Someone is asking me: I saw many investment books saying that fund investment requires long-term holding, Do we need to select time to grasp the buying and selling points when investing in funds?
I said: Funds are divided into many types, such as fixed income funds, bond funds, stock funds , hedge funds , equity funds, etc. The cyclical nature of stock funds is the most obvious. may make 50% a year in a bull market, and you can also lose 40% to 50% in a bear market.
Therefore, it is necessary to choose appropriate timing when buying stock funds in China. This timing is not to frequently speculate on short-term trading, but to be brave enough to stop profits and leave when the market is full of bubbles. When the market is very cheap, you must be brave enough to buy at the bottom of and enter the market. When the market is full of people, buy when no one cares about it.
Then how do we find buying and selling points by judging the relatively high and relatively low market levels of the market? There are usually the following methods: stock and bond deficit method, economic cycle method, valuation method, emotional indicator method, and technical analysis method.
1
stock bond deficit method
stock bond interest rate spread , simply put, it means that the stock yield minus the bond yield, the higher the interest rate spread, the more investment value the stock market is. On the contrary, the bond market is more worth allocating.
In the past decade, the stock-to-debt deficit ratio has indeed risen above 6%, and then it has begun to bottom out and stabilize and rise all the way. At the bottom of the bottom in February 2016, December 2018, April 2020, and April 2022, the stock-to-debt deficit ratio has risen to more than 6%. At this time, stock-based funds should be allocated.
When the stock-to-debt deficit ratio is less than 3%, be cautious and transfer your stock positions to funds with low correlation with stock funds. If the stock-to-debt deficit drops below 2%, you can consider clearing stock funds and converting them all to fixed income funds, hedge funds, CTA funds, and other funds with low correlation with stock markets.
2
Economic cycle method
We found that every bull market in A shares has a big economic background. For example, in order to stimulate the economy in 2014, the central bank continuously cut interest rates, which directly brought about the bull market in 2014 and the first half of 2015; in 2016 and 2017, house prices soared, and everyone rushed to buy houses, which directly brought about a big consumer bull market represented by home appliances; in 2020, the global central bank represented by Federal Reserve released a lot of money, which directly gave birth to the global stock market bull market in 2020.
Economy has entered overheating Central banks have begun to tighten monetary policies, and the stock market often starts to go bearish, or like the United States faces high inflation in 2022, hikes in interest rates brought about a bear market in the global stock market. In short, global central banks' interest rate cuts or economic recovery periods are likely to lead to a bull market, while central banks' interest rate hikes or the economy falls into stagflation and can easily lead to a bear market.
3
Value method
Value method? Why do I put it in the third place? Because the valuation method has obvious time defects, such as medical and Chinese Internet, it has been undervalued since last year, but it has been falling since the undervalued last year, that is, it may continue to fall after the undervalued, and it may continue to rise after the overvalued. For example, the liquor fund in 2020 began to overvalued in the first half of the year, but it did not start to fall until February 2021.
How to use the valuation method to judge relative highs and lows? Taking Shanghai and Shenzhen 300 Index as an example, when the P/E ratio percentage of the Shanghai and Shenzhen 300 Index is less than 30% or even 20%, it is undervalued, which is very valuable. When the P/E ratio percentage of the Shanghai and Shenzhen 300 Index is higher than 70%, or even above 80%, we think it is overvalued, and we should transfer our stock positions to funds with low correlation with stocks.
4
Emotional indicator method
Buffett said, I am afraid of others being greedy, others being afraid of me, I am greedy, when you find that people around you are starting to buy funds crazy, bragging that you are the stock god, the top may be coming, everyone is desperate, and when everyone wants to stop loss and cancel accounts, the bottom may be coming.
For example, in January 2019, the scale of newly issued funds dropped to a historical freezing point, which is a good time to buy at the bottom. The end of 2020 is the historical peak of newly issued funds, so you should choose to take profit and show up.
5
Technical analysis method
Technical analysis method There are two methods, one is to analyze the trend reversal form . For example, in 2021, medical and liquor have appeared classic double top plus top divergence from form, and you should choose to take profit. In April 2022, oversold plus bottom divergence from pattern. You should choose to buy at the bottom.
Another simplest thing is to look at the Shanghai Composite Index point. From the past six years, the Shanghai Composite Index has risen to around 3600-3700 points and starts to take profit. Stock funds can take profit at a relatively high level, and when you start buying funds below 2900 points, you can buy a relative bottom.
Through the above analysis methods, we can roughly analyze the buying and selling points of stock funds. Of course, learning these methods does not mean that you can do it well in actual combat, because The greed after making money in human nature and the fear after losing money are often difficult to overcome. That is why we often see countless investors chasing the rise and sell the fall.
Therefore, it is recommended that everyone do a major configuration rotation strategy. By adjusting the proportion of various assets, maintaining a long-term full position operation, you can avoid the embarrassing situation of stopping profit and chasing the rise and buying stock funds, causing them to be trapped at a high level, or after falling to the bottom, there is no funds to increase their holdings in stock funds.
The "value investment" combination in the figure below, is a stock and bond strategy I built. The maximum drawdown since 2020 was only -9.74%, achieving a return of 48.2%. Compared with now, many investors are in floating losses, the effect is much better.
For high-net-worth investors, can rotate between different major funds. For example, in the end of a bull market or a bear market, stock positions should be reduced, and funds with low correlation with fixed income funds, hedge funds, CTA funds, equity funds, etc. can effectively reduce drawdowns and increase returns. The maximum drawdown of the major fund portfolio in the figure below dropped to -4.59%, and the annualized return was 33.6%.
Summary: When will the fund buy the bottom, and when will escape the top ? If we comprehensively utilize the stock and debt deficit method, economic cycle method, valuation method, emotional indicator method, technical analysis method and other methods, we can still make some effective judgments. Based on the above judgment, doing a good job in major configuration rotation strategies can achieve twice the result with half the effort.
Today's stock-to-bond spread is 6.16%. Judging from historical data, the stock-to-bond spread has fallen below 3%. The stock market is likely to mean the top, and the stock-to-bond spread has risen above 6%, which means it is likely to be the bottom.
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