
It seems that no one likes these chapters of policy analysis, but they are really important, so feel free to read them.
Continue read on readnovelmtl.com