Whether it’s a boom or a bust, the die-hard guys are always there
Yesterday’s “good start” actually stayed yesterday, today’s market took us on a thrilling roller coaster.By the midday close, the market looked something like this…A bowl of noodles hit xiao Xia to the end of words…Fortunately, the A shares in the afternoon gave us A big surprise, out of A shining “V” word, the Shanghai Composite Index took the lead in red recovery, gem index also returned to 2800 points, recovered part of the lost ground.A friend complained to Xiaoxia that when the market was green, I was losing money. How could I still lose money when it rebounded?It’s a hell of a lot harder to do.Indeed, the recent trend of the market do not say profit, can achieve not loss has been able to run to win many people especially the investors of the gem heavy warehouse, the near future is to doubt life.Fund lost money, want to cut meat to leave at once?Let’s start with a test: if you flip a fair coin, heads win, tails lose.If you win, you get 50,000 yuan. If you lose, you lose 50,000 yuan.Will you choose to participate?In fact, statistically speaking, this test is equally likely to win or lose, meaning that the expected outcome of the game is zero.But behavioural economists have found through a number of experiments that most people don’t want to play this game.This reflects what is known as loss aversion.Most people are asymmetrical in their sensitivity to loss and gain, and the pain of loss is much greater than the pleasure of gain.The negative utility of the same amount of loss is 2.5 times of the positive utility of the same amount of gain.When it comes to returns, people are risk averse;When it comes to losses, people are risk-seeking.When it comes to investing, there is also asymmetry in our decisions about gains and losses, and the emotional tension of a 10% rise may not be worth the pain of a 4% fall.Because people are more sensitive to and impressed by losses, even as accounts rise and fall, they are more likely to agonize over daily losses more frequently and end up cutting back, missing out on potential gains from a later rally.Most of the time, we all think of ourselves as’ long-term investors, ‘but it’s hard not to act in the face of a big drop or a rise in the stock market. Human nature makes investor sentiment the dominant factor in trading.Cast: far from the mood, far from the wealth closer but not “cut meat”, and afraid of market trend concussion, how to do?In order to eliminate the influence of “irrational judgment”, it is a good method to make regular and quantitative and disciplined investment through regular investment.Decide to cast capital is to press certain cycle to invest ceaselessly, utmost ground dispersed risk.”Smile curve” gave full play to the advantages of casting batch warehouse construction, low average cost, profit when the market picks up.When you choose to invest, you will be much more calm in the face of the market drop: the market drop can give us the opportunity to buy more funds at a cheaper price, effectively spreading the cost of investment.The numbers are just for indication and it is important to note that we do not need to move up to the original starting position to make a profit, as our costs continue to decrease due to low orders.In fact, in the case of different market volatility data measurement, it can be seen that the longer the time of fixed investment, the higher the average return.Compared with volatility, time is a greater factor in determining return.Buffett has said many times, “For individual investors, the best way to invest is through index funds.By investing regularly in index funds, an amateur investor who knows nothing can beat most professional investors.”Xiaoxia used back test to prove that even if we are very back in the market, the “smile curve” is also expected to help us reverse attack.Let’s say we enter the market with the misfortune of being caught in the scary bear market of 2015.For example, on June 12, 2015, the Shanghai Composite Index reached the peak of nearly a decade at 5178 points. On this day, we started to invest in the Shanghai and Shenzhen 300 index on a monthly basis, which could be considered as starting on Mount Everest.(Figure source network) Assume that all redemptions will be made on December 31, 2017 after one and a half years. At this time, the market is around 3300 points, which is still far from the original high.What would be the return of a certain investment in such an extremely adverse situation?Intuitively, it’s gonna be a lot of losses, and it’s still a long way from making it back, right?What about the reality?The results surprise you, during this period, the market retreated 36%, and the investment managed to achieve 14.88% of the total return rate and 5.58% of the annual return, higher than the general bank financial management.However, if you buy at the peak without a fixed investment, you lose 24 percent of your principal after a year and a half.That’s the beauty of the cast.Data source: iFind flush, China Amc. The historical performance of an index does not predict its future performance and does not represent the performance of fund products.Assume that the start date of investment is June 12, 2015 and the end date is December 31, 2017.Every month decides to cast day to be decided to cast the second month that begins day to day, every month norm decides to cast 1000 yuan.The compound annual average return is divided into N ranges within the selected period based on the calculation period (daily). The compound annual average return =[(1+ daily return)^(365/ calculation period days)−1]×100%.This calculation does not consider subscription, redemption rate.Risk tip: fund regular fixed investment is different from saving by lump-sum withdrawal.Regular fixed investment is a simple and easy way to guide investors to make long-term investment and average investment cost. However, it cannot avoid the inherent risks of fund investment, guarantee investors to obtain benefits, and is not an equivalent financial management method to replace savings.Can buy in such “stage big top”, tell the truth also not everyone has opportunity to experience.Most of the time, our positions are no worse than that, and in theory, a long-term bet plus a reasonable stop-profit should beat the yield in this case.Short-term market ups and downs are difficult to predict, it is better to let yourself far away from the mood, the more panic the more calm, to cast calmly, away from anxiety.The current volatility is more conducive to the formation of the smile curve, if you are on the right track, sometimes it is more important to do something than to do something.As Peter Lynch said in Beating Wall Street, investors who don’t worry about the economy, don’t care about the market, and just follow a fixed plan tend to do better than people who spend their days studying, trying to predict the market and buying and selling accordingly.Last but not least, the short-term market reaction is that under the policy of steady growth, the traditional real estate and infrastructure industry chain with low valuation rebound and repair, with trading opportunities;However, the stock price of the industries with the highest increase in the early period is generally adjusted back, and the valuation falls back. However, the varieties with long-term industrial prospects, high industry prosperity or continuous growth, such as new energy and digital economy, have long-term investment value.It still takes time and process to rebuild market confidence, and the repair of risk appetite cannot be achieved overnight. However, it is not advisable to be overly pessimistic about the market at present.From the perspective of internal and external factors, on the one hand, due to the stabilization of the overseas market, the main risk leading to the continuous adjustment of A shares before the holiday has eased;On the other hand, the current concerns about the strength of policies to stabilize growth have been eased, and the subsequent effects of stabilizing growth have initially emerged, and fundamental confidence is expected to be gradually reshaped.In general, in the policy continues to increase, the improvement of residual liquidity, the general trend of risk appetite twists and turns warming, the index after adjustment, shock and bottom, also brewing new rebound opportunities.After all, most of the winter has passed, can spring be far behind?Risk tip: the past performance of fixed investment does not represent the future performance, investors should fully understand the difference between regular fixed investment and small savings such as lump-sum withdrawal.Regular fixed investment is a simple and easy way to guide investors to make long-term investment and average investment cost.However, regular fixed investment can not avoid the inherent risk of fund investment, can not guarantee investors to obtain income, and is not an equivalent way to replace savings.This document does not constitute any legal document. All information or opinions expressed in the document do not constitute a final investment, legal, accounting or tax operating recommendation. Our company does not guarantee any final operating recommendation with respect to the content in the document.In no event shall the company be liable to any person for any loss arising from the use of any content in this material.China’s fund operation time is short, can not reflect the development of all stages of the stock market.There are risks in the market, so be cautious when entering it.