Introduction To Stock: Cognitive Deficits And Market Transformation

In his philosophical book "conjecture and refutation", Karl Popper pointed out his core idea that truth does not exist in a sense, and all the scientific theorems we can find are an approximate explanation of "truth" in a certain definition. For example, we can think that it is composed of elastic balls by some reflection inside the particle, but this kind of ball does not always exist, but this method can explain the problems that need to be understood at least at the required level.

Because "truth" can not be recognized by us, scientific knowledge increase It needs to be perfected by continuous speculation, questioning and falsification, and this continuous and imperfect scientific knowledge is enough to become our driving force and dependence. On this basis, any kind of theory needs to provide the possibility of such doubt and falsification, otherwise this theory can not be called science. For example, the white swan is the only swan in the world. This theory is falsified, because at least theoretically you can find a black swan or any other color Swan to prove that the theory is wrong. But the theory of "going to heaven after death" is hard to falsify: how can we ask a dead person whether he has gone to heaven?

But the problem is that most people like to pursue the "real truth" and are not too cold for the constantly improving, constantly challenged, dynamic knowledge system. In another book "open society and its enemies", Karl Popper calls this pursuit and the result of this pursuit the biggest challenge to open questioning which is constantly being questioned.

In the investment market, this kind of thinking causes investors to always believe in different things in different times. This belief has caused a lot of investment bias, thereby pushing the financial market to a peak or low. The gap between these peaks and lows is so large that every traditional graduate of business school is terrified. Most of them finally gave up their efforts to understand these behaviors, and a few years after they had been in the market for many years, they found that the cognition of investors was so limited, and our hypothesis about effective market is really as ridiculous as that old story: a hungry economist wandered to a desert island with only a few cans around him, so he said, "now suppose I have a can opener..."

In the current A share market, many phenomena also overturn what we have always identified. Truth " From the perspective of blue chips, in many sectors such as banks, brokerages, iron and steel, infrastructure, manufacturing, transportation and so on, there is a phenomenon that the P / E ratio is less than 10 and the net market rate is less than 1. In the past decade or so, this phenomenon has been considered almost impossible: can we imagine that three years ago, an investor could accept the assumption that the average price earnings ratio of a plate was less than 10 and the annual growth rate was higher than 25%? However, even from the international market, the valuation of blue chips has begun to have advantages.

In the short to medium term, there is a continuing reason for this underestimation of blue chip stocks. On the one hand, investors have shifted from the paranoid mentality of "believing blue chips to economic Representatives" in 2007's paranoid thinking that "blue chips are signs of the old age", and any change in paranoid thinking takes time. On the other hand, from a cyclical point of view, China's past monetary policy cycle is about 2.8 to 3.5 years, while capital market and monetary cycle are highly correlated. Considering that the past monetary policy cycle has been less than 3 years, the pressure of blue chip stocks still exists. But in the medium and long term, as long as economic growth is not seriously stagnant, these sectors are now in the buying range.

At the same time, for small stocks that are 3 times higher than blue chip valuations, investors' perception remains in the wrong sense of "small business is the hope of economic transformation", which was established in early 2009. In fact, we simply do not have enough data to show that in those listed companies, the profit growth rate of small companies can generally exceed that of large ones. Now, this kind of erroneous cognition is slowly changing, and this cognitive breakdown and eventual loss is likely to become an important factor for small stocks to continue to bear pressure in the coming months.

Finally, this week, the rise of capital interest rate is a big probability event, and A shares are generally not good at the end of the month and the end of the year. Judging from these two short-term reasons, it is not easy for the market to perform well in the last trading week before "eleven".