On Friday,PCB prices for some stocks have already reached new highs, while others are approaching their previous highs. During the downturn, it was believed that AI capital expenditure growth had peaked, and domestic CSP manufacturers had money but couldn’t spend it. During the upturn, it was thought that if US stocks in AI could reach new highs, then A-shares could too.
This year has a characteristic where institutional stock valuations can drop to very cheap levels, and once the valuations are corrected, the upward momentum is fierce. Some institutional stocks may appear expensive in the short term, but if you do the math, they may actually seem cheap.
At the beginning of the year, the robotics sector, which had almost no robot options, has surged to1 million units under optimistic expectations.
Subsequent developments in solid-state batteries, nuclear fusion, and robotics are somewhat similar, with future prospects looking vast, while short-term stock prices are catalyzed by the rise of options that reach for the stars.
The new consumption trend has spread from Hong Kong stocks toA shares, transitioning from not understandingLabubu to everyone wanting to ownLabubu, and from not raising cats and dogs to a future where everyone will raise cats and dogs.
Innovative drugs have also transitioned from Hong Kong stocks toA shares, withBD witnessing countless bull stocks.
When the PE ratio is at 20x, it seems unremarkable, but at 30x PE, it feels like there is still a lot of room for imagination.
Once at high stock prices, if it still feels like there is a lot of room for imagination, the point where your account shrinks significantly is not far away, and the next sector that makes you feel imaginative may have already risen for some time.
Why can valuations drop to such low levels, and then rise so high after a main upward wave?
On one hand, it relates to the speculative investment style of institutions, which used to advocate diversified investments with a holding limit in each industry. Now, the pursuit is for sharpness; as long as something can gain fame, there will be subscriptions.
Investment managers treat products as their own accounts, trading aggressively and with sharpness; retail investors treat funds like stocks, chasing highs and cutting losses, trading stocks as if they were funds.
Stock prices rise — fund investors subscribe — investment managers buy stocks — stock prices continue to rise.
Stock prices fall — fund investors increase subscription efforts — realize they are not making money and start redeeming — investment managers sell stocks — stock prices continue to fall and accelerate redemption.
Thus, in the first quarter, robotics funds ranked high, while in the second quarter, it became Hong Kong’s new consumption and innovative drug funds that ranked high. What type of fund will be at the forefront in the third quarter? One can only guess.
On the other hand, it relates to quantification.
No matter how many factors are added to quantification, the overall strategy of buying on dips and selling on rises remains unchanged. When stock prices drop to a sufficiently cheap level, large funds attempt to bottom-fish, and quantification can identify this, quickly pulling up recognition. When stock prices rise to a sufficiently expensive level, quantification will also retreat with large funds.
During the main upward wave, quantification is fully utilized, while during high-level fluctuations and main downward waves, retail investors are fully utilized.
In short, it is still a whack-a-mole market. 10x, 20x, 30x PE, what changes is not EPS, but the preconceived notions in our minds.
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Disclaimer: This article only records investment research thoughts and does not constitute investment advice. Investment carries risks; please proceed with caution.