Many people like to focus on hot spots in stock trading. Although popular stocks may not necessarily become ten times stocks, they are still very attractive.
Let’s talk about the popular stocks of “core assets” in the history of A shares . What are the characteristics of these popular stocks such as
? How did
perform later?
What are the similarities between popular stocks at this stage?
(The following article is excerpted from Everbright Securities "Where have the "popular stocks" gone? 2021/5/12")
01
"popular stocks" in the history of A-shares
What kind of stock can be called "popular stocks"?
All reviews of history are to better guide current and future investments.
What type of stocks can be called "popular stocks" in history?
According to the summary of Everbright Securities , overall, has a high market popularity, a large increase in the previous period, and a high valuation are three typical characteristics of , a popular A-share stock (i.e. "core assets", the same below) .
From the overall perspective of the market, core stocks in 2007, 2015, and this year's Spring Festival, is more in line with the characteristics of "popular stocks".
Starting from the stocks, according to the three major characteristics, the popular stocks in each period are screened according to the following standards:
(1) The stock is a heavily held stock of public funds at this time point;
(2) Taking Shanghai Composite Index as the reference benchmark, the stock's excess returns in the past year are greater than 50%;
(3) The valuation quarter of the stock at this time point is greater than 80%.
will sort the stocks that meet the above screening criteria according to the fund holdings ratio from high to low, and take the top 50 stocks as popular stocks in this period in turn.
It is worth noting that as the market fell in the first quarter of this year, public funds have made significant adjustments to their portfolios. Therefore, when screening popular stocks before the Spring Festival this year, they will be based on the heavy holdings of public funds in the fourth quarter of 2020.
is consistent with the fund's heavy holdings industry:
cyclical stocks such as finance, real estate, and steel is the most popular stock in the third quarter of 2007
TMT growth stock represented by computer is the most popular stock in the second quarter of 2015
Consumption, medicine, new energy is the most popular stock in the market around the Spring Festival this year Tickets
02
Popular stocks have peaked short-term performance:
3 The market rose and fell
Historically, whether it was the third quarter of 2007, the second quarter of 2015 or around the Spring Festival this year, after the valuation of popular stocks peaked, the market showed a significant decline.
When will popular stocks stabilize in this process? What are the differences and commonalities of different stocks in
What are the differences and commonalities in the performance of different stocks?
Everbright Securities has constructed a list of popular stocks. According to the equal-rights investment portfolio, the cumulative yield of popular stocks was compared with the cumulative yield of the Shanghai and Shenzhen 300 Index during the same period.
can be seen that whether it is the popular stock portfolio in the third quarter of 2007 or the popular stock portfolio in the second quarter of 2015, the cumulative yield trend is basically synchronized with the cumulative yield trend of the Shanghai and Shenzhen 300 Index during the same period, and both often bottom out and stabilize at the same time.
And popular stocks bottom out themselves, which is also one of the signs that the market bottoms out.
The trend and market performance of popular stocks in 2007
20071016-20091031
Red line: the cumulative yield of popular stocks combinations; blue line: Shanghai and Shenzhen 300 cumulative yield of
Data source: Wind, Everbright Securities
From the perspective of individual stocks, the bottoming time of most popular stocks is also relatively consistent with the bottoming time of market .
counts the bottoming time of the stock prices of each popular stock in the third quarter of 2007 and the second quarter of 2015 and the bottoming time of the Shanghai Composite Index during the same period. The results show that the bottoming time of the stock prices of most individual stocks in is less than 10 trading days different from the bottoming time of the market.
Among the popular stocks in the third quarter of 2007, excluding the stocks that were suspended from when the market bottomed out, among all 46 popular stocks, 37 of the bottomed out time and the bottomed out time of the market bottomed out were less than 10 trading days, with a ratio of 80%.
Among the popular stocks in the second quarter of 2015, the stocks that were suspended when the market bottomed out were excluded. Among all 38 popular stocks, the gap between the time when the market bottomed out was less than 10 trading days.
If the entire range of the market sideways fluctuations from August to September 2015 is regarded as the bottom of the market, rather than just the day when the market closes the lowest, then among the popular stocks in the second quarter of 2015, about 87% of the stocks bottomed out simultaneously with the market.
03
When the market stabilizes and rebounds,
Popular stocks may have higher elasticity
Overall, the stock prices of popular stocks usually show stronger elasticity of .
Compared with the Shanghai and Shenzhen 300 Index, during the market decline, the overall decline of the popular stock portfolio is greater than the decline of the Shanghai and Shenzhen 300 Index; and during the market rebound, the increase of the popular stock portfolio is also significantly greater than the increase of the Shanghai and Shenzhen 300 Index during the same period.
This means that popular stocks will indeed suffer greater losses when the market falls.
However, when the market stabilizes, investing in popular stock portfolios still has a high probability of short-term excess returns.
Which popular stocks fall smaller and are more likely to show anti-decline properties when they fall?
The best anti-decline attribute comes from the small increase in the previous period and has no obvious correlation with financial status.
The smaller the previous increase, the more resistant it will be when the market falls.
Whether it is the popular stocks in the third quarter of 2007 or the hot stocks in the second quarter of 2015, when the market falls, those stocks with smaller declines are often those with relatively small gains before.
At the same time, there is no obvious correlation between the anti-decline attributes of popular stocks and their own financial situation. Popular stocks with excellent financial indicators do not necessarily have better anti-decline attributes when falling.
Similarly, the larger the decline in the previous period, the greater the increase in the market will be during the market's stabilization and rebound.
04
Current popular stocks and historical popular stocks
Current popular stocks ROE average is slightly lower than the average ROE of popular stocks in the third quarter of 2007, but is significantly higher than the average ROE of popular stocks in the second quarter of 2015.
For current popular stocks, whether 's ROE can remain at a high level in the future may be the key to determining whether it can create long-term excess returns.
From the perspective of market value scale, calculates the market value ranking of popular stocks in each period at that time. It can be seen that in the third quarter of 2007, the overall market value ranking of popular stocks and current popular stocks was relatively high, and the characteristics of large-cap stocks are very prominent; The hot stocks in the second quarter of 2015 include some small and medium-sized stocks.
From the perspective of industry status, most of the popular stocks in are the leaders of various sub-industry.
From a valuation perspective, after has recently continued to decline, the valuation of current popular stocks has dropped significantly.
Before this year's Spring Festival, the current overall valuation quarter of popular stocks was about 95.91%, which is at a historical high, which is close to the valuation levels of popular stocks in the third quarter of 2007 and popular stocks in the second quarter of 2015 when they were at the top of the market.
However, as hot stocks continue to fall and adjust after the Spring Festival, the overall valuation of hot stocks has fallen back to around 74%, and the high valuation of hot stocks in has been significantly alleviated. The sharp pullback in
valuation is an important reason for the long-term poor performance of most popular stocks in history.
For current popular stocks, after recent adjustments, the pressure on their future stock price trends has been alleviated. Whether they can maintain a high ROE level and achieve long-term sustained profit growth will be more important factors that determine whether they can cross the cycle.
From the perspective of future development prospects, consumption and technology are important directions for China's future economic development, which means that the future valuation retracement of current popular stocks may be less than that of popular stocks in the third quarter of 2007.
For popular stocks in the third quarter of 2007, only a few stocks have been able to outperform the market in the long run since the stock price is high.
On the one hand, this is because at the high point in 2007, all popular stocks were given higher valuations; on the other hand, as China's economic growth momentum gradually switched from investment to consumption, the performance growth rate and performance elasticity of cyclical stocks also declined significantly.
Compared with the cyclical industries in which popular stocks were located in the third quarter of 2007, the domestic consumer and technology industries are likely to maintain a high growth rate in the future. Therefore, the downward and downward pressure on profit growth rates and valuation of the leading stocks in the future may be significantly smaller than that of popular stocks in the third quarter of 2007.
This means that although the current consumer and technology leaders are generally of high valuations, the decline in their future valuations may be smaller than the decline in the long-term valuation of popular stocks in the third quarter of 2007.
Therefore, for the current popular stocks, the technology and consumer leaders after 's adjustment deserve continuous attention.
05
In the long run, "popular stocks" may be worthy of configuring
Hot stocks in each period are "star stocks" in the corresponding period.
Looking back on the long run, can these once popular stocks really go through cycles and fulfill the optimistic expectations given by the market?
In the long run, even if is an outdated "popular stock", it may still achieve excess returns.
After the market adjustment is over, popular stocks may be expected to achieve stable excess returns as a whole.
constructed an equal-weight combination of popular stocks near the market bottom in 2008 and 2015, respectively.
For popular stocks in the third quarter of 2007, if the bottom is bought and held to this day, the cumulative yield of the combination is +260%, and significantly outperforms during the same period of the Shanghai Composite Index (+96%) and and the Shanghai and Shenzhen 300 Index (+198%). This combination can even outperform closed-end fund net value index (+241%) during the same period.
For popular stocks in the second quarter of 2015, if the popular stock portfolio is built at the bottom of the market and held it so far, the long-term cumulative yield of the portfolio is +16%, underperforming the same period of the Shanghai Composite Index (+19%) and the Shanghai and Shenzhen 300 Index (+68%).
What factors lead to the difference in the long-term performance of popular stocks in 2007 and 2015?
may be asset quality.
is reflected in financial indicators, which is the difference in ROE levels.
Overall, the ROE of popular stocks in 2007 was higher than that of popular stocks in 2015. In 2007, the overall ROE average of popular stocks was 26.0%; compared with that, the overall ROE average of popular stocks in 2015 was only 12.6%.
In 2015, investors may have pursued growth excessively and ignored the defects in asset quality.
In addition, in the long run, only a few popular stocks can outperform the market in the long run, that is, the excess returns of the portfolio are contributed by a few stocks. uses the Shanghai and Shenzhen 300 index as the reference benchmark.
Among the popular stocks in the third quarter of 2007, only 16 stocks had positive long-term excess returns since the market bottom in October 2008; among the popular stocks in the second quarter of 2015, only 6 stocks had positive long-term excess returns since the market bottom in August 2015.
So, be careful when chasing popular stocks.
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