After the National Day holiday, the market underwent a rapid correction, especially in previously hot sectors such as technology, which saw relatively large declines, dealing a heavy blow to many investors' confidence. Last Friday, the market experienced a miraculous day, rebounding from a sharp morning sell-off to a V-shaped recovery by midday and ultimately closing in the green. This also represented an opportunity for a bottom rebound brought about by major capital decisively entering the market. Although confidence remains insufficient after the rebound, leading to continued choppy fluctuations, this rebound is still meaningful as it effectively ended the previous one-way decline, and the market may enter a phase of wide-range fluctuations going forward, with some sectors gradually warming up. For instance, driven by news that Musk may officially unveil the new Optimus V3 robot by year-end, the humanoid robotics sector has shown sustained performance recently, generating some profit-making effects and marking some improvement compared to the previous relentless decline. However, most AI tech stocks remain in correction mode and have not yet completely reversed their downtrends. At market highs, such as in early July, I advised everyone to overcome greed and adopt a three-step strategy to avoid the risk of a significant contraction in the tech stock bubble, namely resolutely deleveraging, halving positions, and balancing tech with dividend stocks, rather than betting on a single sector. Following this strategy would have helped relatively well in avoiding the risks of this wave of decline, because while tech stocks fell, dividend stocks continued to rebound, with some bank stocks even hitting new highs recently. After more than a quarter of declines, many tech stocks have been cut in half from their relative highs, with some even dropping as much as 70%, significantly releasing the risk of high valuations. Now is again the time to overcome fear, meaning that at relatively low market points, one should no longer be dominated by fear and make wrong decisions again. According to psychological research, when people are overly excited or overly fearful, they think with the amygdala region of the brain, which is a purely emotional area. When emotions run high, whether chasing highs or cutting losses at the bottom, these are typically wrong decisions. You need to calm down and think with the prefrontal cortex, which is the region governing rational judgment. So when you feel overly excited or overly panicked, do not make decisions, as they are often wrong ones. Is the market turning bearish now? This is everyone's question. I think the market is neither a bull market nor a bear market right now, but rather a structural market. That is, if you allocate to some leading stocks that benefit from economic transformation and have earnings support, they may still trend upward in the future, which would be a structural bull market. If you invest in stocks without earnings support that are purely concept-driven, or in industries being phased out by economic transformation, that would be a structural bear market, likely to keep declining. So now it should be a structural market, and this depends on whether you allocate to good industries and good companies, which will determine whether you can achieve good returns when the market fluctuates and rebounds, rather than overly obsessing over whether the index is in a bull or bear market. The Federal Reserve's October FOMC meeting is about to convene, and market expectations for the subsequent rate hike path still show some divergence. The October Fed meeting will most likely hold rates steady, but the December meeting might see another hike, which is also the current relatively consensus expectation. Although the U.S. CPI for September showed a 3.7% year-over-year increase, exceeding the market expectation of 3.6% and the previous reading of 3.4%, the Fed just hiked rates once at the September meeting, so consecutive hikes this time are unlikely. Therefore, the Fed is currently more focused on comprehensively judging whether to prioritize inflation control or employment protection. The Fed's third-ranking official, who is also a voting Fed governor this year, recently stated that the inflation the U.S. faces is not caused by economic overheating but has at least three layers of causes: the first is the surge in international oil prices, which recently approached $120 per barrel, caused by the blockade of the Strait of Hormuz and changes in supply-demand dynamics. Fed rate hikes cannot reduce the inflation brought by rising oil prices. The second part is the large capital expenditure in AI technology, which has led to a surge in chip prices, thereby pushing up consumer electronics prices, including phones, tablets, computers, etc. This is also not something rate hikes can solve. The third reason is price increases from rising actual demand, but this factor is not particularly significant. From his remarks, the possibility of consecutive hikes in October is unlikely. I think this is something everyone needs to pay attention to, meaning that even if the Fed hikes once by year-end, next year at most one more hike, it is not re-entering a sustained rate hike cycle, because the U.S. federal benchmark rate is already at 3.75%-4%, a relatively high level. If rates continue to rise, it could cause substantial shocks to the U.S. economy. Recently, international gold prices underwent a correction, with spot gold once falling below the $4,000 per ounce mark. I previously shared a view that below $4,000 per ounce is a gold pit and a good layout opportunity. Some time ago, it once dropped to $3,900, and if you positioned then, it quickly rose back to $4,600 per ounce in less than a month, a 20% gain. This wave of correction can be said to be influenced by increased Fed rate hike expectations, coupled with rising U.S. Treasury yields, which hit gold prices. But in the long term, the long-term factors affecting gold prices, such as the growing scale of U.S. debt, which has now exceeded $40 trillion, affecting the credit of U.S. Treasuries, as well as central bank gold purchases and tense international geopolitical situations, still exist. This also makes the bull-bear battle for gold prices very intense, with recent sharp rises and falls, but in the long term, gold prices are still upward, so everyone need not worry too much. For gold-related investments, treat it as a medium-to-long-term investment direction. For example, I suggest allocating about 10%-20% of your portfolio to gold-related assets, which allows for both offense and defense. If allocated too high, you will be affected by gold price volatility. If too low, you won't enjoy gold's hedging function and long-term protection against paper currency depreciation risk. So everyone can appropriately allocate to physical gold, gold ETFs, and other gold-related assets based on their risk tolerance and risk preferences. Gold's overall trend has been downward recently, especially after hitting a historical high of $5,600 per ounce in early January, it began a sustained decline. This drop first stems from internal factors, namely pressure from profit-taking. Over the past more than two years, international gold prices started from around $1,900 per ounce and rose nearly more than tripled to $5,600 per ounce, accumulating a large number of profit-taking positions. So once bearish factors appear, funds accelerate selling, causing price declines. Thus, the bull-bear relationship, supply-demand dynamics, and capital games together led to this round of gold price decline. As mentioned earlier, the factors supporting long-term gold price increases still exist. Gold itself is dominated by its monetary attribute, with some financial attribute, but its practical value is not high. The proportion of people holding gold for jewelry is extremely small; it is mainly its monetary attribute. Gold was defined from the beginning as the most ideal general equivalent, and no major gold mines have been discovered in the past 100 years, so gold supply is relatively limited. As a hedging tool against paper currency depreciation risk, gold is still worth long-term attention. Recently, international oil prices have remained high, and U.S. long-term Treasury yields have also stayed at relatively high levels. Global market concerns about a resurgence of U.S. inflation have increased, putting some pressure on the global economy and capital markets. High inflation forces the Fed to passively hike rates, which affects the strength of global economic recovery and significantly impacts risk assets like stocks. Over the past half year, the A-share market, driven by the sharp decline in tech stocks, has seen major sell-offs, largely a comprehensive reaction to these bearish factors. But at the same time, many tech stocks had risen too much previously, far detached from fundamentals, so a sell-off for value regression was necessary. The long-term development trend of the AI industry remains unchanged, and the AI tech revolution is just beginning, so from an industry development perspective, AI technology is still an industry worth watching. But in early July, when everyone was chasing the light, many tech stock valuation bubbles were too large, so this round of sell-off is reasonable. After the bubble squeeze, many tech leaders have gradually become worth allocating to. At the market's most depressed times, it is often when a turning point occurs. As the Wall Street saying goes, when everyone agrees, that's the most dangerous time. Just like in early July when everyone unanimously bullish on AI tech, that was a turning point. Now at relatively low levels, everyone is consistently bearish, many shouting bear market, and this is precisely another turning point. Everyone can ponder this repeatedly. Innovative drugs have recently gained market attention again. At the European Society for Medical Oncology annual meeting being held this week, multiple domestic innovative drugs were selected. China still has relatively large advantages in the development of the innovative drug industry. We have a strong engineer dividend, a large number of medical students, and relatively low wages, so we can serve as the Chinese R&D base for international big pharmaceutical companies in innovative drugs. In April, relevant authorities also issued a document stating that innovative drugs would not be subject to centralized procurement, only mature generic drugs would be. Of course, for innovative drugs, prices may also be controlled through price negotiations. So in the domestic market, the revenue and profits of innovative drugs are suppressed to varying degrees, but exporting through BD transactions and cooperating with big pharmaceutical companies through CXO, CRO, etc., are relatively good innovation methods. The overseas expansion of innovative drugs is an important future development trend. Innovative drugs once surged, and after previous gains and subsequent adjustments, the next stage of the innovative drug market is still worth anticipating. The core logic is whether they can gain a good market share in overseas expansion and secure a place in international cooperation, which may be the key points everyone focuses on. MACD golden cross signals have formed, and these stocks are performing well! Sina statement: This news is reprinted from Sina cooperative media. Sina publishes this article for the purpose of conveying more information and does not mean it agrees with its views or confirms its description. The article content is for reference only and does not constitute investment advice. Investors operate at their own risk based on this.
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