Many people who entered the market after 2019, when they encountered a bear market for the first time, always felt that the sky was about to fall, and they continued to magnify the negative. In fact, judging from the past few bear markets, this bear market is relatively gentle.
I made statistics about the nearly 16 years since I entered the market at the end of 2006. Taking the CSI 300 Index as an example, from the highest point in the stage to the lowest in the stage, there have been about 5 major bear markets:
The first time was from the high point of 5891.72 on October 17, 2007, and it took 384 days to reach 1606.73 on November 4, 2008, with a maximum decline of 72.72%. This bear market is the largest bull market in history that has accumulated in the early stage from the lowest point of 807.78 on June 6, 2005, and has risen sharply for 863 days, with an increase of 629.37%. The greater the bull market gains, the greater the bear market losses. Combined with the global financial crisis at that time, such a large decline is not surprising.
Not long after I entered the market myself, I made a profit of 180% in 2007 by Fengji. At that time, although the Shanghai Composite Index and the CSI 300 Index peaked in October 2007, in fact, small-cap stocks and base closures had to peak in January 2008. Because of the affection for Fengji, which has made a profit of 180%, various calculations have been used to prove that Fengji can safely survive the bear market. It wasn’t until March 17 that it fell sharply, and I couldn’t bear it anymore, so I cleared the position and replaced it with bonds.
At that time, there was a kind of detached bond in the bond. After the convertible bond was issued, it was split into options and the detached bond was listed and traded separately. Of course, the options were copied to the sky, but the detached bond fell to more than 60 yuan, and the annualized yield to maturity was as high as 8 %-9%. If I keep holding until expiration, then I can make no loss in the 2008 bear market. However, due to the influence of public opinion at the time about the situation of the Olympic Games, the base was changed again before August.
As a result, on the opening day of the Olympic Games on August 8 of that year, almost all stocks fell by the limit. Forced me to exchange bonds again. In the end, the 2008 big bear market lost 20%, but it was much smaller than the index decline.
The second bear market started from the highest point of 3803.06 on August 4, 2009, and fell for nearly 4 years, and fell to the low of 2023.17 on June 25, 2013, with a drop of 46.80%. The high point in 2009 was the end of the “four trillion market” that rescued the financial crisis at that time. Although the period rose and fell, the trend in the past four years was still downward.
This 4-year bear market is much better than the first time I encountered a bear market. It mainly relies on the rotation of base closures and bonds, and I also achieved positive returns, because only the annual data was recorded at that time, and the yield in 2010 was 29%. , 5.16% in 2011, and 6.97% in 2012. The cumulative 3-year rate of return was 45.11%, which greatly outperformed the index. The CSI 300 Index fell by 29.44 in the past three years.
The third bear market started from the high of 5380.43 of the CSI 300 on June 10, 2015, and fell 264 days to the low of 2821.21 on February 29, 2016, a decrease of 47.57%. This bear market is mainly due to the leveraged bull market in the first half of 2015, which has led to high valuations of many stocks. Once it collapses, the consequences are unimaginable. The impact of this bear market is very large, and there have been many times when thousands of shares have fallen by the limit, thousands of shares have been suspended, and even thousands of shares have been melted. None of these phenomena have occurred once in today’s bear market.
I did not participate in this bull market because I was sick in the first half of 2015, but in the second half of the year, I participated in the whole bear market. Fortunately, I was full of debt variety grade A at that time. I enjoyed the big meat after several big discounts. In 264 days, it even got a positive return of 13.56%.
The fourth bear market fell from a high of 4,403.34 on January 26, 2018, to a low of 2,934.83 on January 4, 2019, a drop of 33.35% after 343 days.
In this bear market, I just experienced the failure of small market capitalization, full of white horse stocks, and one-sidedly believe in the long-term holding of unmoved argument. As a result, in the past 343 days and nearly a year, my account has dropped by 32.30% in total, almost The same as the index decline. This profound lesson made me feel a pain in the ass.
The fifth time is now this time. The high point occurred on February 28, 2021. The CSI 300 Index hit an all-time high of 5,930.91. After 617 days of decline, the CSI 300 Index last Friday was the lowest at 3,533.40, a drop of 3,533.40. As high as 40.42%.
Luckily for this bear market, after comparing Maotai and other white horses with convertible bonds last month, we liquidated Maotai and other white horse stocks at 2,000 yuan and exchanged them for convertible bonds. In the end, the account did not fall in the last 617 days. Soared 46.65%.
Summarizing these 5 bear markets, we found that the bottom is still rising, from the first low of CSI 300 at 1606.72, the second at 2023.17, the third at 2821.21, and the fourth at 2934.83, to today 3533.40, although this 3533.40 is not necessarily the low point of this bear market, but at least the possibility of falling below the fourth low of 2934.83 is very small.
In these five bear markets, I have basically relied on debt varieties to successfully escape, ranging from pure debt, detached debt, grade A to another part of debt convertible bonds. So expanding your circle of competence is very important. For me, it is not suitable for mindless holding quality stocks in a bear market. Because the history of A-shares has proved that no matter how good the stock is, it is also in a bear market. This time Maotai’s slump is an example.
As for the future outlook, I am not pessimistic. The 40-year history of reform and opening up that I have experienced throughout the whole process has not surpassed the difficulties encountered today to a certain extent: when it comes to the confrontation between China and the United States, it can surpass that when our Yugoslav embassy was bombed by the United States, and Wang Wei’s plane was bombed by the United States. The plane crashed; when it comes to the war, it can surpass the actual war with Vietnam; when it comes to the economic situation, it can be compared to the previous year when a large number of state-owned enterprises went bankrupt, a large number of state-owned enterprise employees were laid off, and inflation reached the bank’s value-preserving subsidy as high as more than 20% more? Let’s talk about stocks, no matter how miserable the stocks are today, can there be a thousand-share limit-down, thousand-share suspension, and thousand-share meltdown in 2015-2016? We have come through these difficulties in the past, and I believe that we will still overcome these difficulties now. A thousand sails pass by the side of the sinking boat, and a thousand trees spring ahead of the sick tree.
Of course, I am not pessimistic. It does not mean that there must be a bottom now. On the contrary, I think the probability of continuing to find the bottom next week is quite large. It is just that I am in awe of the market, and I cannot predict where the bottom will be. But when we look at it on an annual basis, these are nothing.
Yesterday, when I was doing a show at Big Vision, the host asked me which sectors I am most optimistic about in the future? From the perspective of development trends, I think new energy and new technologies, including high-tech manufacturing, are closely related to the development of our country. But there are several problems. If a pioneer does not go well, it is easy to become a martyr. Even if you invest in ETFs, there is a problem with overvaluation. In addition, these industries are the future development trends, and investing in these industries may not necessarily be the same as making money.
When it comes to long-term profitable sectors, I am still optimistic about the traditional large-scale consumption and pharmaceutical and medical industries. In the long run, these two industries have the highest ROE and the most profitable. Of course, these two industries have fallen more in the past two years. However, after nearly 2 years of decline in medicine and medical care, coupled with the squeeze of centralized procurement, the valuation has become more and more reasonable, and there are even signs of stabilization; and large consumption is affected by Maotai and other liquor, and the trend of continuous decline is still there. Go ahead, but at least keep an eye on it. It is more difficult for small funds to buy Moutai. You can pay attention to the large consumer ETFs that have fallen much earlier, such as Huabao CSI Consumer Leading ETF (516130).
After going through 5 big bear markets, I will definitely not hold the white horse stock, although it may be said that it is not a real value investment. You know it’s a bear market, why are you still carrying the white horse? No matter what I say, I can’t be sorry for real money.
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