Where there is oppression, there is resistance. Similarly, in the market, it is easy to have a big rise after a continuous big fall. Friday’s medical rally is a case in point.
Taking China Securities Medical (399989) as an example, the above table lists the top 5 increasers and the top 5 decreasers in the past 17 years. Among them, the big bear market in 2008 happened to have 3 big rises and 3 big falls. In the two years of 2006-2007, there was a big rise in the bull market (May 18, 2006, 13.75%) and two big drops (July 13, 2006, -9.37%; May 30, 2007, -9.26 %), among which May 30, 2007 is the famous midnight rooster call market, plus stamp duty; and September 19, 2008 is the famous “save one rescue” market, stamp duty is reduced. In 2008, there has been no such extreme market situation in the 14 years since the “Save One Save”. It is also relatively rare to see such a surge in CSI Medical this Friday.
From these data, it can be seen that extreme market conditions of skyrocketing and falling are more likely to occur in a big bear market or a big bull market. This is something that needs our attention in particular. Don’t cut the meat because of extreme pessimism when it is falling sharply, and don’t chase it because of quarterly optimism when it is rising sharply.
We should have a plan in advance. Let’s first take a look at the daily K-line of CSI Medical in the past 17 years. In 2007, 2009, 2015, and 2021, 4 highs were generated, while in 2008, 2013, 2018, 2022 produced 4 lows respectively. Although the 4 highs and 4 lows are not in a straight line, the latter high is higher than the former, and the latter low is also higher than the former. This trend is very obvious.
Let’s look at the PE (TTM) of China Securities Medical. Because of historical data, I only obtained data after 2014, 2 highs in 2015 and 2020, and 3 lows in 2014, 2018 and 2020. One high is lower than the previous one, and the next low is also lower than the previous one. This trend is still very obvious.
What do these two pictures tell us? It tells us that with the progress of society, the highs and lows of CSI Medical are constantly rising, while the highs and lows of valuation PE are constantly decreasing. The former tells CSI Medical that the general upward trend will not change, while the latter tells us that as the market capacity becomes larger and larger, the situation where the rare is the most expensive is gradually broken, and the valuation is getting cheaper and cheaper.
After the big rebound in medical care yesterday, another netizen came to ask if it was possible to buy the bottom? To be honest, after Friday’s big rally, even if the U.S. stock market doesn’t fall overnight, it will take a break. If you expect to be able to speculate, I advise you to give up this idea. Of course now is not the time to sell at least in the long run as part of the allocation. CSI Medical is an industry index fund, which is tracked by Huabao CSI Medical ETF (512170).
To put it another way, the correct attitude is to make a plan in advance, rather than rushing around to ask if you can buy the bottom after waiting for the medical treatment to rise. Everyone’s existing allocation, capital situation, expectation of yield, tolerance of maximum drawdown, etc. are different, and there can be no standard answer.
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