I received a lot of messages from friends after I posted the article yesterday. It may be because the market has fallen too badly recently, and everyone is worried that the market will continue to bear bears, so they are generally more negative .
Not only the official account platform, but also the comments on other platforms are surprisingly bearish, and some people even predict that the market will fall below 2,000 points.
Fear has gripped the stock market.
In this situation, should we go, or should we stay?
First of all, I think that as an investor, you must be rational and not copy what others say.
If everyone’s decline this year is around 20%, I think it is a very good income.
Some people will say, what kind of excellence is a loss of 20%?
That’s right, it is excellent to lose 20% this year, because the CSI 300 Index has fallen by 19% this year , and most of the fund managers in the country can’t even beat the CSI 300 Index.
You outperformed most fund managers in the country, so what’s not outstanding?
Some people will ask, why does the excellent still lose money?
Because, it’s not that our ability is poor, but A-shares are rotten like mud.
Although the broader market did not continue its downward trend today, the ChiNext continued to record lows and could not be held back. As of today, the ChiNext Index has fallen by 31% this year, the Shanghai Composite Index has fallen by 15%, and the Shenzhen Component Index has fallen by 26% .
Look at this market, you can’t make money by inviting Mr. Buffett.
Therefore, everyone should face up to their own profit and loss, as long as it is acceptable within a reasonable range, because the market itself is not good, not many people can avoid it, and if there is no loss, even if it is earned.
This is not the spirit of Ah Q. Only by rationally looking at the fall of the stock market can we enjoy the rise of the stock market .
Since the stock market is so bad now, should you increase or clear your positions?
I have already analyzed this question yesterday. If you are interested, you can read yesterday’s article again. Today, I plan to objectively analyze the current situation of A shares from another perspective.
The clearest signal to increase positions – valuation
There are various ways to look at the top and bottom of the stock market, some are based on emotions, some are based on policies, some are based on fundamentals, and some are based on technical trends, but in the end, we must return to valuation.
Because valuation is the most straightforward and practical indicator.
Below is a brief look at the 3 indices.
(1) CSI 300 Index
I think the CSI 300 Index is the index that can best reflect the trend of the entire A-share market. Judging from the valuation in the past 10 years, it is currently near the 40th percentile .
After the bull market stalled in 2015, the CSI 300 index broke through the 30-point line three times.
The first was the stock market meltdown in 2016, followed by a slow climb in the index.
The second was the Great Bear Market of 2018, which bottomed out in early 2019.
The third time was the outbreak of the epidemic in early 2020, followed by a wave of Mavericks.
Coincidentally, this year is 2022, and the valuation of the CSI 300 Index has returned to around the 40th percentile again, and if it falls again, it will return to the 30th percentile.
And each time the valuation reaches the 30th percentile rebound cycle is exactly 2 years.
History does not repeat itself, but some laws are always traceable.
Even for those who don’t know much about investing, it is a very good choice to invest in the index when the valuation of the CSI 300 index is lower than the 30th percentile .
Valuation is to estimate the value of an asset. If it is too low, naturally someone will buy it.
(2) ChiNext Index
The reason why the GEM index is taken out is because the GEM has the highest valuation in the main board, so let’s take a look at the current valuation percentile of the GEM.
The 30th percentile valuation of the ChiNext Index in the past 10 years is 44. As of today, it has basically reached the 30th percentile .
But the GEM has a characteristic, that is, it is particularly bullish when it is bulls, and it is also particularly bearish when it is bears .
Although the valuation of the ChiNext Index has now reached near the historical 30th percentile, there is still a lot of room for decline.
This is also the reason why I have been emphasizing recently not to rush to lay out the Growth Enterprise Market. The flexibility is too great, and you can wait a little longer .
(3) Hang Seng Index
I also pay attention to Hong Kong stocks, so by the way, let me talk about the situation of Hong Kong stocks.
The situation of the Hang Seng Index is very similar to that of the CSI 300 Index. The current situation is near the 30th percentile of the valuation in the past 10 years, which is a good time to increase positions.
So much has been said about the analysis of valuation today, let me talk about my personal views on the stock market .
A-shares may not have reached the bottom yet, because the valuation is only one of the reference factors. Now that the valuations of major indices are near the 30th percentile, it does not mean that the valuation will not reach the 20th percentile or lower.
But from the perspective of the stock market, the current A shares are cheap enough, and if they fall again, it is a bargaining chip with blood, and it is a good opportunity to increase positions.
We may not be able to buy the lows, but buying near the lows will definitely pay off in years to come.
Since the layout can be arranged at this time, what should I buy?
①If you are more stable, you can buy index funds, such as CSI 300, A50, SSE 50, etc., and you can buy them by fixed investment. The period is about 0.5 years to 1 year.
② Those who have a certain understanding of the stock market can deploy high-quality assets with reasonable valuations in batches. What counts as premium? One looks at the moat, the other looks at the future prospects, and the other looks at the industry leadership and influence.
③ If you have a certain level of investment, you can consider looking for cheaper chips.
For the current stock market, I hold a very optimistic attitude, because the current layout means that there will be very good harvests in the next 3-5 years.
It is no longer scary to continue to fall, and the chips with blood will not last for long.
The horn of the rebound is getting closer!
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