As for companies like Pinduoduo and ituan, seizing the opportunity to make a quick buck from the ga of hot potato is fine, but missing it doesn’t matter. Those businesses don’t affect the subsequent plan.
Having made up his mind, at 9 o’clock, Han Lie turned his attention back to the market.
The trend today seed to indicate a continued decline.
The Shanghai Index was heading straight for 2,100 points, clearly probing for the market bottom.
After the policy bottom and valuation bottom appear, the market won’t adjust imdiately. Instead, it will go through repeated grinding, shaking off the less resolute chips completely.
What’s the theoretical support for this situation?
Simply put, during the bottom-searching process, a lot of long-term capital will continuously enter the market and top up positions. These are the types of value investors who buy and hold for a very long ti, rarely moving.
Their operating style is extrely simple: "At this price point, I’m adding to my position, no matter if it falls later. If it falls more, I will continue to buy more."
As such, active chips keep concentrating and then quieting down, allowing the bottom to naturally form.
Having a bottom doesn’t necessarily lead to a surge.
If the external environnt isn’t right, it may lead to bottom box-range trading until a new direction is chosen.
But it’s okay. Value investors can reduce their positions at the higher points of the box and then buy back at the bottom, grinding it out like this indefinitely.
From 2016 to 2022, the market was actually in constant box-range trading. It wanted to surge but lacked the conditions. However, when it fell, it created good opportunities.
Now, there’s a new opportunity in the market.
The Shanghai Index bottod on June 25th. On that day, panic selling led to a new low of 1,849.65 points, but the market closed back up at 1,960—a typical irrational oversell.
The likelihood of falling back to 1,960 again is almost nonexistent. Around 2,000 points can be regarded as a solid bottom. Note: a solid bottom isn’t unbreakable, but if broken, there won’t be any damage, and it will bounce back very quickly.
Just like 2022’s 2,900 points, it could break, but if it did, it was an opportunity because the overall valuation was already extrely safe.
「Back to the present.」
Recently, the market has been on a steady decline, spawning a "freak stock" like Wei Hua. But Wei Hua shouldn’t be played anymore, so the approach needs to change imdiately.
How to change? From taking the initiative to waiting passively.
The 2,100-point level definitely isn’t going to hold. I vaguely rember that in 2014, the index started falling from the beginning of the year, bottoming around 2,000 points. It wasn’t until the second half of the year that the great bull market began. So, the bottom box-range oscillated for almost a whole eight months. With this information, even a fool could make money. Buy at 2,000 points, sell when it rises a lot, and buy again at 2,000 if it falls... Child’s play.
The market opened at 9:30. Han Lie looked at the situation and gave the direct order, "Continue to hold an empty position."
Then, ti to leave work... Checking the ti, it was ungodly early, so early I didn’t even know what to do. After thinking about it, I decided to go back to school and have a look. Just a few days until the New Year’s Eve party—is my ’harem departnt’ all set with the program?
Taking Liang Wu along, he drove straight back to the School of Humanities.
This darn school was so small. As soon as Han Lie entered the gate, following a sixth sense, he turned his head and saw Xi Luting and Pan Ge holding hands, chatting by the roadside.
What, you two again?! Forget it, forget it. None of my business. Scram!
Just as Han Lie was about to slip away, Pan Ge’s younger brother, who had just finished class with her, suddenly shouted, "Bro Han, you’re back?!"
Damn!
Han Lie’s expression froze, and so did his movents.
He turned around stiffly, only to see Pan Ge waving at him with a smile.
That gesture had a familiar yet distinct vibe, as if the tis were calling out—’Co and play, big guy!’
Han Lie silently sighed. He decided he would deal with Ding Xiang that very night.
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