Why does this cliff like selling pressure often appear at the beginning of each year? The Baijiu medicine in early 2021, the new energy in early 2022… Investment is like this, the market will always be a minority of people making money, the so-called existence is reasonable, but in fact is just an excuse for catching up and killing people, and the real value is always born in the wrong killing and collecting. In 2022, the green door is open, maybe the new atmosphere is coming into being.
The good start of 2022 has turned green in anticipation. The track stocks that have been popular for nearly two years have fallen one after another. The gem component index represented by Contemporary Amperex Technology Co.Limited(300750) has fallen all the way from 3500 to 3100 in the past few weeks, and the style change is obvious at a glance.
The preference for the track has reached its extreme in the past three years. The main reason is not only the prosperity of the industry itself, but also the rapid expansion of the scale of public funds in the past two years. Now, 300 people have managed 4 trillion yuan of funds. The same background, the same assessment mechanism and the same investment philosophy have created the same style, The characteristics of top-down stock selection, focusing on industry rather than valuation, finally led to the track only market phenomenon. At that time, talking about valuation has become a dispensable joke at some time, but such a market phenomenon itself may have major defects and distortions.
It’s hard to imagine where to start with value without valuation. In my understanding of value investment philosophy, any industry and enterprise have value, but the corresponding market prices are different. Whether it’s ST shares or traditional industries, as long as the stock price falls below the internal value of the enterprise, there is investment value. On the contrary, no matter how prosperous the industry is, When the valuation is too high, it is always out of the scope of value investment. Therefore, value investment has nothing to do with the subject matter of investment and should be more related to the cost performance of investment. However, the public funds dominated by relative income in the past two years have made great changes in the market. It has even become a fashion to only talk about the track rather than valuation. At this time, the risk arises at the historic moment.
The question is why this cliff like selling pressure often occurs at the beginning of each year? The Baijiu medicine in early 2021 and new energy in early 2022, it seems that whenever the New Year bell rings, Cinderella will return to the original, and the pumpkin car is gone. The reason behind it is still the nature of the fund. The requirement of relative income ranking makes the public offering more in the face of the financial crisis when it is not too tense. It also causes many funds to continue to increase the market value of heavy positions at the end of the year even if they are very expensive. Even if they want to change positions, they have to survive some critical moments. The end of the year is the key point of ranking and assessment. Therefore, we believe that public offerings as the largest buyer in the market are unwilling to sell at the end of the year even if they know that the so-called good track stocks are already very expensive, The continuous sharp rise finally makes people in the market more enthusiastic and enthusiastic about the track. Sometimes investors are like this. A few big positive lines can change their faith.
After a year, everything has changed. The occurrence of dominoes sometimes only needs the first card to fall. Therefore, we expect that 2022 must be a new face and another new group may be brewing.
Investment is like this, and the market will always be made by a few people. The so-called existence is reasonable. In fact, it is only an excuse for chasing up and down, and the real value is always born in the wrong killing and leakage picking up. The green door in 2022 may be the birth of a new atmosphere.
(the author is the director of Guotai Junan Securities Co.Ltd(601211) Shanghai Research)
(source: Dazhong Securities Journal)
