I’ve been sick recently, with a dry cough and discomfort. A little friend named Lao Luo, said to me, haven’t got it yet, this is because God told you to talk less, shut up. Yes, talk less recently, talk too much and lose. Another little friend, Lao Sun, told me, what are you thinking, the cycle has finally become a little hot, and if you don’t rub it, you will take it up if you don’t rub it on others. Yes, so many people want to be an internet celebrity. Both are justified, who listens to?
Sometimes investing is like that, it’s tangled. Buy it, it has already gone up; don’t buy it, it feels like it can still go up, what should I do? After thinking about it, I stopped talking, and made up a few jokes, Bo Jun smiled.
Mystery 1: What are cyclical stocks?
When it comes to cycles, I am confused. What exactly is a cycle? European recession, Fed rate hike, crude oil surge? Or the inventory cycle, the production cycle, the economic cycle, the political cycle? Everything is cyclical, which industry is not cyclical, there are long and short. For stock speculation, too much scope is equivalent to saying nothing, and too much assumption is tantamount to cheating. Generals are on their way, not chasing little rabbits, not so complicated. We are speculating in cyclical stocks, and we only catch simple and clear big opportunities. Then, there are no more than three categories: price increases that are visible to the naked eye, penetration rate increase of the regular army, and valuation jump. As for the other, let it go as it should, and it may not be clear anyway.
Mystery 2: Why is the cycle not worthy of the track?
In the past few years, cyclical stocks have not been so bad. Some friends have actually swelled up. Ask me, Brother Feng, will cyclical stocks become the track? I said, absolutely not, stop dreaming. What is a track stock? When you can’t, everyone still thinks you can. This is a track stock. If you have faith, you will be forgiven if you miss it. On the other hand, cyclical stocks are nasty. When they rise, everyone worries about peaking, and when they fall, everyone feels they deserve it. Ignoring often exists, and prejudice is difficult to correct, so cyclical stocks don’t want to lie down and win, they have to keep tossing, of course, this provides a lot of money-making opportunities. When will the cycle become a small track? It is estimated that it will take several generations of efforts, and the opportunity will be left to the children.
Mystery 3: Why is it different every time?
Shipping has been very popular recently. COSCO SHIPPING Holdings, COSCO SHIPPING Energy, and COSCO Haite, probably most people haven’t figured out the difference between these three brothers. If you study carefully, you may find that those who have bought COSCO SHIPPING Holdings are easy to miss COSCO SHIPPING Energy, and those who have bought COSCO SHIPPING Energy are easy to miss COSCO Haite. Look, every industry has a chain of contempt, and you can’t be arrogant. I once wrote an essay called “Maritime VS Pig”. A friend named Lao Tang said, “Brother Feng, you can write another “Maritime VS Pig 2.0”. This year, the shipping and the pig have performed again, but Not the same as last time. I think, it must be different, the market is not stupid, there is a learning effect, can it be played back to give you money, after all, this is not watching a movie…
Anyone who has speculated in cyclical stocks knows that experience is harmful, but it is very common. Big opportunities are easy to attract incremental funds. These people don’t talk about martial arts, don’t play cards according to the rules, and beat the old master to death with random punches. In hindsight, the fundamentals have indeed come out, and it’s not wrong to kill them. We have not gone through a big cycle, and most of them are summaries of some small experience tips. Just as the English teacher in junior high school taught me, if you look, you may not be able to see, and if you listen, you may not be able to hear. One is the action and the other is the result. Experience does not mean true understanding. There is a saying in the cycle, if you don’t listen to the old man, you will suffer in front of you. Always listen to the old man’s words, step in the air for 10,000 years.
Mystery 4: Why is the cycle old being beaten by the macro?
What is the most afraid of the cycle partners? Write a strategy report. Because there are too many macro forecasts to be made, cyclical stocks pay attention to actual combat. In an uncertain world, forecasting is not as good as responding. When you make forecasts, you have to be ravaged by the macro. You say demand is good, he says the economy is going to end; you say demand stabilizes, and he says the world is going to decline. After citing and saying that he couldn’t say anything, he was hanged and beaten every day, but in hindsight, the stock went up. The macro and the cycle are not people of the same world. The macro looks at the growth rate, and the cycle looks at the difference between supply and demand. When the economic growth rate drops from 5% to 2%, the macro means that the economy is finished, collapsed, and doomsday; for the cycle, supply is 0% and demand is 2%, which is also an opportunity. Something high that you can’t justify better is a risk. Low-level stuff, you can’t prove that worse is an opportunity.
The cycle is divided into two factions: fast growth VS slow growth, although both depend on supply and demand, the difference is large. Fast-growing varieties mainly depend on demand and production capacity, such as lithium mines. Market worries are mostly about supply, and always feel that mines are about to be opened, and the general risk is that demand is missing. Slow-growing varieties mainly depend on inventory and operating rate, rather than supply and demand (because they are very slow), such as oil and coal. The market is worried about demand. It believes that the economy is about to collapse, and the general demand is not negative + the problem of replenishing inventory is not big.
Mystery 5: Cyclical growth stocks or not?
Recently, Cement has issued a mid-term report, which is not very good, it is normal, and no one cares. The cycle Alpha, which was sought after before, is now in the cold palace. Some friends told me, Brother Feng, these are not cyclical stocks. What? It’s too realistic to be fired if you fall. These are not cyclical stocks, could they be growth stocks? Cyclical stocks have a type of play called flawed high growth, which is often packaged as alpha and valuation. After each bear market, a batch will be born, which generally triples and is not scarce. For example, in the consumption of building materials, property, steel structure, and aluminum processing from 2019 to 2021, the valuation performance has achieved a double rise. Recently, we have set up an in-depth review group to review and classify these. Afterwards, the conclusion is not to sing praises at a high point, but to expand + try out new fields. Cyclical growth stocks are also traditional manufacturing industries, and their advantages always have boundaries. After the bear market in 2022, a batch of automobiles, machinery, and chemicals are expected to be born, and they have to be dug.
Mystery 6: Why is coal so strong?
Recently, turning the stone has not been very good, and the coal has begun to swipe the screen. Many friends asked, why is coal so strong, and the price of coal has not risen. As soon as I listened to it, it was over. I definitely didn’t read the weekly report or read the official account… Coal prices will increase in 2021, but not in 2022. It’s different. Coal is a simple and representative variety. The logic in 2022 is not to increase the price, because the price will not rise sharply (with control), nor will it fall sharply (with price difference), the speculation is a high degree of profitability + high dividend. Do you think that the coal industry has collectively chopped JJ, and is there no compensation for the valuation? Those next door, don’t be dissatisfied. If you disapprove, you can also chop it up. If you chop it, it will rise.
Mystery 7: Can the cycle be low volatility?
The word volatility is very interesting. It generally refers to downward volatility (commonly known as retracement), and upward volatility means rising. Who doesn’t love it. Some friends said that the cycle logic is good, but the fluctuations are too large to resist. I took a look at his holdings, and the fluctuations are not small. Why can’t they resist it when the cycle comes… It is often a good company that really loses a lot of money. Yes, chopped. For a fund, a single stock can lose at most 8%. Even if it loses all, it has little impact. As long as you don’t make up, the trouble will soon disappear, and the old fund will continue to have trouble, and even lose 15%.
The future is probably like this picture, ” emerging industries have good demand, traditional industries have less supply, the external environment is unfriendly, and market volatility will not be small “, then “anxiety-panic-correction-optimism” will continue to cycle, and there will be many opportunities for cycle mismatch. If you want to reduce volatility and make a low-drawback, high-yield product, you have to do two things well. First, the research time is long enough, more than 10 years, and you have seen enough industries. The second is enough diligence, physical strength, and coverage to balance through industry hedging and dispersion.
Mystery 8: Is the cycle a lone warrior?
The kindergarten is about to start, and my daughter asked me to teach her to sing “The Lonely Brave”. She said that the children in their class can do it. Lonely brave, this word is really bad street, 5-year-old children say that they are alone and brave, is there any reason for heaven? A friend asked me, Brother Feng, do you think the cycle is a lonely hero? I said, of course not, we are neither alone nor brave. The characteristics of cyclical stocks are that loneliness is ridiculed, and it is simple and clear to make money. We have a large number of industries, a large number of companies to study, to research, how interesting, and solitary. Secondly, we come to the stock market to make money, not to quarrel. Don’t be so brave unless there is a big profit. When the market questions domestic demand, we buy external demand; when the market questions external demand, we buy domestic demand, and when the market questions it, we buy rigid demand. If the market does not question it, we will jump on it, call it all, and fight to the death. We are persistent and flexible, and we are not alone… Who is the real lonely person? There is an inner room next door…
Mystery 9: Can cycle + manufacturing draw a beautiful, continuous curve?
In the past few years, the cycle has not been so cold, and the styles of play have become diverse, some are fierce and some are sharp; some are concentrated and some are scattered. A friend asked me, Brother Feng, do you think cycle + manufacturing can draw a beautiful and continuous curve? My god, how beautiful is still going on, so demanding, so soul-crushing, how do I know. I don’t know, but I think it’s worth a try. The current cyclical stocks are neither cold nor hot, just right. We don’t like a lot of people, as many people can’t make a lot of money; if no one is there, it’s easy to have hungry wolves in no-man’s land; not many people, not many people, it’s good. The current assets are also diversified enough, with price increases, penetration rates, and valuation jumps, so there is room for expansion. There is rice, meat, vegetables, and a cook, which can be fried.
Mystery 10: Leave blank
I can’t edit it anymore, leave it blank, and write it in the next issue
Source of this article: Emei Peak looks at the world (risk warning: not as an investment basis.)
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