For ordinary retail investors, it is easier to lose money in the bull market. In these rounds of bull markets, most retail investors have not really made money. All they have gained is blood and tears.
Let’s first analyze why retail investors are more likely to lose money in a bull market? Later I will talk about how to buy funds in a bull market.
Why are retail investors more likely to lose money in a bull market? I sorted it out, and there are mainly these reasons.
(1) Retail investors often realize things later.
Ordinary retail investors are not sensitive. When they feel the bull market, it is basically in the middle and late stages. Friends around them have made money through investment, which makes them feel that the bull market has finally arrived.
Therefore, the timing of their entry into the market was not good, and their buying position was relatively high.
It is difficult to make money if you buy it too expensively.
(2) Investors tend to be greedy in a bull market.
Because ordinary retail investors enter the market relatively late, when the peak of the bull market arrives, their profit ratio is lower than that of investors who entered the market early.
For example, friends around me have doubled their profits in this wave of investment. How can I achieve 20% profit? Must be doubled.
At this time, retail investors usually lose their minds and take it for granted that everyone should double their profits or even higher in a bull market.
Due to greed, he missed the best opportunity to reduce his position. In the end, he gave up all his profits and left the market in tears with a loss of principal.
Having talked about examples of retail investors losing money in a bull market, let’s talk about how to buy funds in a bull market.
It is definitely not a blind purchase with your eyes closed.
When buying funds in the bull market, you must pay more attention to quality.
Why do you say that? The main reasons are as follows.
(1) The growth rate of excellent funds is even more impressive.
In a good environment, just like the natural environment, with fertile land and high-quality trees, they will grow taller and stronger.
The same is true for funds. The bull market is equivalent to fertile ground, and outstanding funds with good quality will have even more impressive gains.
A good fund may double in the bull market, but a bad fund may only earn 20%. This is the gap.
(2) A cow will not become a feather when it comes to an abrupt end.
When will the bull market end? No one can guess. But good funds have a certain degree of resilience.
Let’s take the previous example. During the same period, funds with excellent quality have doubled their returns. At the end of the bull market, they may fall by 50%, which is equivalent to returning to the starting point without making any money.
But if a fund with poor quality only rises by 20% when it rises, and if it also falls by 50%, it is equivalent to a loss of 40% of the principal.
This is all secondary. What is more important is that if you buy a poor fund, you may not be able to get your money back until the next bull market comes.
However, for excellent funds, even if there is a short-term retracement, the long-term fundamentals are still good, and they can return their capital and make profits without waiting for the next bull market.
After talking about these basic principles, let’s talk about which sector funds may become better funds in the bull market.
(1) Medical consumption sector.
Drinking alcohol and taking medicine is a tradition in our A-share market. Whenever the bull market comes, the returns of these two sectors will be very good.
Needless to say, the increase in medical funds this year has basically doubled. In terms of consumption, the growth rate of liquor, food and beverages is also very good.
(2) Brokerage sector
Brokerage firms are the direct beneficiaries of the bull market. After the Spring Festival, the brokerage sector continues to make efforts. The securities stocks held by individuals can rise again quickly. Doubled.
(3) New and old infrastructure sectors.
New and old infrastructure should be a focus of this year’s bull market. Old infrastructure is traditional real estate, roads and railways.
The new infrastructure has a stronger sense of technology. For example, photovoltaics and new energy are all highly oriented industries. This year’s trend remains unchanged and it’s worth configuring.
Finally, to summarize, you can’t blindly buy funds in a bull market. If you buy well, you can make money, but if you buy poorly, you will lose money.