Although I had purchased funds early on, it was not until 2014 that I officially started investing in funds.
In the blink of an eye, nine years have passed.
To be honest, over the past few years of fund investing, the overall return rate has been far less than that of stocks, almost half of it.
However, apart from one fund that resulted in a loss due to liquidation in the middle, all the funds have achieved a positive return.
I have also successfully completed the small goal recognized by everyone, with an annualized return of 15%.
In the past two years, many friends have been troubled by fund losses, and it seems to be a long way to get back to the original, and they have no confidence in the market.
That is because they entered the market at the tail end of a bull market and are now experiencing a long bear market cycle.
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Friends who like to make regular investments all know that the cycle of the market is a smiling curve.
And stepping on the left half of the smiling curve will be somewhat painful.
Bulls are short and bears are long, which means that the time period on the left side may be very long, making people very uncomfortable.It's as if after the decline began in 2015, there was a slight recovery in 2016-2017, followed by another sharp drop in 2018, with only a modest improvement in 2019.
From 2015 to 2019, nearly four years, were almost entirely characterized by negative returns.
Apart from broad-based indices like the CSI 300, which have been profitable in recent years, funds of small and medium-sized indices and industry indices have seen almost no gains.
However, in the roughly one and a half years from 2020 to 2021, the returns of several core funds have exceeded 50%.
If we consider the decline starting in 2015 to the peak in 2021 as a complete fund cycle.
This six-year cycle has actually yielded a return of over 50%. When looking at the time cost of capital entry, the actual capital return exceeds 80%, with an annualized compound return exceeding 12%.
If you, like me, know how to increase positions at lower levels, the actual return rate can easily exceed 15%.
Therefore, only by experiencing a complete cycle can one truly appreciate the charm of fund investment.
The fund investment cycle that began in 2021 is expected to end in 2026.
From 2022 to 2024, it will be a bear market layout cycle, which is inevitably a period of pain.The key issue is how to layout within this cycle and try to reduce the cost of investment as much as possible.
Instead of going all-in at this position and then just lying flat to wait, this is going to lead to an accident, and the problem is really serious.
If you are currently deeply trapped in the quagmire of funds, you might as well patiently read the following pieces of advice.
Participate less in mixed-type funds, and do not buy what you do not understand.
Many fund investors are often recommended to buy some mixed funds, which are funds that have everything.
If these funds really meet a formidable fund manager, there will indeed be a good return rate.
But the question is, how do fund investors know which fund manager is good? They are all packaged.
Buying this type of fund is like being in the dark, everything depends on fate.
Do not buy what you do not understand is a basic common sense of investment, otherwise it is blind investment.Who knows if you should add to your position after a big drop?
Some fund managers are simply not up to par, and they significantly underperform the market. What should be done in such cases?
Therefore, hybrid funds are not suitable for ordinary fund investors; once you fall into the pit, it's hard to climb out.
Consider finding an industry fund or a thematic fund, where you can judge the level of risk based on the valuation.
However, such hybrid funds can leave people at a loss, unsure of when to increase or decrease their positions.
If you still hold a large amount of hybrid funds, it is recommended to reduce your position if necessary and consider switching to index funds.
Fund investment must consider valuation; if you can't analyze it, learn how.
Many fund investors do not have the concept of valuation when they start investing in funds.
We are accustomed to referring to price movements as high or low positions, but the real high or low position is not determined by the movements, but by the valuation.
During times of rampant speculation, even a halving of valuation can still be at a high position.For example, in the pharmaceutical industry a few years ago, the valuations were ridiculously high. Only after being halved did they just enter the reasonable range, and there is still some distance from being undervalued.
Similarly, in the photovoltaic industry before, the valuations were also ridiculously high. After being halved, they entered the low valuation area.
For fund investors, this kind of valuation that can be halved at any time is completely different from feeling that the risk has been released after a 10%-20% drop.
In fact, it is very simple to check the valuation, just search online and you will find it, but many fund investors are not willing to analyze and look at it.
If you invest in funds at a low valuation, you can't lose money, at most you just lose some time.
Inverse cycle layout must control the position and learn to see bull and bear markets.
The essence of fund investment is to buy more when the price drops, but buying more when the price drops is in the inverse cycle layout.
There is an iron rule in the inverse cycle layout, which is to be more cautious in controlling the position.
The reason why most fund investors are deeply trapped is that they do not control the position at high positions and keep buying.
When it's really at a low position and they want to buy, they find that they have no money in their hands.Dollar-cost averaging (DCA) is more reliable than manual position increasing because when you manually increase your position, you often feel that the price is about to rise, and you hurry to replenish your position.
When your position is high, especially at a high level, you will be very passive in the later stage.
You must learn to distinguish between bull and bear markets, especially after an industry has experienced a sharp rise, there will be a long bear market.
If you can lay out in the middle and later stages of this bear market, there will be a lot of opportunities. The most feared thing is that when the bear market starts, it is regarded as the bull market that has not yet ended.
How to distinguish between bull and bear markets is also very simple. In a bull market, large-scale funds have good performance, while in a bear market, large-scale funds have poor performance.
Find a large-scale fund and compare it with an index such as the CSI 300, to see whether it falls more or rises more, and what the excess return is.
This is the historical law and experience, the best way to distinguish between bull and bear markets.
Space-based DCA is more reliable than time-based DCA, effectively utilizing funds.
DCA is a good thing, but many people don't use it well.
Especially after more and more people start DCA, a unique phenomenon occurs.It is the beginning of a bear market, as a large amount of fixed investment enters the market, it will not plummet, but will fluctuate at high levels.
When the fixed investment continues to suffer losses, most people choose to terminate the fixed investment, and then it begins to fall all the way.
There are too many people taking over at high levels of fixed investment, which makes the high level last for a long time. Once many people have no money to invest, a rapid decline occurs.
This is a problem with time-based fixed investment, which does not exist in space-based fixed investment.
The so-called space-based fixed investment is to make fixed investments after a certain decline, while time-based fixed investment is to make fixed investments on a weekly or monthly basis.
Generally speaking, after a 10% drop, make a fixed investment, and then after another 10% drop, make another fixed investment. This method is more reliable.
In the cycle of short bull and long bear, space-based fixed investment will also save time cost, and will not enter a large amount of funds in advance, improving the efficiency of funds.
Learn a few emotional indicators, which can effectively make the bottom wave.
The bottom of the market is not only the bottom of valuation, but also the bottom of emotions.
The so-called bottom of emotions is that when the valuation is low, there is a sudden outbreak of enthusiasm for doing more.The so-called "emotional bottom" is essentially the market's pessimistic expectations, which cause many funds to lie flat and many to exit by stopping losses.
Emotional indicators are mainly indicators derived from the analysis of price and volume.
The lower the activity level of such indicators, the higher the probability that the market will hit a major bottom and start to rise.
The bottom will not be achieved overnight, and funds are not like some individual stocks, so the fluctuations at the bottom can be used to make some small trades through the judgment of market sentiment.
After all, in a large cycle of five or six years, there will be no shortage of small cycles once every few months.
Of course, for inexperienced fund investors, it is better not to engage in small fluctuations. If you don't know how to read emotions, do not operate blindly.
Understand one truth: great opportunities only arise after a significant drop.
Finally, there is a big truth, which is also the key to whether fund investors can make money.
The reason why fund investors add positions at high levels is that they believe funds will not fall deeply.
But the facts have proven that the space for funds to fall is actually very large.Having suffered losses, one must understand that opportunities arise after a significant drop, not after a minor one.
A fund, if it experiences a halving in value, and if the valuation of an industry can return to an absolute bottom, or even hit a new low, represents a major opportunity.
However, major opportunities do not come by often and require patient waiting.
When buying funds, you can continuously buy in the bottom area, but do not always think that the price will rise immediately after the purchase.
Only when market sentiment is there, everyone is unable to buy more, and the price is sufficiently low, does the opportunity truly arrive.
Investing in funds involves many skills, including how to understand industry cycles, and I will share more with you when there is an opportunity.
Those interested can also leave a message.
Many issues, once you understand the essence, profitability comes naturally.
Finally, if the funds you currently hold have suffered significant losses, do not be too pessimistic.
Learn to start from the end, understand how to start over, the investment market never sleeps, and there are opportunities every day.The key point is whether you have realized your own mistakes and whether you have found a way to succeed.