Today, let’s talk about the white horse exchanged convertible bonds in the middle of last year in detail.
At that time, my holdings were basically white horse stocks. I survived the bear market in 2018, and also enjoyed the bull market in 2019 and 2020. By the first half of 2021, the first heavyweight Maotai has fallen from its peak of 2,600 yuan. to about 2,000 yuan. According to experience, it is difficult to return to 2,600 yuan in a short period of time. In addition, the number of convertible bonds issued by me at that time was increasing, which brought opportunities for quantitative backtesting.
After downloading the historical data of convertible bonds from Ningwen.com, it took about a whole month to fix numerous bugs, and finally made the first version of the convertible bond multi-factor strategy.
The result of the backtest at that time was that from the beginning of 2018 to the middle of 2021, the optimal annualized rate of return of this strategy can reach about 70%. According to my past experience, it is conservatively estimated to be about half, that is, 35%, which is quite good. . Compared with Maotai, the price of 2,000 yuan will increase by 35% to more than 2,600 yuan. According to my experience, it will be difficult to achieve at least one year. So last year, we finally made the most successful rotation: we liquidated all the white horse stocks such as Maotai, LONGi, and China Merchants Bank, and replaced them with convertible bonds.
Let’s compare the results of the two in the following year: Moutai, LONGi, and China Merchants Bank fell by an average of 29.04% in the past year, while my account increased by 37.71% in total, and the excess return was as high as 66.76%.
Let’s take a look at the second half of last year and this year. In the second half of last year, the three white horses that I held a lot of positions only fell by 3.77%, and because I chose the multi-factor strategy of convertible bonds, I gained 31.13% Income, the excess return is as high as 34.90%.
For more than 9 months this year, these three white horses have fallen by an average of 26.51%, while my return is a positive 5.02%, and the excess return is still as high as 31.53%.
Whether it is the second half of last year or this year, the average rise and fall of these three white horses is close to the SSE 50. In fact, it is not surprising, because these three white horses are originally heavyweight stocks in the SSE 50. It is worth noting that, whether it is the slight decline of the three heavyweight white horses in the second half of last year, or the sharp decline this year, the real market of convertible bonds has always outperformed by more than 30%, which is completely the same as last year when I did this round. The most important thing is to have consistent estimates before making decisions.
Although I made many mistakes later on, I was a little bit different from the ideal return by stepping on the air and chasing the increase, but it was because of a correct choice in the middle of last year, which turned a loss of 29.04% into a profit of 37.71%. This fully proves that choice is more important than effort. Of course, the choice is also achieved through hard work.
Therefore, in the comparison of different varieties and different strategies, the most important thing is to predict the future rate of return. This comparison is relative, although I could not predict in June last year that the white horse would drop slightly in the second half of last year, and it will fall sharply this year. But I judge that whether the white horse falls slightly or falls sharply, the convertible bonds will outperform; even if these white horses rise sharply, the convertible bond factor will not lose to the white horse.
If we split it into monthly comparisons, we will see more clearly. In these 16 months, the highest performance of White Horse was in September, October and June 2022. These three months have all outperformed. The bond market is 5%-7%, but in the 16 months, only 4 months outperformed, and 12 months underperformed, in June, November 2021, July and October 2022, The underdogs are all 2 figures.
Of course, if there is a big bull market such as Moutai, my rotation may fail this time, but last year it was because Moutai fell from 2600, and I judged that it would be difficult to have another big bull market such as Moutai for at least a year. That’s why such a big change was made. Some people say that you are a survivor bias, indeed I am a survivor, take 10,000 steps back and say, if I fail, I still won’t give up the rotation, I won’t complain about the market, it’s not that I haven’t failed in the past, it’s just I will sum up my experience better, and I believe that the market will definitely give people like me good returns in the long run.
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