Only by understanding the megatrends can we seize real opportunities.
At present, the bottom has been preliminarily confirmed, standing at this critical historical juncture, we have every reason to look forward to the performance of the next two years.
A new round of bull market has quietly started before the Spring Festival in 2024 and is expected to last for about two years, that is, from February this year to the first half of 2026.
This judgment is based on a comprehensive analysis of the following factors:
With the gradual implementation of various policies and the steady recovery of the economy, the investment value of the a** field will be further highlighted.
With the moderate easing of monetary policy and the deepening reform of the capital market, market liquidity will continue to improve and provide strong support.
The market valuation is at a historically low level, providing a high margin of safety for the bull market, and the overall valuation level of the current A** field has been at a historically low level, providing investors with a better opportunity for layout.
Although the global economy is still facing many uncertainties, China's relations with major economies remain stable, providing a good external environment for the world.
Recently, the regulator has introduced a series of positive policy measures to promote the healthy development of the capital market and boost investor confidence based on investors.
* The long-term trend is profoundly affected by the fundamentals of economic operation.
Over the past 70 years, China's economy has made remarkable achievements, especially in the past four decades. However, the A** market has shown a long period of downturn, and the Shanghai Composite Index has been fluctuating around 3,000 points for many years.
The trend of the a** field does not fully reflect the real level of economic development of an economic power. At present, the valuation level of ** is clearly in a state of significant undervaluation.
At present, we are in a critical period of economic transformation, and the economic operating structure is undergoing major strategic adjustments. This transition is destined to be a long one, accompanied by the pains that characterize the transition period and a certain degree of economic volatility. This is the fundamental reason why ** has continued to hover at a low level in recent years.
However, while traditional industries are gradually declining, the development of emerging industries is showing vitality.
China's economy is undergoing a comprehensive transformation from traditional manufacturing to emerging industries with scientific and technological information as the core. Once the transformation is successful, the vitality of economic development will be fully unleashed again. At the same time, this is also the only way for China to move from an economic power to an economic power. The judgment of the future medium- and long-term trend of the A** field largely depends on how you judge the final outcome of this transformation process.
It has been exactly 17 years since the birth of the A** field in 1990 to the all-time high in 2007. And from 2007 to 2024, it will usher in the second 17 years. The first 17 years witnessed the prosperity of the industrial era, while the second 17 years were a key stage in the structural adjustment and transformation of the development model after the completion of industrialization.
In the past nearly 17 years, China's economy has undergone profound structural adjustment, and it has also undergone long-term adjustment. Today, China is gradually moving towards a new era dominated by emerging industries such as science and technology. It is expected that by 2024, with the vigorous development of emerging industries such as artificial intelligence and new energy, they will become the core driving force of economic development, and a new era cycle is quietly kicking off.
* It has its own operating rules, and the short- and medium-term trend may not be synchronized with the economic operation. However, in the long run, the value center of ** must be consistent with the level of economic development.
* The deviation between the operation and the level of economic development is unlikely to continue, and will eventually return to normal valuation levels. In the case of a representative Shanghai Composite Index, a reasonable valuation level should be at least 5,000 points, and this is only the lower limit, and the upper limit may even exceed 7,000 points.
From the perspective of technical analysis of the large cycle, it also supports the view that the next two years will enter a bull market.
The Shanghai ** Stock Exchange was established in 1990 and launched the Shanghai Composite Index at the same time. However, there are limitations to using this point in time as a basis for technical analysis, as it fails to adequately take into account previous economic developments.
In order to get a more complete picture of market trends, we need to go back to 1949, which is the real starting point of a long-term cycle.
As shown below, this is a diagram of the long-term wave movement of the Shanghai Composite Index.
Cyclic waves: 1949-1966, 17 years
In the first 17 years after the founding of the People's Republic of China, the national economy experienced the first period of development and successfully established a complete industrial system, thus laying a solid foundation for the long-term steady development of the economy.
Cyclic waves: 1966-1978, 12 years
The national economy has entered a 12-year adjustment period.
Cyclic waves: 1978-2007, 29 years
Driven by the reform and opening up policy, China's economy has ushered in a 30 years of rapid development.
Cyclic waves: 2007-2019, 12 years
With the completion of industrialization and the basic end of the urbanization process, the national economy has gradually entered a stage of adjustment and transformation.
Cyclic waves: 2019-2026, 7 years
Emerging industries are gradually emerging and are expected to gradually replace traditional industries and become the leading force driving economic development.
From the above-mentioned long-term wave running structure, we can clearly see that 2007 was a pivotal time. The year marked the pinnacle of China's industrialisation era, with the Shanghai Composite Index soaring to an all-time high of 6,124 points, which has yet to be surpassed.
With the basic completion of China's industrialization process and the changes in the international environment, the problem of overcapacity caused by long-term rapid development has become increasingly prominent. As a result, the national economy has entered a long period of structural adjustment. This is also the deep-seated economic reason why after peaking in 2007, the range continued to be wide and hovered at a low level for a long time. At this stage, ** is in a 12-year cycle of IV wave bear market correction.
2007-2019 Cycle Wave Running Structure:
Wave A: October 2007-October 2008, 6124-1664 points.
Wave B: October 2008 - November 2010, 1664-3478 points.
Wave C: November 2010 - June 2013, 3478-1849 points.
Wave D: June 2013 - June 2015, 1849-5178 points.
E wave: June 2015 - January 2019, 5178-2440 points.
Since reaching an all-time high of 6,124 points in October 2007, the 11-year cyclical wave correction finally came to an end in early 2019. Since then, ** has officially entered the V-wave phase.
Running structure of the cyclic wave**:
Big wave: January 2019 - February 2021, 2440-3731 points.
Big second wave: February 2021 - February 2024, 3731-2635 points.
Big three waves: February 2024 - mid-2025, 2635-5300 points.
Big four waves: the third quarter of 2025, 5300-4200 points.
Big Five Waves: 2025 2025 - 2026 mid-2026, 4200-7000 points.
As the last rising wave of the big cycle, the cycle V wave is likely to hit a record high, that is, to break through 6124 points in 2007, and finally reach the 7000-7500 points mentioned above.
The Big First and Big Second Waves of the Cyclic V Wave (from the beginning of 2019 to February 2024) actually constitute a large bottom pattern. This phase is characterized by a limited range of indices** and a structural bull market dominated by blue chips and white horse stocks. The current big three waves, which have just started, are the main ascending stage of the entire cycle of V-waves.
In addition, in the five years from the beginning of 2019 to the beginning of 2024, or the eight years since the beginning of 2016, the Shanghai Composite Index has formed a perfect large bottom pattern. This long-term bottom has been constructed, which means that a real bull market since 2007 is on the horizon, and the Shanghai Composite Index will surely break through 5,178 points in 2015 and have a high probability of surpassing 6,124 points in 2007 and hitting a new all-time high.
In the first phase of the big three waves, wave 1**, the index is expected to climb around 3,700 points, a goal that is expected to be achieved within this year.
2025 will be the main ascending phase of the entire Big Three Wave, when the Shanghai Composite Index will regain its footing above 5,000 points and further rise to between 5,200 and 5,300 points.
Eventually, the Shanghai Composite Index is likely to reach a new high of 7,000-7,500 points by mid-2026.
Admittedly, I'm optimistic about the idea that the next two years** will enter a bull market, but I'm not blindly optimistic. The so-called 10 or 20 year bull market view put forward by some people in the market has no scientific basis. In the field of investment, we should remain cautious and rational, and analyze the actual situation.
Economic operation has significant cyclical fluctuation characteristics, which is one of its inherent laws.
In the economic cycle, the long cycle is particularly important because it is closely related to industrial change and has a high historical value. This article will focus on the long-cycle part of the economy.
The long economic cycle, usually referred to as the Kondratiev cycle, lasts about 50 to 60 years.
The enormous influence of the long cycle makes it impossible for all countries to stay out of the way.
Today, we are in the midst of a long-term depression that heralds the beginning of a recession of the century. This economic depression represents not only a decade of depression in the Compo cycle, but also a century-long winter of the world economy.
Since 2020, the outbreak of the health event of the century has opened the prelude to the arrival of the Compo depression and the larger world economic recession. And between 2027 and 2028, there may also be a financial and economic crisis on a global scale.
With the end of the U.S. interest rate hike process, global economic growth may continue to rise in the next two years. However, this growth is not the beginning of a new long-term business cycle, but only a short-lived one. According to me**, the U.S. and world economies will end their recovery by the end of the fourth quarter of 2024 and around 2026, followed by another recession. Especially between 2026 and 2030, the depression will continue to intensify.
Among them, the global economic and financial crisis that will break out from 2027 to 2028 will become an important inflection point for the world economy, and will have a far-reaching impact on world economic growth far beyond the early recession of 2020-2022. That's when the real economic crisis and the Great Depression came.
It should be noted that the current situation not only involves the usual depression phase of the Compo cycle, but will also show very different operating characteristics from the Compo cycle of the first half century. Therefore, the traditional cyclical theory cannot simply be applied to the analysis of the current world economic situation.
In addition, the impact of each Compo cycle depression on global economic growth is different. The previous Fourth Compo Depression was characterized by stagflation, while the current Fifth Compo Depression will have significantly more shocks to the global economy than the fourth.
The Compo Depression not only ended the global economic boom of the past half century, but also heralded a once-in-a-century recession. We cannot use a simple cyclical theory to explain this unprecedented challenge that the world is facing.
Even by the end of the Compo Depression in 2030, we will have only crossed the first phase of the Great Recession of the century. Since the beginning of 2020, the world has entered a once-in-a-century Great Recession. This process will continue for 20 to 30 years, until the middle of the century.
The Great Recession will be more severe than the 2008 financial crisis and even more protracted than the Great Depression that began in 1929.
With the development and changes of the times, the world order of the past 100 years is being seriously impacted and gradually disintegrating. The establishment of a new order is expected to take decades of exploration and effort.
During this period, the old dominant powers gradually declined, but the contours of the new world order were still unrevealed. We are currently in the stage of alternating the old and new hegemons, which is destined to be a long and difficult period. The alternating phase of the old and new hegemons is destined to last for decades, up to the middle of the century.
This unprecedented chaos has created powerful shockwaves that will have a serious impact on the world order and will profoundly change the course of history for the next 20 to 30 years.
Although the current international environment and the background of the times have reduced the possibility of large-scale hot wars between major powers, non-military means such as economic warfare, financial warfare, and scientific and technological warfare have become ways of competition between major powers. The intensification of the confrontational nature of economic warfare will cause serious damage to all mankind, and the consequences will be no less painful than the pain caused by war.
At present, we are in the midst of a new round of industrial revolution and scientific and technological revolution, which will lead to drastic fluctuations in the strength of various countries and profound changes in their relative positions. The clash between the old and the new, as well as the fierce rivalry between the dominant and challenging powers, will inevitably occur. As a result, the next 20 to 30 years will inevitably be fraught with tensions, conflicts and instability.
At present, we are only in the first stage of the struggle for the fate of great powers. The United States is facing a phase of economic recession and strategic contraction, and its willingness to participate in international affairs is relatively low. However, once the United States succeeds in solving its domestic problems, the United States it once knew will reappear. This point in time is expected to be after 2030.
After that, international tensions will reach their worst between 2035 and 2040, and around 2035 will be the moment of the final showdown between the great powers.
After the competition of this ** country, the strong will eventually win, and who is the real king will be revealed. This process is expected to continue until mid-century, until a new international order is established and matures.
Eventually, the new dominant nation and its successors will form the new world leadership group.
At the same time, in every round of the recovery phase of the Compo economic cycle, there are always one or two countries that unfortunately fall victim to this process. After World War I and World War II, Germany and Japan became sacrifices to the new order; The advent of a new era of prosperity in the middle of the century is also destined to bury one or two great powers to lay the foundation for the formation of a new order.
The current period is a period of great chaos unseen in a century and the period of depression in Compo, so the backward system and the backward country will face the destruction of the dual forces.
The 100-year bull market in U.S. stocks is coming to an end and is about to enter a long-term bear market.
Up to now, the bull market in U.S. stocks and the world** has lasted for 15 years.
At present, the U.S. stock market is gradually forming a large-level long-term top structure. This process can be quite complex and take years, eventually developing into a landmark historic top.
The bull market in U.S. stocks is expected to end around 2025, followed by a long-term bear market.
The arrival of this bear market not only marks the end of the bull market that began in 2009, but also the complete end of the ultra-long bull market that has lasted for nearly a century since the Great Depression in 1929. Therefore, from a macro perspective, the upcoming bear market in the next two to three years will be the total adjustment for this ultra-long bull market, and investors need to pay close attention to and guard against potential risks.
At the same time, Asia** such as Europe** (which includes major markets such as Germany, the UK and France) and Japan and South Korea are also expected to enter a long bear market phase that will last for decades, in tandem with US equities.
Since 2009, the world has experienced a 15-year super bull market, and the performance of the A** field is relatively lagging behind, far worse than that of other countries. However, I believe that this situation is temporary and is caused by the unique operating rhythm of A-shares. This situation is expected to change significantly from 2024 onwards.
A-shares are expected to complete a round of strong catch-up gains from 2024 to 2026, and it will take only two years to complete the 15-year bull market process abroad.
Based on my analysis that U.S. stocks and the world** will enter a long-term bear market around 2025-2026, it is obvious that the A** market will not be immune to the big bear market in foreign markets. Therefore, the next two years will be a valuable time for the A** market to go bullish.
At this stage, investors should pay close attention to market dynamics, grasp investment opportunities, and make reasonable asset allocation according to their own risk tolerance and investment objectives.