Behind this kind of game, it is to admit that the cycle will inevitably appear, such as bull and bear, but the process and details are difficult to predict, so we need to prepare a reasonable strategy to deal with it. Then, we can actually use it in reverse, for example, since we don't know when to rise and how high, we can consider avoiding the worst cycle, and then realize the game, so that the return will be greatly increased after the end of the cycle. Also, don't think that the bad cycle is bad, in fact, the more bad cycles you experience, the greater the probability of a good cycle coming.
Calculation of the return factor in the index cycle
Correctly understanding and utilizing the cycle is an essential element of investment. Everything is cyclical, and there is a cycle in the change of almost all security prices. When entering a boom cycle, prices are significantly higher than they are worth and continue to get higher. Conversely, when entering a recession cycle, prices will continue to fall below value. Cycles arise from a cycle: the superposition of certain factors causes things to gradually develop in one direction, and the process of development brings more related factors. Finally, under this forward or reverse cycle, the cycle is created.
In the investment market, cycles are very easy to happen. Even most of the time, the prices of stocks, bonds, and funds are almost in a cycle: either higher than the actual value or lower than the actual value. There is almost no time when the price is exactly equal to the value, which means that the market is incorrectly priced 99% of the time, overvalued or undervalued. The continuous buying and redemption cycle of an active fund. These two are the most typical, mispricing phenomena.
When the market is active, pulling the net value of the fund, investors will think that it is a certain type of fund manager "Shenwu Wise", and the fund also deliberately creates a star fund manager, and even takes the initiative to "become a god" On the one hand, the fund manager does not consider, because his role is to expand the scale of the fund, so that there is money to be made;
In the same way, the market is sluggish, the net value is declining, of course, the people want to redeem, regardless of whether it is valuable; fund managers are the same, according to the reason, the chance of falling out, the lower the asset, the greater the probability of profit, but at this time there is no money, there is a redemption to sell to raise money, repay, the result is that the more valuable it is, the more it has to sell. ——This is also a special phenomenon of China's fund model focusing on scale (earning management fees) and ignoring net worth, so it is also true that active funds lack the value of the game, because they can't escape the cycle.
Taking the Wind Partial Equity Mixed Fund Index as an example, the natural unhedging time after buying an active equity fund at the highest point of the index in the past years is measured, and the following rules are found: in more than 1/2 of the years, even if you buy at the highest point of the year, the time for the index to reach a new high is within 1 year, close to 3/4 of the year, even if you buy at the highest point of the year, the time for the index to reach a new high is within 2 years, and only in a few years, it takes 3 to 5 years for the index to reach a new high after buying at the highest point of the year. - So,
When it comes to repair, U.S. stocks are even more bullish. The Nasdaq made its worst in history in 2022, then recovered its losses in 2023, and is now at a new high, so it is essential to have a QDII tool in the portfolio to gamble on overseas indices. A single A-share asset is fragile, if there is no underlying logic, it is really difficult to survive, this is Yuming repeatedly emphasized, but also the need for shareholders to survive in the long cycle of the market, the more uncomfortable, on the contrary, after you establish these, you will have a good cash flow and holding experience, have more choices, you can take advantage of the big inflection point cycle game, shareholders also need to sort out the factors in this regard, so as to survive for a long time.