Stock picking is not as good as timing.

Author: Yang Qingming / Country: Mainland China
Publisher:
Publish Date: 2006-08-01
Features: This book is divided into four parts. The first part mainly introduces macro factors affecting stock market trends, hoping to provide a general understanding for stock trading enthusiasts. The second part focuses on common phenomena in the stock market and some price fluctuation patterns. The third part introduces the use methods and judgment principles of technical analysis tools and indicators, aiming to assist investors in selecting buy and sell timing. The fourth part discusses common bull and bear scenarios encountered by investors and corresponding response strategies, enabling investors to truly "watch the stock market's ups and downs with a smile"!
In the stock market, stock analysis naturally refers to comments made by experts on the market. Generally, they have a high level of understanding of the stock market. Self, on the other hand, refers to an individual investor's own understanding of the stock market. So, should investors trust stock analysis or trust themselves? My view is that investors must stay centered and treat stock analysis merely as a reference. Stock analysis only represents the personal opinions of the analyst, and analysts are neither obligated nor intended to be the voice of the market.
The stock market is like a football match. Coaches, team leaders, clubs, public opinion, and fans all cheer and guide from the sidelines, never stopping, while only the players on the field are actively participating. If you follow the guidance but it's incorrect, you're finished; if you don't follow the guidance, and you're not a good player, you're also finished. Stock trading is the same. Retail investors must always remember who they are fighting against and not be overly influenced by the ceaseless interference of those on the sidelines.
People have summarized a very vivid description of stock analysts: "The most trustworthy thing a stock analyst can say is, 'Follow what I say, not what I do.'" However, to reiterate, if those experts can always identify stocks that will rise significantly, why don't they trade them themselves? Wouldn't that allow them to make substantial profits? Why would they then need to earn commissions from retail investors? In fact, many analysts who do stock analysis in the media are not as skilled as they claim to be. Of course, not all analysts are bad, but I think if we, through learning and research, master the correct operational techniques and methods, wouldn't that be better?
However, stock analysis is indispensable in the stock market. In the stock market, "facts" are the only god. Whether it's a "black mouth" or a "white mouth," if they can help you make money, they are good mouths. Eliminating the "black" means the "white" has no reason to exist. A stock market without analysis is like a world without doctors—just a pile of medicine. Therefore, for the stock market to develop, stock analysis is essential.
Although investors should stay centered and view stock analysis as optional, due to the limitations of their own abilities and the need to save costs, stock analysis can also serve as a reference. Every time the stock market falls from a high point to a low point, it will experience the same cycle of psychological and analytical sentiment changes. By carefully observing market analysis and the psychological shifts of most investors, it is possible to better predict the current stage of the market and guide one's investment behavior, often leading to better results.
1. A major market trend is nearing its peak. The main force sells heavily when market sentiment is strong, and at this time, good news is constantly released, while bad news is interpreted as "bad news being fully released, which is good," or "bad news not causing a drop, making the upward trend more reliable." The index clearly lacks upward momentum, but most stock analysts still call it a "strong adjustment." When the main force has sold off most of its holdings and no longer needs to support the stock price, any bad news causes the index to plummet. To comfort those trapped at high positions, well-intentioned stock analysts publish articles saying the market's sharp decline is due to some unexpected reason and that it will rebound after digestion, so there is no need to panic.
2. A rebound occurs after a sharp decline. The main force continues to distribute shares, and small and medium-sized institutions rush to buy the rebound, becoming trapped. At this time, stock analysts are divided: the bold ones declare the bottom has been reached and the market will rebound, while the cautious ones say that after a sharp decline, market sentiment has been damaged and a period of consolidation at lower levels is needed. Both believe the market has hit the bottom. Small investors agree with the stock analysts, thinking that if they can break even, they should sell; if they can't break even, they should hold for the long term.
3. The rebound ends, and the stock market continues to fall. At this time, only some small and medium-sized institutions and retail investors remain steadfast. Trapped small and medium-sized institutions often artificially push up the stock price, giving the impression that the main force is still active in the market. Some stock analysts believe the main force is trapped and will rescue itself by pushing the price up to sell, urging investors to trade individual stocks regardless of the index. Another group of stock analysts firmly believe the market is in a "bottom-building" phase.
4. The stock market continues to fall, and technical indicators enter the lower range. More and more stock analysts advocate that the market has hit the bottom. Stock analysts and small investors begin the "joint bottom-fishing" game, while the true main force watches from the sidelines.
5. The stock market fails to stop its decline, and the center of gravity continues to shift downward. Those who buy and get trapped repeatedly start to cut losses in small amounts and find it rewarding, as the market continues to fall. They then increase their cut-loss efforts and declare the bear market has arrived. Upon hearing this, stock analysts, who believe "the long position is not dead as long as the short position is not dead," now think the long position is dead, so the bottom must have been reached. They become even more determined to be bullish. The main force is suppressing the market in line with the trend, preparing to build positions in the future.
6. The stock market falls below the last line of defense set by bullish analysts. After breaking through the bullish analysts' last line of defense, they also become desperate, setting lower and lower bearish targets. At this point, the sharp decline is nearing its end, and a new bull market is about to begin.
P60-P62