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emotions continued to ferment during the two days over the weekend. tomorrow we are likely to see the fourth gap in the stock market. so the next question is, how should we operate in the market outlook?

in our knowledge planet, there are also people who plan to leverage funds into the stock market.

let’s first review all our recommendations over the past month. a month ago, i reminded everyone that a shares will bottom out within a month.

therefore, in the past month, i have reminded everyone many times to ambush in the stock market in advance (although you may have to endure floating losses in the short term), and then fulfill the prediction that the market will bottom out in mid-september. after bottoming out, we will ushering in the first heavy volume increase, i then reminded everyone that there was more than one positive line.

so after that, two more big positive lines appeared, and the market has rushed to close to 3100 points. so by now, most planet members should be fully profitable and waiting for the price to rise.

so what to do next? before that, i must first tell you where the certainty of the stock's rise comes from. then starting from this theory, we will give you a general operation suggestion.

the first profit-making meaning of stock market investment is that when you invest in a stock, the potential meaning is to obtain the sum of all future cash flows of this stock.

for example, a certain monopoly central enterprise operates very stably, with revenue and profits unchanged every year. its market value is 10 billion, and its annual profits are 3 billion, and 1 billion of the 3 billion is used as dividends. that is, the dividend value is 10% of its market capitalization.

in other words, when you buy 10,000 yuan of the company's stock, you can get 1,000 yuan in dividends every year, and you can get your capital back in ten years. the dividends after ten years will be the extra net income.

if you invest in stocks with the idea of ​​getting dividends every year, you will most likely not be reaped. are there such stocks?

have!

these are the four major hong kong stocks that i reminded you about on knowledge planet two years ago. roughly, profits account for 1/3 of the market value, and then dividends account for 1/3 of profits, and then the annual dividend return is 10% (calculated based on the current stock price). when the market thinks that 10% is a good deal, or even a 9% return, the stock price will rise by 11% (11% increase = 10%/9%-1).

then, let’s look at the second level of profit-making meaning of stock market investment, which is its upgraded version.

that is, if there is a stock with a dividend return of only 3% that year, and an annual profit growth of 20% (that is, the dividend increases by 20% every year), then if you buy the stock now, its dividend return will be higher in 7 years than it is today. the purchase price will also reach 10%.

at this time, the 10% dividend return is called the expected dividend return. moreover, after realizing the 10% dividend return after 7 years, if i expect the company's profits to continue to grow at a rate of 20%, then in another 6 years, the dividend return will exceed 30% compared to my earliest purchase price. %.

in other words, if the market believes that the reasonable value of the expected dividend return is 10%, it means that the current stock price must increase more than three times relative to my purchase price in order to reduce the dividend return from 30% after 6 years. is 10%.

so, when you are faced with a stock with a 3% dividend yield but 20% growth, and a stock with a 10% dividend yield but no growth. obviously, the former is more cost-effective.

when the latter got back the entire stock price with dividends after 10 years, the former's stock price had tripled.

having said that, the main point i want to say is that in stock market investment, the two most important indicators are expectations and growth.

as long as you have growth, i would rather not receive your dividends, because my profits will be reflected in the growth of the stock price. for example, buffett's berkshire hathaway never pays dividends. so the growth is all reflected in the stock price. in buffett's words, if i distribute the profits to you, you won't be able to achieve a return on investment of 15% to 20%. it's better for me not to distribute dividends and use all of it to increase market value.

therefore, for stock prices, growth expectations are actually included in the stock price. it can also be said to be price-in.

when financial reports reveal growth that falls short of investor expectations, stock prices fall. on the other hand, when growth exceeds expectations, stock prices rise.

at this point in the article, the first and second levels of profit meaning in the stock market have been explained. it does not seem complicated. so why is it so difficult for everyone to make profits in the stock market?

next is the third level of profit meaning we want to talk about, which is harvest!

harvesting relies on the asymmetry of expectations. the root of the expected asymmetry lies in the asymmetry of information and cognition.

for example, now you have a house in the suburbs, and the rent is only 3,000. but because i work in the planning department, i know that a subway is going to be built next to your house, so the rent will double to 6,000. so i can find you to buy a house based on your rental expectation of 3,000. once the plan is made public and the house price doubles, my harvest from you will be realized.

so what am i going to say? the stock market is not a casino. the cruelty of the stock market is far greater than that of a casino.

in a casino, no one knows the hole cards, so the game is equal. your probability of winning is 50%. in the stock market, it is very likely that the other party knows the information you do not know, and the game is not equal, so your probability of winning is only 10%. this also creates a pattern of 7 losses, 2 draws and 1 profit in the stock market.

therefore, we can also draw two conclusions from this point.

first, stick to your circle of competence in the stock market. if you only know 5% of the knowledge, you can only trade repeatedly in this 5% circle. if you leave the circle, you will be harvested.

second, in some areas, we strive to obtain certainty that our opponents do not know, and thereby increase the probability of stock market profits in transactions.

among them, the first thing you have to do is to have a correct assessment of your own abilities. the second thing is what i want to do. i will provide you with information that no one knows, so that you can increase your probability of winning.

for example, i said a month ago that the market bottomed out in a month, and after the first big positive line with heavy volume increase on 9.24, i told you that there is more than one positive line.

when you buy a large amount at the bottom based on this information and make a profit, it must mean that the same amount of opponents have suffered low losses and shortfalls. because one purchase must correspond to one sale.

of course, these are conclusions based on big data and models. they are based on high probability bets, but the high probability is not necessarily 100%.

what is the underlying logic behind this?

even though i don’t know what happened, someone does, so the behavior of these people is reflected in the stock market and will be reflected in technical indicators such as volume and price. based on these technical indicators, i can roughly judge a direction with high probability.

on the other hand, if you see a serious deviation between fundamentals and stock price trends, you may assume that the market is making a mistake and plan to take advantage of this. but the greater possibility is that the market is not right but you are wrong. because your opponent has information that you don't know.

that is to say, you must remain in awe of the market.

okay, looking back, based on the above description, we can now discuss the current stock market and why the economic fundamentals have hardly changed, but the stock market has risen sharply.

because of expectations!

that is to say, although the economy has not changed much now, some people may know in advance that there may be a lot of heavy stimulus above, and these stimuli may cause corporate revenue and profits to bottom out and enter a growth track. so they have to grab money in advance.

furthermore, the data before the third quarter report is no longer important to the current stock market. for example, someone told me yesterday about the decline in corporate profits in august. i told him that this was not important at all, because the current fund-raising parties expected the revenue and profit growth brought by the big stimulus. the data for august is just before the big stimulus.

in other words, the market is now completely trading in expectations of big stimulus. rather than based on actual past data.

to give an example from the past, for example, in the first quarter of 2022, real estate data declined across the board, but the growth rate of the real estate sector in the stock market ranked first among dozens of industries. because the capital market expects that policy easing will lead to a bottoming out of real estate. as a result, the expectation of a real estate rebound was slapped and falsified by the market, and the real estate sector returned to a downward trend.

what i mean is that the expectations of the capital market are not necessarily correct.

so, how should we respond to the current market expectations for big stimulus?

the area and time of greatest certainty is now past.

for novice users, if you don’t understand the stock market, just listen to my advice on planet and fill up your position at the bottom with chips. well, please follow two points.

1 only sell but not buy above 3000 points (also my strategy). if you believe in the expectation of big stimulus, you can sell later. if you don't believe that big stimulus can reverse the economy, you can gradually reduce your position and ship goods earlier.

2 because retail investor sentiment is high (xx’s consensus is also the consensus), if the effect of this sentiment can continue to push up the market, for example, it exceeds 3500, or even close to 4000, and you have reduced your position earlier, you must not sell the stocks you have sold. buy the chips back (a mistake 99% of leeks make).

for experienced users, you can freely use your experience. my model and monitoring will continue to track the market. when a situation with high certainty is discovered (that is, the probability of a certain direction is very high), i will issue a timely notification on the planet. tell you what the big data points to, so that you can lighten your position and run away.

however, judging from the closing point of 9.27, there are no high-certainty signs of such a downward trend yet.

for those students who missed buying chips at the bottom, if you want to buy, my advice is:

for the bull market, believe in the early days and pay the bills in the late days. if you want to buy, i suggest not to fill the position, but to intervene with a part of the position (do not add more positions later), because risk control always comes first. that is to say, if the market unfortunately falls below 3,000 points again, you must increase the position at the bottom to ensure that the average position price can be lowered below 3,000 points. you can't lose money in the long run like this.

in other words, it doesn’t matter whether you make more or less, but you must not lose money. if you want to bet on economic stimulus expectations, you must do a good job in risk control.

it is expected that the market will open at 3100~3200 tomorrow, but this part of the area is an area where chips are intensively locked up. the selling pressure to return to the market may suppress the new funds with high emotions. that is to say, the long-short game will be fierce, and the transaction may release huge amounts.

for the rest, just watch as you walk.

finally, let’s talk about the property market. the picture below is the tokyo stock market trend chart from 1990 to 2020.

in other words, between 1990 and 2005, when the property market continued to decline without any rebound, the stock market had many opportunities to sell high and buy low. i happened to answer this question on planet just before the stock market’s first surge in volume.

in other words, when it comes to the property market, if you want to invest, remember to be more cautious. a rebound in the stock market does not necessarily mean that the property market will rebound. at least from the example of japan, this is indeed the case.

postscript:

i would also like to share my personal operation. i have bought too many positions in the stock market this month. although i answered the question on planet and said that the positions are full, i had a lot of cash from selling my house last year. therefore, because of the cash purchase, the current position has actually exceeded the leverage position in the past. that is to say, i will be more inclined to sell overweight positions in the future.

for the non-overweighted part, just hold the shares and sit on the sedan chair.

the effects of the big stimulus will be reflected in economic data in about two months, and by then the market will have a direction determined by fundamentals (that is, everyone was betting on expectations in the first two months). but before that, there will be countless funds that will use various methods to confirm the stimulus effect as early as possible and trade in advance. so everyone must be cautious.

it is conceivable that this round of bull and bear fluctuations in the stock market will inevitably deepen the further out-of-control wealth differentiation of all participants.

therefore, during this process, if my data model detects any abnormalities, it will notify everyone in time, allowing everyone to reduce their positions and escape in time.