The US stock market surged 3.4%

In the past, China's stock market always seemed to experience a significant drop around festivals, but this time after the Spring Festival, people might find that the stock market has finally risen.

Yesterday was the last half-day trading session for Hong Kong stocks before the Lunar New Year, and both the Hang Seng Index and the Hang Seng Technology Index closed higher.

Last night, the U.S. stock market also performed very well, giving us a nice gift for the Lunar New Year.

As the Lunar Spring Festival arrives, everyone should have a good holiday, take a week off, and when the A-shares reopen next week, people might find that A-shares have finally risen, and funds have finally started making money.

01

Last night, the U.S. stock market surged.

The Dow Jones Industrial Average rose by 1.2%, the S&P 500 Index increased by 1.9%, and the most impressive was the Nasdaq Index, which jumped by 3.4%.

Of course, the Nasdaq Index, which is mainly composed of technology stocks, had fallen quite rapidly in the previous period. So now that the Nasdaq Index is rising quickly, people might not think it's particularly special, but I still believe it's a good sign.

Because the Nasdaq is primarily made up of technology stocks, and growth-style technology stocks are currently generally overvalued. With the U.S. having confirmed interest rate hikes, this category of technology stocks is hit quite hard. So the rebound of the Nasdaq indicates that market sentiment has at least been alleviated.

Advertisement

At the beginning of January, when the U.S. stock market fell, I had judged that it was greatly related to the Federal Reserve meeting. As long as the Federal Reserve meeting does not produce any black swans, the stock market will gradually stabilize. It seems that the situation is indeed like this, and until the meeting in March, the U.S. stock market should have a period of calm.Yesterday evening, technology stocks in the US stock market performed quite well, with a large batch of leading technology stocks closing higher across the board.

In January of this year, technology stocks such as Netflix, Tesla, and Amazon fell by 10% to 30%. By last night, Tesla had risen by 10%, Netflix by 11%, and Amazon, Apple, Google, and others all increased.

Chinese concept stocks also saw good gains. Pinduoduo rose by 12.8%, JD.com by 8%, Alibaba and Baidu by 9%, and all three new energy vehicle companies rose.

Yesterday, the Hong Kong stock market only had a half-day trading session, but technology stocks still surged, with the Hang Seng Technology Index rising by 2.4%.

After the Spring Festival in 2021, the Hong Kong stock market has been falling, and finally, after entering 2022, there are signs of a bottom in the Hong Kong stock market. In January, the funds of A-shares basically fell, but the public funds invested in the Hong Kong stock market were better off looking down, and even slightly rose.

In theory, as an open market, the Hong Kong stock market is more susceptible to the influence of the US stock market. However, during the rapid decline of the US stock market, the Hong Kong stock market performed relatively stable this time, which also fully demonstrates that from the perspective of fundamentals, the Hong Kong stock market has fallen to a lower position. If the liquidity in Hong Kong can be appropriately restored, the performance of the Hong Kong stock market in 2022 can be expected.

In the past two months, southbound funds have been flowing in, which also indicates that mainland investors are more optimistic about the development of the Hong Kong stock market.

This week, like A-shares, the Hong Kong stock market has entered the Spring Festival rest period, and will start together with A-shares next week. This will make it easier for A-share investors to judge.

After the Spring Festival in 2021, at that time, the Hong Kong stock market opened ahead of schedule, and A-shares were still resting. The surge in the Hong Kong stock market made everyone think that A-shares would continue the surge before the Spring Festival after the market opened, but this judgment was later proven to be wrong. After the Spring Festival, A-shares opened high and then went low. A rapid decline followed, and this time A-shares and the Hong Kong stock market opened at the same time, avoiding this situation.Based on the trend in January, Hong Kong stocks are likely to continue their upward trajectory in February. The A-shares that also open for trading should perform well.

During the decline of the stock market, there are always some fund investors who regret not selling their funds at the beginning of the market's downturn, waiting for the market to fall further before buying back in.

Caishuode Mingbai reminds everyone that market timing is a very risky idea.

Of course, it would be ideal to sell funds before a decline or at the start of a decline and then buy them back at a lower price. However, this is an ideal state.

With such judgment ability, there would be no need to buy funds or even stocks, and one should use leverage to amplify the investment multiple.

In most cases, even if one sells at a relatively high position in a timely and accurate manner, market timing can still fail. Because no one knows when it's a low point, when it starts to rise, or when it will rise rapidly.

Over the past 15 years, if we had invested in equity funds, the cumulative average return could reach 550%. This is the return situation without market timing and holding on.

However, if someone really sold the funds at a relatively high position and then waited for a low position to buy back, there is a great possibility of missing the trading days with the fastest increase.

Data shows that if one missed the five days with the largest increase in the past 15 years, the total return would be only 375%. In fifteen years, just not grasping these five days, the gap is so large.If you miss the 30 best-performing trading days, the total return is reduced to only 54%, with an annualized return of less than 3%, which doesn't even keep up with the level of inflation.

A successful market-timing requires two successful judgments. The first is selling at the top, and the second is buying at the bottom. If the success rate of each judgment is only 30%, then the probability of both judgments being successful becomes only 9%.

Moreover, consider that in 15 years, if you miss just 30 of the best-performing trading days, the return is only 54%. With over 200 trading days each year, there are more than 3,000 trading days in 15 years. In the continuous process of buying and selling while trying to time the market, not missing those 30 days is an even greater challenge.