For example, after the epidemic in 2020, everyone was extremely worried about the future economy. As a result, the stock market immediately reversed after a deep decline. As a result, the economy was actually pretty good, not as bad as imagined, especially when we took advantage

We often hear others say: The stock market is a barometer of the economy.

probably means that changes in the stock market are ahead of the economy.

For example, after the epidemic in 2020, everyone was extremely worried about the future economy. As a result, the stock market immediately reversed after a deep fall. As a result, the economy was actually pretty good, not as bad as imagined, especially when we took advantage of the epidemic overseas to increase exports. .

For another example, at the beginning of 2021, the CSI 300 began to decline. As a result, the economy began to gradually weaken in the middle of the year. By this year, everyone feels that the economy is even more miserable.

It seems that the stock market can really reflect the economy in advance.

If you really think this sentence is the truth with linear thinking , then you are a typical leek.

1. Correlation is not causation.

In this sentence, the stock market and the economy are not actually a causal relationship, but a correlation. This is the mystery inside.

Let me give an example to explain the difference between causation and correlation.

We know that after the rooster crows, the sky will light up. This is a correlation. Because if you make the cock mute, the sky will still light up.

But many people think that because the rooster crows, it is dawn. Don’t laugh, everyone, there are many people who mistake correlation for causation.

For example, many people made a lot of money from stock trading in 2019 and 2020, so they naively believed that they were stock gods and that they had genius-like investment abilities. But is it really so?

As everyone knows, your ability to make money may have nothing to do with it, it is just because you have caught up with the market. In the bull market, all fools make money, and you are very likely to be that fool.

So when many people choose funds and repeatedly compare the performance of the funds in previous years, I do find it quite funny.

The picture below shows the performance of Sister Mumu and Buffett in recent years. If you only read the first half, you will think that Sister Mu is the stock god and Buffett is the leek.

Please note that from 2014 to 2021, Buffett has underperformed for 7 years. Therefore, don’t naively think that a fund’s performance in the first five years is really good.

Many people's wealth has also been on this roller coaster ride. They have caught up with the dividends of the times and suddenly become a nouveau riche. They all think that this is because they are wise and powerful, so they have made so much money.

But how many people have kept this wealth? Once many people have wealth, they either consume randomly or invest blindly. In the end, the wealth will return to where it came from. If you don’t have the ability to hold huge wealth, you will eventually pay it back.

These examples are all about the difference between correlation and causation.

So everyone can think about it carefully. Is the stock market a barometer of the economy? Is it a correlation or a causal relationship?

2. What does the stock market reflect?

When you can't figure out the correlation and causation, you just need to find counterexamples.

For example, in the great bull market of 2015, the economy was still very weak at that time. The economy gradually stabilized in 2016 after the stock market plummeted.

This shows that the two are not causally related, but only related.

So what exactly does the stock market reflect?

The stock market is a market composed of people, so it reflects the expectations of investors.

For example, didn’t real estate and cars surge sharply not long ago? Why is

rising? Is it because these two industries will indeed see a significant increase in performance?

No, it’s just because investors speculate that stimulus policies will bring about performance improvements.

When everyone thinks so, an upward trend will form. When the trend is formed, some fools will catch up when they see the rise, thus pushing the trend up even more fiercely. However, at this time, the main force is already selling quietly. The main force of

especially likes to deliberately increase the stock price after seeing some news, so that unreasonable retail investors think that these news can indeed improve the company's performance.

Retail investors think the company is good when the stock price rises. When they see the stock price fall, even if it is a good company with an annual profit of hundreds of billions, they think the company is garbage.

So retail investors are just predicting, while experts are predicting other people's predictions!

sounds confusing. Let me give you another example and you will understand.

There was 100 yuan on the ground. A student saw it and immediately bent down to pick it up.

At this time, the economics teacher said disdainfully: How is it possible? If there really was 100 yuan, it would have been picked up by someone else long ago.

This teacher is predicting other people's predictions. But the funny thing is, sometimes, there are actually 100 yuan on the ground.

Seeing this, you will know why it is so difficult to invest in . There are three reasons:

First, if you invest after seeing the phenomenon, you will easily be cut off by others. For example, if you rush into the stock market when you feel that the economy is very good, but as soon as you enter, the stock market plummets.

Second, if you predict the phenomenon before investing, you may also be cut off. For example, you predict that new energy will be a good investment direction in the future, but as soon as you enter, the stock price plummets. Because everyone else predicts the same thing as you, you just follow the herd. Only those who predict your prediction make money.

Third, people who predict other people's predictions may still be cut. Just like that economics teacher who thinks he is smart.

So how do we make money stably in the stock market? Let’s talk about this lastly. Let’s first look at the circumstances under which it is best not to participate in investment.

3. When everyone is predicting other people’s predictions, be careful

I have an elder who worked in a state-owned enterprise in the 1990s. There are 10 colleagues at the same level, but there is only one place for promotion.

The competition is very fierce at this time. Everyone is fighting with each other openly and secretly, and they are all thinking about what dirty tricks the other party will use.

This elder is also quite interesting. He simply gave up and stayed in his job to go into business.

After a few years, he became the best one. And those 10 colleagues were all very average. In the struggle, they basically injured the enemy 10,000 and suffered 8,000 losses themselves. How did

damage itself? Whether it's to spend money to gain connections or to offend colleagues, it's still essential.

said this example to illustrate, if you find that the situation in a certain investment sector is very confusing and you are confused for a while, it is better to give up and go to a relatively simple and easy sector to make money.

Just like the recent pork section.

According to the past pig cycle rules, pork prices have not bottomed out and the number of live pigs has not declined before we should not rush to make a move. In other words, there is no need to rush before you see a turning point in the performance of breeding companies.

But, as soon as the theory of pig cycle and was touted by various self-media, this investment method became a bad theory. The method everyone knows about will eventually fail.

So this pig cycle is very interesting. Pork prices are still plummeting, and a large number of investors are planning to end the market.

These people just predict others' predictions and jump ahead.

When many people are predicting others, the stock prices of breeding companies are pushed up in advance. Wen's share price began to rise in the middle of last year, and it is still suffering huge losses. Do you think investors are crazy?

Generally when encountering this kind of situation, I am not willing to participate. Because the scene was so chaotic, everyone didn't look at performance at all, but instead predicted other people's predictions. To put it bluntly, everyone is gambling, betting that they can guess what others are thinking in advance.

Since there is serious internal friction among investors and opinions will diverge, the stock price will not rise much. We don’t know how long this trend can last. After all, without performance support, everything is nothing. It is impossible to guess the psychology of thousands of investors. As long as the stock price of

drops slightly, we will be frightened and wonder if other investors will retreat collectively.

Perhaps what is even more ridiculous is yet to come, that is, when these breeding companies finally turned a profit, their stock prices plummeted.

Of course, there are definitely people who can make money in this game, but what we invest in is probability and odds, not individual cases.

In short, when you find that the situation is very chaotic, you don’t have to fight to the death. Wouldn’t it be nice to change to a battlefield that is easier to win?

So when I saw many people insisting on medicine, I could only sigh. The situation in medicine is so uncertain now, so why insist on clinging to it? There are many other opportunities to make money!

4. How to make money stably in the stock market?

The stock market is a world of people, so to make money here, you have to be prepared for everything.

But when everyone is smart and predicts others' predictions, it will be difficult for you to make money.

Currently, most of the investors in A shares are retail investors, and there are still very few smart people, so those with knowledge and experience can make a lot of money. However, as A shares become more mature, there will be more and more institutional investors. .

At this time, everyone is smart, and it will be difficult for you to make excess returns here. If you were still a fool, you would be eaten alive.

Is this like the workplace?

So, based on my personal experience, in order to make long-term and stable money in the stock market, I have 5 principles:

1. I generally will not touch things that are not supported by performance.

For example, in sectors like the military industry, the performance itself is very poor. The stock price is all supported by the imagination of retail investors. I will not participate in it.

Anyway, there are so many sections that can make money, why should I hang myself on one section? Regardless of long-term returns and short-term explosive power, the military industry is still inferior to the GEM index , and the GEM at least has performance support. Then I will definitely choose sectors with performance support.

I always remind myself that I am here to make money, not to gamble.

2. The valuation is too high, and generally you will not touch it.

Like many technology sectors, the rise is indeed rapid, but the valuation is often frighteningly high.

However, due to the enthusiasm of investors, no one cares about the high valuation, so even if I am bearish, I am often slapped in the face, and they keep rising.

But it turns out that very few people can make money in this sector. For example, how many people have really made money in new energy and semiconductors in the past two years? Even if you make money, what proportion will it account for in your total funds?

I estimate that many people ran away early as the price continued to rise. I looked back and saw that it was still rising, so I caught up again, and the result... you know.

3. The scene is too confusing, and generally you will not touch

Just like the pork, cars and real estate examples I gave before.

They all trade in expectations. Expectations are so unpredictable that one piece of news may shatter all illusions.

4. Looking for the correct non-consensus

In the investment market, what everyone thinks is right usually cannot make money, and even if it makes money, the rate of return is very low.

Because everyone thinks that good things will not be cheap. The price is not cheap, and the income is naturally not high. It might even be extremely dangerous!

Of course, things that everyone thinks are bad may not necessarily make money. For example, everyone knows that real estate is a sunset industry. If you insist on going against the consensus, you will suffer heavy losses.

Therefore, what we are looking for in must be the kind of investment that everyone thinks is wrong, but it itself is the correct investment target.

For example, the previous Zhonggui is an example. Everyone thinks that China Basic Information Network is doomed, but in fact it is impossible for China Basic Information Network to be doomed. Only the correct non-consensus of

can make us make a lot of money. Similar examples of

include insurance, but it has not been verified yet. When the review is conducted in two years, everyone may suddenly realize it.

So to invest, you really have to be a little rebellious, because according to the consensus, it is difficult to make money. After all, the stock market is not a place where most people can make money.

However, one thing worth noting is that it usually takes a long time for to go from non-consensus to consensus, so you have to be a long-term investor to win.

5. Think of the worst outcome in the previous

investment, and there will definitely be losses. So no matter what we invest in, we must first think of the worst outcome.

has formulated corresponding strategies in advance to ensure that when the worst outcome occurs, it will not cause irreparable harm to us.

For example, position control, position opening methods, stop loss strategies, fundamental detection, etc.

In short, the stock market is not a barometer of the economy, but a barometer of changes in investor psychology. But I personally don't want to predict each other with others, but make money secretly in places with few people.

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