Rebirth of the Capital Legend

"In theory, it is indeed easier to leverage small-cap growth stocks and concept stocks with smaller circulations, and it is indeed easier to induce the trend of small-cap stocks than to induce the trend of weighted stocks, and the amount of funds consumed is less." After listening to Li Jinshi's words, Chen Guiyun pondered for a while and continued to say, "However, the most fundamental reason is that these small-cap stocks do not have enough underlying logic support and future expectation support. In addition, due to the large amount of funds gathered in these stocks in the last bull market, these stocks have overdrawn their future growth space and valuation improvement space.

Even these individual stocks have generally fallen by around 70 to 80 percent since the last bull market.

However, when comparing valuations, the valuations of these individual stocks are still generally significantly higher than those of the "big infrastructure" main line, as well as individual stocks in weighty main line areas such as liquor, white appliances, medicine, consumption, electricity, and finance.

When valuations are not cheap, future expectations are insufficient, and there is no expectation of a fundamental reversal to support it.

Moreover, it is under the pressure of a large number of historical trapped positions in the early stage.

Why would the long-term investment fund group in the market, that is, the main institutional fund group, make large-scale adjustments to these small and micro-cap stocks to leverage the market and further spread the sentiment of this line?
Without basic underlying logical support, it is difficult to attract the continued attention of major funds and continue to increase their positions and lock in shares.

You mentioned the logic of market development and the logic of trend preview.

In my opinion, the fundamental focus of everything is on the 'emerging industrial chain', that is, the film and television media, Internet software, Internet applications, electronic information, and new energy industry chains. Only when there is an expectation of a fundamental reversal can we attract the continued participation of other major funds.

With this underlying logic, there is continued participation of major funds.

Only by starting from small and micro-cap stocks, and taking the GEM and SME boards as entry points, can we reverse the overall market investment confidence and capital investment preferences. Otherwise, this trend change is simply a castle in the air. Without the underlying support, it is impossible to achieve it. "

"Old Chen, according to the logic of your analysis, doesn't it mean that it is useless for funds to gather and speculate on the current GEM and SME board constituent stocks to push up the valuation of the entire small and medium-sized stocks and micro-cap growth stocks?" Li Jinshi did not quite agree with Chen Guiyun's views on the current market trend. After a pause, he continued, "Not entirely? With the general rebound of small and medium-sized stocks and micro-cap stocks, and the increasingly better K-line trends of the GEM Index and the SME Board Index, it is obvious that the overall investment sentiment and investment confidence of the market are recovering, and it can also be clearly felt that a group of wait-and-see funds are intervening in the off-market.

In contrast, a large number of institutional main capital groups previously clung to the main line of "big infrastructure", as well as the main weight sectors such as liquor, white appliances, medicine, consumption, electricity, and finance.

The market transaction volume not only showed no signs of continued increase, but instead showed a shrinking trend.

This shows that after the main institutional funds continue to hold these weighted main-line sectors, it has an obvious negative feedback on the overall market trend.

Let’s put aside the distorted Shanghai Composite Index.

In fact, as institutions continue to stick to the core theme, the market's bullish ecology is becoming increasingly sluggish.

It is only that with the recent main theme of "big infrastructure", under the leadership of the institution "Huayi Capital", some sustained money-making effects have been achieved, and the situation has improved relatively.

Anyway, I don’t quite agree with the view that the main line of group weight can attract off-market funds.

We also do not agree with the market trend and will base our decision on valuation and fundamentals.

In fact, looking back at the big bull stocks in history, only a small number of them were stimulated by changes in fundamentals. Many big bull stocks were almost all driven by emotions, with continuous capital relay, and the market speculation sentiment and short-term investment risk preference continuing to improve.

Based on past historical experience...

Our A-shares are not really a mature investment market that is based on performance and anchored by valuation.

I believe that before there is a major change in the structure of A-share investor participation, that is, among the investors who still participate in the market, about 85% of them are retail investors, the market's continued hype and emotion-driven speculative market behavior will never exit the mainstream.

On the contrary, in my opinion, the behavior of institutions banding together is non-mainstream.

Take the overall trend changes in the last bull market as an example. In the last bull market, the stocks with the highest growth rates and the industry sectors with the highest general growth rates were not entirely driven by performance, right?

Like the check for 'Silver Jay' which saw an almost 40-fold increase in value during the last bull market.

Whether in the past or now, has there been sustained performance support?
In my opinion, the so-called expectation of fundamental change is nothing more than the product of the change in everyone's mentality after the market hype sentiment has risen, the overall investment confidence and investment risk preference in the market have increased. "

"Institutions continue to hold on to the main weight sectors such as liquor, white appliances, medicine, consumption, electricity, and finance, which cannot change the overall ecological environment of the market. It is also difficult to attract a large number of off-market funds to enter the market under this environment." Liao Guoxiang thought about it and continued to respond, "But small and medium-sized stocks and micro-cap stocks that are not supported by fundamental logic will find it difficult to go far simply relying on the assist of emotions. Even if there is a capital relay, the subsequent relay funds will also need the support of expectations from all aspects, right?
In the last bull market, there were a group of concept stocks in the "Internet finance" sector, including Yinzhijie, Jinzheng Holdings, Dazhihui, and Flush...

The reason why it can be hyped up to such a high valuation by the market is that the space is generally ten times or even dozens of times.

Is it due to the explosive growth of mobile Internet? Is it because everyone expects that the number of mobile Internet users will increase exponentially as mobile Internet explodes in the future?
Only an industry boom can give rise to long-term hype that does not require performance support.

If this condition is missing.

Then when the corresponding emotions reach the climax, the subsequent funds will find it difficult to lock in their positions when they see that there is no such a beautiful story to tell.

Without a large amount of continuous relay funds willing to lock up positions for a long time, there will naturally be no long-term trend market.

Currently, the line of 'emerging industrial chain'...

That is, the core industry sectors of Internet software, Internet applications, film and television media, and electronic information.

The explosive growth of mobile Internet has passed, the entire smartphone replacement wave is coming to an end, the mobile Internet user group has begun to stabilize, the entire industry has begun to have a large number of incremental markets, and has entered the game of existing markets. Naturally, there are not so many beautiful stories to tell.

Without so many beautiful stories to tell, it is naturally impossible to support a valuation that is too high, let alone the bubble space.

What's more, the current overall macro-environment makes it difficult for a large number of incremental funds from the off-market to intervene.

So, obviously...

In an environment where the market has been unable to break away from the stock game, the certainty of the main-line related sectors of the "emerging industrial chain" without the support of underlying logic and their related concept stocks is not that sufficient. Without sufficient certainty, there will naturally not be much money locked up and dared to hold positions for a long time.

That is to say, the chip structure within it will not settle so easily.

On the contrary, in the line of "emerging industrial chains", when the corresponding growth stocks and concept stocks lack certainty, the strong certainty advantages of the weighted main line with strong performance support and the leading stocks in related industries can be easily highlighted.

It is also easy to get the attention of the major capital groups in the market who need certainty. When the major capital groups in the market change their trading ideas, they generally change their offensive strategies into defensive strategies and begin to actively seek certainty in the future.

Then, it is normal for the overall market to develop around the main line of weight.

And when a large number of main institutional funds generally concentrate on the main line of market weight for the sake of certainty, then in the market environment of stock stock game, naturally less funds will fall into the field of small and medium-sized and micro-cap growth concept stocks.

This is also the case after a large number of major institutional capital groups generally clung to the main line of market weight.

One of the main reasons why the liquidity of small, medium and micro-cap stocks is getting worse and worse.

As long as you understand the fundamental forces driving the development of market trends, the investment preferences of the current major capital groups in the market, and the main focus.

Then you can understand the explosive growth of small, medium and micro-cap stocks in this round.

It can only be an oversold rebound, not a trend reversal.

It can also be understood that as long as the main institutional capital groups in the market do not withdraw their large positions from the main line of "big infrastructure" and weighty main line areas such as liquor, white appliances, medicine, consumption, electricity, and finance, or carry out large-scale position adjustments, the market is unlikely to see a change in the overall investment trend.

in summary……

At this point we should not focus on the line of 'emerging industrial chain'.

In particular, people have too high expectations for the Internet software, Internet applications, film and television media, and electronic information sectors, which have rebounded strongly in recent days.

Of course, this is roughly the direction of the overall market development.

But the performance of individual stocks is different.

Driven by the previous "big infrastructure" main line, the Shanghai Composite Index successfully crossed the huge pressure position of 3000 points.

Although this still failed to attract too many off-market wait-and-see funds to intervene, the investment confidence and bullish sentiment within the market have somewhat warmed up.

And some investment confidence has recovered.

It is indeed beneficial to the improvement of the short-term investment ecosystem.

In other words, in terms of the overall main trend, it is highly likely that the 'emerging industrial chain' will find it difficult to open up any space, but when it comes to specific stocks.

During the process of sector trends fluctuating and differentiating.

There is still a relatively high chance that one or two, or a few concept leading stocks that are the focus of the market will come out on top.

Therefore, I am not optimistic about the subsequent market trend of the 'emerging industrial chain' line.

I also don't think that the film and television media, Internet software, and Internet application sectors, with the help of the current hot sentiment, can follow the example of the three major sectors of real estate, building decoration, and building materials in the previous "big infrastructure" main line and develop a sustained strong trend.

But I am relatively optimistic about the check from 'Chinese Online'.

As for the line of 'big infrastructure'.

The unusual movement of the "big infrastructure" line mentioned above was driven by the unusual trend of a number of domestic real estate stocks in the Hong Kong stock market.

So, the trend of the 'big infrastructure' line.

I think we should take a closer look at the performance of a number of domestic real estate stocks and construction stocks in the Hong Kong stock market.

But overall, as long as the Shanghai Composite Index does not fall below 3000 points and continues to fluctuate above 3000 points, the market conditions will not be too bad.

At least there won’t be a serious effect of continuous loss of money.

In this case, we can actually pay less attention to the index and more attention to individual stocks.”

"Well, Lao Liao's analysis is still thorough." Chen Guiyun nodded with a smile, "Indeed, under the premise of grasping the general trend direction and market investment style, it is a better strategy to focus less on the index and more on individual stocks. Next...even if the sentiment of the 'emerging industrial chain' line will decline slightly, the trends of various sectors will gradually diverge, at least the 'Chinese Online' check can still be pushed forward, and even if the upward space of this check is limited, under the current sentiment performance, there is still enough room for error, and it will not be directly killed."

"It means that we are relatively optimistic, but cautiously optimistic." Li Jinshi responded, "That's what I have always said. The 'Chinese Online' check will not die for the time being. As long as this check can continue to rise, whether the 'emerging industrial chain' line, the film and television media, Internet software, and Internet applications sectors rebound or reverse, there should be room for error."

"There is room for error, but there is no obvious point to continue to participate in the game." Chen Guiyun said, "Under the driving effect of the 'Huawen Online' check, the 'emerging industrial chain' line, the concepts of 'online education', 'domestic software', 'network security', etc., which are currently being hyped, are likely to be a pure feast for investors. There is limited room for upward movement. Even if you gamble and participate in the relay, it is difficult to get too much expected profit and get out of it unscathed.

On the other hand, the main line of "big infrastructure" has been adjusted for two days.

There is support downwards and motivation upwards.

Once the sentiment of the main line of "emerging industrial chain" declines slightly, the group of funds engaged in aggressive speculation, or the large group of short-term profit-making funds gathered on this main line, will inevitably move closer to the main line with strong certainty again when the market investment risk preference decreases again.

In other words, the expected profit margin for intervening in the game of "big infrastructure" is still relatively sufficient.

What's more, the current market attention on the 'Oriental Yuhong' check is still quite high, with 'Fuxing Road' continuously locking up positions in it.

There is a high probability that when the main market direction changes, it will rebound first and continue to hit new highs.

Therefore, compared to continuing to gamble on the "Huawen Online" check, I think the certainty and expected profit margin of the "Oriental Yuhong" check will be higher. Moreover, compared with the "Huawen Online" check, the trend of the "Oriental Yuhong" check is more stable, the fundamentals are more solid, and the internal chip structure has not seen any obvious signs of loosening so far. "(End of this chapter)