Source: Brokerage China Author: Qu Hongyan Recently, China Yangtze Power hit a historical high and once again showed the slow bull stock trend of "tripling in ten years". The slow bull market has left behind many passers-by and brought good returns to the steadfast investors. It is "rare for those who triple in one year to be like carp jumping over the dragon gate, while those who double in three years are few and far between." On the other end of the investment world, however, violent collapses are also deafening, with many financial products suspected of "Ponzi schemes" ceasing payments, leaving investors with no hope of recovering their investments. Both positive and negative cases illustrate the importance of forming a suitable mentality towards money in one's lifetime; otherwise, sooner or later, you will divorce yourself from your money. "I call this the money mind, a person's IQ can reach 120, 140, or even higher levels, and perhaps some people's minds are good at doing one thing, while others are good at doing another. They can do things that most ordinary people can't do. But I know some very smart people who make very foolish decisions because they lack the money mind." Buffett once said so. The so-called money mind refers to believing in common sense, believing in compound interest, being cautious and rational, thinking independently, prioritizing security over return, not dealing with people with questionable character, not easily guaranteeing for others, not believing in windfall profits, and not trying to cross legal norms for extra benefits. In today's world of ubiquitous information, everyone's wealth may become the "prey" of those with ulterior motives. Only with the money mind, can one form good behavior habits and shield oneself from separating from one's wealth. Do not entrust your wealth easily. Wealth is easy to lose but hard to accumulate, and trust is a vital reason leading to the rapid loss of wealth. "Do not allow anyone else to manage your business unless you can watch their every move closely and understand their behavior; or you have strong reasons to believe in their character and ability. For investors, this criterion determines when you can let someone else make investment decisions for you." Graham's criterion written eighty years ago is so clear. Almost all the investors who lost their wealth in the financial products have violated the above two criteria. They did not have the ability to closely supervise the whereabouts of their funds, nor did they have sufficient reasons to believe in the character of the product issuers. They easily invested their own wealth solely based on others' glib tongue and a piece of commitment paper. They did not act as gatekeepers of their own wealth and ended up with nothing left even if the government punished the wrongdoers. "An ounce of prevention is worth a pound of cure." This is a phrase Munger often says. Destiny must be in one's own hands, and investors with a suitable money mind will try their best to find suspicious points in their investments to protect the safety of their principal. For example, whether the manager is trustworthy, whether the underlying assets are profitable, whether oneself can timely monitor the risks in the investment process, and whether the sales staff is obtaining large commissions. As long as any unreliable signs are found, these investors firmly will not invest their money. Do not desire to get rich quick. As in the capital market and anywhere else, making money is not easy, and desiring to get rich quick will lead to quick loss of wealth. In the capital market, the desire to get rich quickly often leads to investors over-allocating specific stocks, industries, or assets at the worst time. For example, buying high-risk stocks that can gain huge returns once an adventure succeeds, but the chance of success is very small, also known as "whispering stocks" by legendary fund manager Peter Lynch. "They often tell investors a story with explosive effects. These 'whispering stocks' have a hypnotic effect on people, and it is easy for you to believe that the story the company tells has an emotional appeal that can easily confuse you." This is like hearing a very tempting "sizzling" sound, making you salivate, but you did not notice that there is no steak on the grill. In the eyes of investors who lack the money mind, stable yield provided by blue chips such as China Yangtze Power cannot meet their demands. However, historical experience clearly shows that buying stocks lacking in safety solely based on imagined high yields is unwise. The long-term average investment return of general stocks is 9%-10%, which is also the average investment return of stock indexes in history, a benchmark to measure one's investment performance and the benchmark to measure fund investment performance.
Author: Zhou Le.

Today, the A-share market has experienced ups and downs, with the three major indices collectively falling in the morning session, then quickly rebounding. However, in the afternoon, all three major indices suddenly declined across the board. As of the close,$SSE Composite Index (000001.SH)$ dropping 2.53%, barely holding above 3200 points;$Shenzhen Component Index (399001.SZ)$ dropping 2.53%. $Chinext Price Index (399006.SZ)$ Fell more than 3%.

At the same time, the Hong Kong stock market also fell across the board, as of the close, $Hang Seng Index (800000.HK)$ down 3.67%, $Hang Seng TECH Index (800700.HK)$ some dropping 4.65%. $SUNAC (01918.HK)$ dropping more than 12%. $EAST BUY (01797.HK)$ Fall more than 9%. $NIO-SW (09866.HK)$Please use your Futubull account to access the feature.$GWMOTOR (02333.HK)$ Fall more than 8%. Pre-market trading in the U.S., Chinese concept stocks generally declined. $JD.com (JD.US)$ falling over 6%, $NIO Inc (NIO.US)$Please use your Futubull account to access the feature.$Baidu (BIDU.US)$ Dropping more than 4%.

On the news front, the escalating tension on the Korean Peninsula has led to a significant rise in market risk aversion. Among them, defense stocks collectively rose during the trading day, with Leideng Weili and Northern Long Long achieving a 20% limit up, Shengnan Technology surging by over 18%, China Harzone Industry Corp. rising by over 16%, and Anhui Greatwall Military Industry hitting the limit up.

After a significant adjustment, investors are particularly concerned about how the market will evolve in the future and the investment themes in the market.

Market shock

Today, the three major A-share indexes collectively closed lower, with the SSE Composite Index falling by 2.53%, closing at 3201.29 points; the Shenzhen Component Index falling by 2.53%, closing at 10066.52 points; and the Chinext Price Index falling by 3.22%, closing at 2085.99 points. Most stocks fell with fewer rising, with over 4400 individual stocks in the entire market declining, and the total turnover of the Shanghai and Shenzhen markets reaching 1.63 trillion yuan for the day.

On the news front, global geopolitical tensions have escalated again, with the situation on the Korean Peninsula intensifying, leading to strong risk aversion in the market. According to Xinhua News Agency on the 15th, North Korea blew up parts of the road on the North-South Korean border. Subsequently, the South Korean military conducted counter-shootings south of the military demarcation line. The Joint Chiefs of Staff said that the South Korean military is closely monitoring North Korea's actions and strengthening vigilance and response under South Korea-US cooperation.

China Securities Co., Ltd. stated that the current military industry sector is at a triple bottom range in terms of valuation, earnings growth rate, and capital allocation. In the fourth quarter of 2024, domestic and foreign catalytic factors may continue to emerge, injecting new impetus into the sector's upward trend. The catalysis in new domains and qualities are ongoing, and it is recommended to actively seize the opportunities for structural recovery.

Furthermore, brokerage stocks continue to weaken, with Haitong Securities and GTJA both falling more than 5%; real estate, convertible bond concept stocks declined, and Tianjin Realty Development hit the limit down.

Block orders continued to net inflow into defense military industry, computer, media, basic chemicals and other sectors before the close, while net outflow occurred in banks, autos, nonferrous metals, and food and beverage sectors.

Meanwhile, the Hong Kong stock market also fell across the board. As of the close, the Hang Seng Index fell by 3.67%, the Hang Seng Tech Index fell by 4.65%. Sunac fell by more than 12%, East Buy fell by more than 9%, NIO, Great Wall Motor fell by more than 8%, Meituan, Li Auto Inc. fell by nearly 7%, Alibaba fell by more than 5%, Tencent fell by more than 4%.

Furthermore, the FTSE China A50 Index futures once expanded their decline to 3%.

Government bond futures rose across the board, with the 30-year main contract up 0.02%, the 10-year main contract up 0.1%, the 5-year main contract up 0.07%, and the 2-year main contract up 0.04%.

How will the market evolve in the future?

After a significant adjustment, investors are particularly concerned about how the market will evolve in the future and the investment themes in the market.

Analysts point out that in addition to external disturbances, another reason for today's adjustment is the short-term speculation of funds. Some profits accumulated during the National Day holiday are still being cashed out. The current market volatility remains high, and the future index may undergo a process of narrowing fluctuations. With the introduction of a comprehensive set of policies such as monetary, real estate, and capital markets exceeding expectations, there is still upward momentum in the medium term.

China International Capital Corporation (CICC) stated that after the recent significant market rally, twists and turns have emerged, with fundamental factors possibly becoming the focus of trading. Companies and industries that perform better than expected in the third quarter are expected to become the main theme in the market stage. Seizing the turning point of fundamentals and the possibilities for recovery resilience may be important investment strategies at present.

Central China Securities pointed out that the average P/E ratios of the Shanghai Composite Index and the Chinext Index are 13.74 times and 33.47 times respectively, at near-median average levels in the past three years, suitable for medium to long-term layout. With continuous implementation of macroeconomic regulation and growth-promoting policies in China, the overall stock indices are expected to maintain a volatile upward trend in the future. It is still necessary to closely monitor changes in policy, fund flows, and external factors.

China Securities believes that the current market is at a transitional stage from the expected major reversal to a turning point in the market trend. After the previous pulse-like rise, the intensity of the long and short market game has increased. The pace of off-market incremental funds entering has slowed, but the potential market entry funds are still substantial. It is expected that the market trend will gradually shift from emotion-driven by funds to validation-driven by fundamentals. The market characteristics will change from pulse-like ups and downs to stabilizing slow rises.

China Securities Co., Ltd. pointed out that the first phase of the "blitzkrieg" came as expected, quickly and goes quickly, and this round of bull market has entered the second phase of the "tug of war". During the "tug of war" stage, the index tends to fluctuate and some trading funds will tend to buy high and sell low. However, the market will still have structural highlights, and institutional investors will focus on directions with advantageous economic prospects.

On a macro level, Galaxy Securities stated that considering the current strong determination of the management to stimulate the economy, even with increased market volatility after the National Day holiday, with the trading volume staying above trillions, margin trading balances rapidly rising, the recent adjustment is a technical correction due to excessive short-term gains. In the short term, the likelihood of continuous upside is low until market expectations are officially reversed.

Looking ahead to the medium term, Galaxy Securities pointed out that from the warming of sentiment to the improvement of earnings per share (EPS) is an important direction for trading in the fourth quarter of this year and the first quarter of next year. With the continued disclosure of the third quarter reports and the successive landing of important domestic and foreign meetings, the end of October to early November is likely to be a crucial repositioning window after policy clarification and adjustment of earnings expectations, during which one can actively seize opportunities for repositioning and stock changes based on market changes.

Editor / jayden