Rebirth of the Capital Legend

"No rush," Wang Shujie said with a smile. "Generally speaking, after a surge in stocks like the 'new energy industry chain' that have confirmed a fundamental reversal, there will be a significant pullback in the market after the sentiment feedback is complete, in order to further adjust and stabilize the stock structure. At that time, there will be plenty of opportunities to increase positions on a large scale."

In the financial market, generally speaking, buying and selling points are not scarce.

Buying points are often within a range, and selling points are also often within a range.

There's no need to fixate on a single point. As long as the general direction is correct and the trend is correctly judged, the relative cost level isn't that important for long-term, long-term market trends. Instead, getting fixated on buying and selling points within a narrow range can easily lead to missing out on major investment opportunities and being blinded by small immediate gains, preventing a clear understanding of the market's overall direction.

Of course, this refers to the 'new energy industry chain'.

Due to numerous incorrect predictions by many institutions in the market in the early stages, many institutions do not hold much positions in the 'new energy industry chain' sector, and many institutions have not even made any investments in this sector.

This led to a sharp surge in the market performance of the 'new energy industry chain' this afternoon.

In reality, there aren't many major institutions that have actually acquired the chips. In other words, everyone's starting line is basically the same at present.

I have nothing to worry about regarding the 'new energy industry chain'.

My biggest concern right now, and the core sector in the market that I feel has the greatest uncertainty, is actually the 'major infrastructure' sector.

“The ‘major infrastructure’ theme?” Li Shangfeng was slightly taken aback and said, “Mr. Wang, isn’t the ‘major infrastructure’ theme currently the most certain and stable in the entire market? Moreover, looking at the fundamentals, the underlying logic of the ‘major infrastructure’ theme is indeed still strengthening, and there is still a lot of room for growth in expectations and potential. At the same time, both ‘Fuxing Road’ and ‘Huayi Capital’ are continuing to increase their long positions in this core theme of ‘major infrastructure’. What’s wrong with that? I feel that with the help of these two related firms, ‘Fuxing Road’ and ‘Huayi Capital’, the ‘major infrastructure’ theme is highly likely to continue to take off.”

“The influence of ‘Fuxing Road’ and ‘Huayi Capital’ is indeed profound for the market,” Wang Shujie said. “But the influence of individual seats is far less reliable than the combined efforts of the market. Currently, in the ‘major infrastructure’ sector, there are many profit-taking positions within the internal shareholding structure. With valuations largely corrected and uncertainties surrounding future expectations, it will be difficult for these profit-taking positions to remain stable.”

Moreover, the core leading stocks in the entire "major infrastructure" theme have generally doubled in value.

Their market capitalization is already quite large.

At this position, with the internal shareholding structure gradually shifting towards divergence and requiring increased trading volume, the incremental funds needed to continue moving upwards are still quite substantial.

That is to say...

For the "major infrastructure" sector to break out of its second wave and continue its upward trend, it needs to achieve a sustained upward breakthrough.

The market must maintain a high level of trading volume and momentum.

Otherwise, there wouldn't be enough new buying to absorb the selling pressure from those gradually taking profits.

Do you think the market can maintain this level of trading volume for an extended period?

I think it will be quite difficult for the market to maintain a trading volume of around 5500 billion to 6000 billion yuan. After all, today's market trend and trading volume were formed due to the extreme fluctuations in the morning and the stimulus of two major positive news events at noon.

Without the two major positive developments at midday...

I estimate that today's market turnover will most likely remain around 4000 billion to 4500 billion.

Furthermore, even though the market saw increased trading volume today, a significant amount of active capital entered the market from outside.

But can this portion of active funds remain in the market indefinitely?
To retain these active funds, a fundamental shift is needed, along with changes in the market environment and sustained profit-making opportunities in the market.

Currently, the overall market ecosystem seems far from being ready for change.

A shift from a bear to a bull market is unlikely at this point in time.

So, looking at it all...

I just said that the probability of the 'major infrastructure' sector continuing to strengthen and forming a second wave of continuous upward movement is not very high; the market's certainty is still somewhat lacking.

Of course, this excludes the 'major infrastructure' sector.

Following the release of significant positive news, the fundamentals of the 'new energy industry chain' have reversed. Although there may be some fluctuations in its subsequent trend, the problems are unlikely to be significant.

If the 'new energy industry chain' experiences a significant correction in the future.

I think we can adjust some of our positions and focus on key areas.

"According to your suggestion, Mr. Wang..." Li Shangfeng said, "Should we gradually reduce our holdings in the 'major infrastructure' sector and start taking profits?"

Wang Shujie thought for a moment and said, "Let's see how the sentiment and market performance of the 'major infrastructure' sector are reacting after the two related seats, 'Fuxing Road' and 'Huayi Capital,' continue to increase their holdings in the 'major infrastructure' sector. If the trend hasn't turned bad and the sentiment remains relatively aggressive, then we can wait a little longer."

Although I am not optimistic about the 'major infrastructure' sector, at the current point in time and at this stage.

How much more room can be created to push it upwards?

However, from a short-term perspective, the influence of the two major seats, 'Fuxing Road' and 'Huayi Capital', on the current market, including the vast number of retail investors and other institutional investors, is indeed not to be underestimated. These two seats can bring short-term room for speculation and create some short-term opportunities for hype.

However, overall...

The strategy regarding 'major infrastructure' remains unchanged.

That means you can sell as prices rise, and gradually transfer the freed-up shares to the 'new energy industry chain' as the main theme.

"Okay, sure," Li Shangfeng replied. After a pause, he continued, "Mr. Wang, what's your opinion on the main sectors that are heavily weighted in the main board, such as liquor, white goods, pharmaceuticals, consumer goods, power, petrochemicals, and finance? Especially the liquor and white goods sectors, which are also heavily invested in by 'Huayi Capital'. Looking at today's market trend, after the overall market sentiment improved, these two sectors actually weakened somewhat."

If it weren't for the closing phase, a large number of small and mid-cap stocks would have already risen across the board.

Subsequent funds could not afford to buy at higher prices, so they had to flow back to the main board's heavyweight stocks.

It's possible that the liquor and white goods sectors might even close lower today. Regardless, based on today's market performance, the liquor and white goods sectors were indeed the weakest performing main sectors in the entire market.

Our fund currently holds significant positions in both of these main sectors.

I'm thinking, what if these two sectors can't break out?

Or, in terms of price action, it may continue to underperform the broader market in the near term. Should we then optimize our portfolio structure and continue to reduce our holdings in the liquor and white goods sectors to realize profits?

Wang Shujie responded: "The liquor and white goods sectors are not only stable consumer sectors, but they are also positively correlated with the recovery of the real estate market. The fundamentals of these two sectors have not changed compared to before. On the contrary, they have been gradually and continuously improving."

Since the fundamental situation hasn't changed, that means the underlying logic hasn't changed.

Therefore, there's no need to rush into optimizing the portfolio structure.

Furthermore, I believe that the performance of the liquor and white goods sectors is much more certain than that of stocks in the "major infrastructure" sector.

Moreover, the industry's fundamentals, sentiment, and trend continuity are much better.

Looking ahead to the next few years, or even the next ten years, people's desire for a better life and a higher quality of life will not change.

Moreover, as people's incomes increase, their desire to consume also rises.

Both the liquor and white goods markets will be continuously growing markets.

Since it is an incremental market, the market size is constantly expanding, and at the same time, the market concentration is also constantly shifting towards giants.

Therefore, we should steadfastly continue to buy into leading stocks in the liquor and white goods industries, or in other words, firmly hold onto core leading stocks in the liquor and white goods sectors.

That's the perfect trading strategy.

In this respect, I actually admire 'Fuxing Road' and 'Huayi Capital' quite a bit.

This guy foresaw this at the beginning of the year and decisively bought a large number of leading stocks in the liquor and white goods sectors during the stock market crash, and hasn't sold a single share since.

“Huayi Capital’s investment acumen and strategies are undoubtedly excellent,” Li Shangfeng nodded and said. “We will continue to hold our positions in liquor and white goods, reduce our holdings in the ‘major infrastructure’ sector as prices rise, and increase our holdings in the ‘new energy industry chain’ sector on pullbacks. Mr. Wang, what are your thoughts on the ‘emerging industry chain’ sector, including film and television media, internet software, and internet applications, as well as the ‘smartphone industry chain’ sector, especially the ‘Apple industry chain’ sub-sector?”

Wang Shujie chuckled and said, "I think we don't need to look at the film and television media, internet software, and internet application sectors for now. There is no hope for a turnaround in the fundamentals of these sectors, at least not for the time being. Since the fundamentals are not optimistic, it means that the only opportunities for short-term speculation in these sectors right now are limited to short-term trading."

And short-term speculation in the market...

It's dominated by a group of active speculative investors in the market, so it has little to do with us.

Moreover, short-term market trends are difficult to predict, with extreme volatility. In addition, the vast majority of stocks in the film and television media, internet software, and internet application sectors are small-cap or micro-cap stocks, making it difficult for large funds to enter and exit, and they cannot react as quickly as speculative funds.

Therefore, these sections can basically be ignored and abandoned.

As for the 'Apple supply chain' sub-sector, the fundamental situation has actually improved slightly.

However, before Apple's new product launch event, no one knew how well this year's new Apple products would sell or whether they would meet market expectations.

And under the circumstances of inherent uncertainty.

The market has already driven up the prices of all related stocks in the entire 'Apple supply chain' in accordance with expectations, or even exceeding expectations.

In other words, the fundamentals haven't completely reversed yet.

Market expectations have already been shattered.

In this scenario, it means that even if Apple's subsequent product launch exceeds expectations and the products sell well, the corresponding Apple supply chain stocks will not see significant price increases.

Conversely, if this year's Apple product launch falls short of expectations, just like last year's...

Therefore, what awaits stocks related to the 'Apple supply chain' is very likely to be a relatively sharp sell-off.

In summary…

I believe that investing in the 'Apple supply chain' is not cost-effective at present and lacks certainty. Even based on the most ideal expectations, the profit margin is relatively limited.

Therefore, given the lack of certainty, the investment is not cost-effective.

There's no need to spend more time and effort focusing on this line at this point in time.

“Okay, good.” Li Shangfeng nodded and said, “Looking at it this way, the core themes of the market should be the liquor and white goods sectors, as well as the ‘major infrastructure’ and ‘new energy industry chain’. In terms of priority, the ‘new energy industry chain’ should be prioritized, followed by the liquor and white goods sectors, and then the ‘major infrastructure’ sector.”

“That’s about right.” Wang Shujie nodded in agreement and said, “Some main themes seem lively, but in reality, there’s not much large capital involved. Other main themes seem to have average trends and weak initiative, but over a long period, they can outperform 90% of the stocks in the market. Let the speculative funds do the short-term speculation. We should stick to our own trading strategies and operate according to our own ideas.”

"Okay," Li Shangfeng replied.

Meanwhile, inside the trading room of the "Blue Chip Hybrid Selection" fund at "Nuoan Capital," the two key figures in charge of the fund were having a heated discussion about the current market trend and the performance of the major market themes, and were making timely decisions on subsequent trading strategies.

At the same time...

At this moment, in the trading room of the "Huarui Excellent Growth No. 1" main fund product at Huarui Fund Management Company, fund manager Song Shaopu, after browsing the data of the two stock exchanges' daily trading records and finding a group of stocks that "Huayi Capital" had significantly increased its holdings in today, couldn't help but chuckle and say, "It's rare to see "Huayi Capital" so aggressively increasing its holdings. It seems that after the positive market news at noon, they've started to get anxious facing the 'new energy industry chain' sub-sector, which they have no chips to hold."

“It’s hard not to be anxious,” said Jia Yongxiang, the trading team leader standing next to Song Shaopu, upon hearing his words. “After all, following the major positive news released at noon, everyone knows that the fundamentals of the ‘new energy industry chain’ have completely reversed. With such an obvious investment opportunity, which major institutional group in the market, lacking sufficient shares, wouldn’t want to rush to buy?” (End of this chapter)