Rebirth of the Capital Legend

"It's human nature to seek profit and avoid harm," Zhao Qiang said. "In a market with limited liquidity, stocks that lack investor attention and hype are unlikely to generate profits or establish a trend. It goes without saying that we should avoid these stocks. In addition, I think that at the current stage, we should not chase highs or try to buy at the bottom. We should only take advantage of short-term right-side opportunities with higher certainty. Otherwise, it's easy to lose money."

“Old Zhao is right.” Sun Chengyu smiled and continued, “The market is in a period of volatility, which is often when many short-term investors lose the most money. It’s wrong to go long and wrong to go short. Many core concept leading stocks will get trapped if you chase the highs and get buried if you try to buy the dips.”

"This problem is easy to solve," Lao Qian said. "The market has now fully shifted to growth stocks and blue-chip stocks that are heavily held by institutional investors. We just need to follow this condition when making our trades. We should buy the core leading stocks dominated by institutions and avoid other concept stocks that have no performance, lack expectations, have low market attention, and have poor historical K-line trends, no matter how strong the short-term rebound is."

"Stocks dominated by institutional investors may have better price stability, but their upside potential is clearly limited," Zhao Qiang said. "It's better to control your position size and focus on leading stocks that have strong market attention and concentrated capital support. Relatively speaking... the best defense is offense. In a market with moderate liquidity, leading stocks with extremely high liquidity often have higher certainty. Just don't chase the highs too much or over-leverage; take profits when you can."

Amidst the ongoing heated discussion among the main speculative investors in the Yuhang Group...

As time continues to pass.

US stocks continued their upward trend, and investor sentiment across the market also improved overnight.

Influenced by the continued record highs in US stocks and stimulated by a number of positive news items in the evening, people are relatively optimistic about the market trend tomorrow.

During the day, the somewhat subdued market sentiment was boosted by these positive factors.

The market has already shown a clear recovery at this moment.

The night passed, and the next day, September 8th, Thursday, arrived.

In the morning, before the market officially opened, after digesting the positive news from last night and various domestic and international financial market news in the morning, the general investor group's expectations for today's market trend and the performance of their own stocks have improved significantly.

Meanwhile, some retail investors who reduced their positions during yesterday's trading session, or those who did not hold any positions at all, also participated.

At this point, noticing a rebound in overall market sentiment and the high probability of a strong opening and continued upward trend, many people began to feel anxious.

"Judging from this, the market looks like it will open higher today."

Noticing the market sentiment in the morning, which was clearly biased towards the bulls, and with numerous positive developments in both domestic and international markets, some retail investors gathered on various online stock investment exchange platforms couldn't help but sigh.

"The opening price won't be much higher, right? The various positive news gathered in the market right now are all minor positives. There's no core, major positive news that can truly determine and change the market trend. I don't think there will be any unexpected positive news. The market trend should still follow its original direction, and it's hard to change it, right?"

"I also think that this positive factor is unlikely to really change the market trend."

"US stocks continue to hit record highs, which should be expected, right? Moreover, the performance of overseas markets has a decreasing impact on the domestic market."

"To be honest, when US stocks rise, A-shares don't necessarily follow, but when US stocks plummet, A-shares definitely do. As for today's market trend... while it can't be called optimistic, it shouldn't be as bad as yesterday. At this level, without the influence of major positive news, the downward momentum is still not much."

"I don't ask for much, as long as there isn't a big drop, it's fine. First, we need to stabilize in the 3080 to 3100 point range, and then seek a breakthrough later. That would be more prudent. At this point, without the support of sustained trading volume, if we force a breakthrough upwards, I feel that we won't be able to hold above 3100 points."

"That's right. As long as the index doesn't drop too much, there will definitely be opportunities to trade during the day."

"Last night, several major tech giants were driving the US stock market up. Do you think there are any opportunities in the tech sector? It feels like the infrastructure sector has been going strong for a long time, and the expected returns are pretty good. Meanwhile, the tech sector has been falling for a long time, and many tech stocks have become quite attractive. I think there's a possibility that these two main themes will switch gears in the future."

"The technology sector? You mean internet software, internet applications, electronic information, semiconductors, film and television media... these so-called emerging industry chain sectors? Then I think these sectors, and their related core stocks, still don't have opportunities in the short term."

"Why is there no chance anymore?"

"These major sectors currently lack large-scale institutional investment in locking up shares, so the shares haven't been accumulated. However, it's not that the shares haven't been accumulated; the main issue is the lack of active buying power, coupled with the heavy historical losses."

"There's a saying that goes, 'Don't try to predict trends, just follow them.' Currently, the main focus of market speculation and the strongest profit-making effect is concentrated on the major infrastructure theme. So, just focus on this theme and why worry about anything else?"

"That makes sense; large-scale infrastructure projects are still the safest option."

"In terms of the trend, isn't the large-scale infrastructure sector not yet at the point where expectations have been fully realized and it has peaked?"

"How could it have peaked at this time? Housing prices haven't peaked yet. Speaking of which... housing prices have really soared this year. In many places, they've almost doubled."

"That's right, it feels like the real estate market has completely entered a bull market atmosphere."

"It's certain that the real estate market is entering a bull market. However, it's hard to say how much of this real estate industry chain's performance will ultimately translate into profits for all the companies in the industry chain and affect their stock performance. It's very likely that there will be a surge in profits, but the stock price increase will be limited."

"My concern is that the performance will lag far behind, and given that the market's valuation of traditional industry sectors is already very low, it will be difficult for them to truly perform."

"I think thinking about overall valuation improvement is a bit of overthinking it."

"Let's look at the individual stocks."

"Yes, it's better to look at the specific stocks when making decisions. I think as long as Beijiang Jiaojian doesn't fall today, it's fine."

"I hope that today, the stock of Beijiang Jiaojian will open a gap so that I can buy in."

"Judging from the pre-market sentiment, it seems like Beijiang Jiaojian stock is going to be hard to get going; it's likely to hit the daily limit up."

"That's not necessarily true. I think there are actually quite a few disagreements on the major infrastructure sector. A lot of funds are involved, and a lot of funds want to cash out."

"If Beijiang Jiaojian hits its daily limit up, then we can buy other similar stocks to speculate."

"You mean Tianshan Cement?"

"Actually, Tianshan Cement is not bad. In this round of rebound of the main infrastructure theme, the strongest core sector is actually the cement sector. Moreover, Conch Cement, a large stock, has risen by nearly 50% in the past three months. I think other stocks still have the potential for a catch-up rise at the current stage."

"You can't compare them like that, can you? Conch Cement's continued surge is because its valuation is indeed too low."

"It's not entirely a valuation issue, is it? There are so many stocks in the market, many with low valuations and good performance, yet none of them have seen a smooth upward trend. I think the main reason Conch Cement's stock has risen so much is its strong expectation of future earnings growth, and also its rapid expansion, reacting faster than other similar companies in the industry. It's one of the better beneficiaries of this round of infrastructure boom." "Isn't it because of institutional investors clustering around it?"

“Institutional investors aren’t just randomly banding together. I feel that in the current market, institutional investors are clearly more reliable than speculative investors.”

"Yes, haven't you noticed? Stocks bought by institutions, especially those on the daily trading list, tend to get more active buying support the next day than stocks heavily held by speculative funds, and they are also more likely to perform well. Now, the vast majority of concept stocks driven purely by speculative funds can no longer outperform stocks dominated by institutions."

"We noticed this early on, but many of the stocks dominated by institutional investors are already at high levels, making them difficult to buy."

"Yes, I'm afraid that once I buy in, the stock price will start to fall back."

"Yeah, that's right. Because Oriental Yuhong stock kept rising, I couldn't bring myself to buy at the high price, so I just didn't dare to buy it and missed out."

"If you ask me, for stocks that you really like and want to buy, just buy them without hesitation."

What if I bought the exact top of the list?

"Looking at the current real estate market, it's clear that the entire industry is still in a period of explosive growth. Even though many related stocks in the infrastructure sector have been heavily speculated on by institutions in the past two or three months, resulting in a continuous short squeeze and significant price increases, it's still too early to say that they've peaked. Moreover, even if you buy at the top, stocks that have been on an upward trend for more than a month are unlikely to have a sharp peak; there will be repeated opportunities. In other words, even if you happen to buy at the peak, there will be opportunities to reduce losses or cut your losses in time."

"That's right. Generally speaking, in a long upward trend, it's unlikely that there will be a sharp peak."

"Anyway, I am firmly optimistic about the major infrastructure sector."

"I've reduced my holdings in Oriental Yuhong stock quite a bit, but I'm still optimistic about the stock."

"The stocks that Mr. Su's Huayi Capital clearly holds a large position in actually have very stable performance. You can buy them with your eyes closed. It's uncertain how much they will rise or how much you can earn, but they will definitely outperform the market index."

"That's right. In fact, as long as you can outperform the market index in the long run, you can make a lot of money in the long run."

"Yeah, you bet. I've lost a lot of money lately chasing highs and selling lows."

"Chasing highs and selling lows is not advisable. In fact, during a period of market fluctuation, chasing highs and selling lows will only result in losses on both sides. Since it is certain that the index will not break through strongly upwards in the short term, and the market is expected to continue to fluctuate in the coming period, what we should do is to decisively buy low and sell high, and not be afraid of selling too early. Of course, we should not be afraid to increase our positions at low levels during the trading day due to fear."

"Buying low and selling high sounds easy, but it's very difficult to do."

"That's not true. You either sell your chips too early or buy at the bottom halfway down the mountain. The key is that if you make a mistake, you can't correct it on the same day. That's so annoying."

"I think it's more appropriate to maintain a half position and do day trading by buying low and selling high every day."

"It's also very difficult to do; judging the intraday trend, the highs and lows, is still very difficult."

"When it comes to investing, there's no such thing as a sure thing. Just focus on the high-probability investments, set stop-loss and take-profit levels, and that's it. You really don't need to worry about anything else."

"The market is about to open. By the way, what do you guys think of Tianci Materials? If it opens high today, is it a good time to buy?"

“I think it’s worth buying. Institutions have positions in this stock, and it seems they’ve even locked up their shares.”

"I also think it's possible to take the plunge, but it's not advisable to go all in at once. The safest approach is to gradually build a position using a grid-like strategy. Overall, I feel that the new energy industry chain is not as strong as the infrastructure sector. In terms of trading priority, I would still prioritize infrastructure."

"Yes, there are actually quite a few differences in the new energy industry chain."

"The key is to wait until the large amount of profit-taking from last Friday's positive news is cleared out and the shares have settled for a period of time before buying heavily. At present, it is not very suitable."

"Yes, we still have to wait for the opportunity. In the market, patience is the most important thing."

"Yes, I understand now. I can't trade too frequently."

"If your win rate is high enough, you can trade frequently, but I doubt many people can achieve such a high win rate, right?"

"That's too difficult."

"I'm focusing on just one stock right now. I feel that sticking to one stock is better than constantly chasing hot stocks. This month, I've made almost 15%."

"Do you do T every day? You're really something."

"Pretty much. There's a saying: make money in a bull market, accumulate stocks in a bear market. As long as the stocks I hold aren't delisted, and I keep lowering the cost basis of my holdings, I'll eventually be able to make a profit and leave the market. After all, what we retail investors have the least to lack is time."

"Wow, I feel like this method might work."

"You have to watch the market every day and have enough patience."

The pre-market discussions and exchanges among countless retail investors across the internet continued.

As time passed, 9:15 a.m. arrived quickly, and amidst everyone's attention, the market ushered in the initial call auction.

Countless eyes were fixed on it.

When the stagnant market starts to move again under everyone's attention.

Whether it's the hottest major infrastructure theme, the slightly more controversial new energy industry chain theme, the smartphone industry chain theme, or the emerging industry chain theme that is generally considered to be relatively weak, namely the film and television media, internet software, and internet applications sectors, or even the main board sectors such as liquor, white goods, pharmaceuticals, consumer goods, power, finance, and petrochemicals...

At this moment, the market is influenced by overall sentiment, as well as a confluence of positive pre-market news.

All of them achieved varying degrees of initial strength. (End of Chapter)