On September 24, 2024, the Shanghai Composite jumped 4.15%, the Shenzhen Component rose 4.36%, and the ChiNext Index gained 5.54%. Total turnover across the two exchanges reached 974.4 billion yuan, nearly double the previous day.
After getting used to the market grinding sideways like a loom, a move like this feels almost unreal. The first emotion is surprise, even more than joy. But of course there is joy too. After a long decline, with sentiment depressed and almost every piece of stock-market news sounding negative, holding a fully invested portfolio has not been easy.
Even while the indexes kept falling, I never turned bearish on Chinese equities. I stayed fully invested because I have long believed that, relative to the country’s economic fundamentals, A-shares are deeply undervalued—especially when compared with U.S. stocks. That valuation judgment is one reason I could hold my ground. The other is more practical: over the past two years I happened to be positioned in undervalued blue chips, and both years were profitable. It is always easier to stay patient when your account has already given you some evidence that patience can work.
According to my trading app, my year-to-date return is 13.27%, though the real number should be a bit better because some dividends seem not to have been counted. Even using the app’s figure, that performance is better than 95.5% of investors on the platform. That alone says a lot about how difficult this market has been. It also helps explain why so many retail investors have stepped away and daily turnover had fallen toward roughly 500 billion yuan.
Low turnover feeds falling indexes, falling indexes crush confidence, and weak confidence reduces turnover even further. It becomes a vicious cycle. That is why the authorities want to stabilize and stimulate the market.
The last major intervention was on February 6, when the Shanghai Composite rose 109 points. For comparison, this time it rose 114 points in a single day. Back then, a new securities regulator chief took office, and the market gave that moment a lot of hope and enthusiasm. The rally lasted roughly ten trading days. Now the market has surged again, and naturally everyone is asking the same question: what exactly is driving this move, and is it just another one-day burst?
The explanations circulating online are roughly these:
- the indexes had already fallen to very low levels and had built up strong rebound momentum;
- high-dividend blue chips had become broadly and severely undervalued;
- interim results were generally better than many people had expected;
- the reserve requirement ratio was cut by 0.5 percentage points, releasing about 1 trillion yuan of liquidity;
- existing mortgage rates were reduced, potentially freeing up consumer spending;
- down-payment requirements for buyers of multiple homes may be aligned with first-home standards, reportedly possibly unified at 15%, to help revive the property market;
- a securities-fund-insurance swap facility was launched with an initial size of 500 billion yuan, with more to come later;
- banks’ funding costs are being lowered;
- qualified companies are being encouraged to increase holdings or carry out buybacks, including through bond financing;
- long-term stabilizing funds are reportedly being studied for market entry;
- and more.
So yes, the concentration of positive policy signals is unusually high, and that clearly helps explain the size of the rally. The harder question is duration. Can these measures support the market for longer than the previous policy burst did, or will they be absorbed within ten trading days again? That is what worries many investors. If someone rushes in now and the policy impact fades quickly, they may just end up taking over from earlier buyers at the wrong time.
Will this round of stimulus last longer?
My view is that the intensity of the policy rollout does show determination. But nobody can confidently say how forcefully each measure will be implemented or how long the support will continue. And those two things—execution strength and duration—shape investor expectations, which is where the real power of stimulus lies. If the policy window stays open long enough for people to regain the confidence and desire to make money in stocks, the market can start generating its own momentum. If not, this will just become another short cycle.
Do I personally trust this policy wave? Yes, but not with absolute conviction.
The reason is simple: the broader macroeconomy is still not especially strong, and I have not yet seen truly forceful economy-wide measures such as deeper structural reform or much larger fiscal stimulus. Most of the current measures are gradual by nature. Apart from the reserve requirement cut, many of them are not likely to produce immediate results. So my own stance is still to watch the market step by step. If you already have positions, keep holding. If you are sitting in cash, it may be better to observe for a few more days first.
A lot of this comes back to how I invest. I have stuck for a long time with a very simple form of value investing: I only buy stocks I consider undervalued. I do not buy high-growth companies because I do not really understand how to value them. Because of that, the stocks I hold tend to be relatively stable. They usually fall much less than the broader market, their dividends beat bank deposit rates, and a few good calls have helped keep my overall returns positive. That positive experience has only reinforced my willingness to hold for the long term—and by long term, I mean seven to ten years, not a few months.
Being fully invested during a decline is painful, but it also means I do not have to panic about when to get back in once the market rebounds. That has taught me one lesson very clearly: if you do not have real trading skill, do not trade too often. Most of the time, frequent trading only increases the chance of making small mistakes that turn into bigger losses.
This leads to another question: should a value investor believe in stop-losses?
Many books say no. The logic is straightforward: if you bought because you believed a stock was undervalued, then you are waiting for valuation to normalize. If that belief is correct, the price should recover sooner or later. If it never does by the time you can no longer hold it, then either your original judgment was wrong or your later decision to sell was wrong.
I have been trying to become a genuine value investor, but I still do not fully have the courage to ignore every drawdown. Some people can watch a position sink to a net value of 0.3 and still refuse to sell, then eventually make money when it doubles. I am not built quite like that.
In this current cycle, my biggest overall drawdown was probably around 12% of principal, though I do not remember the exact figure. I think I could psychologically tolerate a total portfolio drawdown of roughly 30%. Beyond that, the pressure would become serious. That threshold applies to the portfolio as a whole, not to individual names. I am much more patient with single-stock losses because my holdings are diversified. Several positions have been down more than 30% at one point, and I did not feel much because no single name dominates the portfolio.
For example, Tongwei is still down 33% for me even after I averaged down twice, but I still believe it can recover. Tianqi Lithium, which I have already sold out of, was once down around 35%; I finally exited when it rebounded to roughly a 4% loss.
At least for me, the key to staying profitable so far has been buying only undervalued stocks, spreading risk across multiple holdings, and trading less. I stay cautious because there is so much I do not understand.
If I were to add one more rule, it would be this: I would rather pay a higher price for a good company than buy a bad one just because it looks cheap. By “good” and “bad,” I do not mean market labels like industry leader versus second-place player. I mean companies that meet my own standards after careful selection. I have hesitated over this before. Sometimes the company I liked most was more expensive, so I chose a second- or third-tier alternative simply because it looked cheaper. In practice, the better company often turned out to have much stronger upside.
As for this latest rally, my current plan is to watch for another couple of days. If momentum weakens on Thursday or the market pulls back, I may reduce some positions on Friday—especially older holdings I never liked very much and that fell more heavily in the recent decline, whether they are currently at a gain or a loss. If the advance remains steady, then I will reassess after the National Day holiday. I remain structurally bullish on China’s stock market over the long run. What I do not fully trust is the short-term staying power of policy-driven rallies. So I may use this window to rotate positions and wait for better opportunities.
My view on other assets is also part of that framework.
On U.S. stocks—especially the Nasdaq—I think valuations are seriously stretched, and I lean toward expecting a significant correction at some point. On gold, I believe it will appreciate over the long term. Gold is a scarce metal, Earth’s reserves are limited, and more importantly it has real industrial uses. That makes it very different from things like diamonds, whose value depends much more on preference and perception. As for cryptocurrencies, I have never really understood them, so I do not pretend to have a useful opinion.
Putting those three together, I suspect U.S. equities and markets highly correlated with them are more likely to enter a downward phase; gold may continue rising, but its usefulness as a large-scale store for broad household wealth is constrained by supply; and in crypto, whether prices rise or fall, the participant base may not change much. Overall, I think a decline in U.S. stocks and closely linked markets would actually be helpful for Chinese equities. China has the world’s second-largest stock market, and in that sense it is a natural alternative. If money loses confidence elsewhere, some of it could eventually flow here. Of course, many people disagree and say capital leaving U.S. stocks could simply stay on the sidelines instead of coming to China. I do not feel the need to argue with that. There is no clear winner in such debates, and not much point in forcing one.
A few days ago I posted something online about Ray Dalio’s pessimistic comments on China’s economy, and someone sarcastically replied with the equivalent of, “Go ahead and buy more Chinese stocks and wait to get rich.” I did not respond. We were not even speaking in the same conceptual language.
That is true of investing more broadly. I do not think there is one universally correct method of managing money. There are only methods that fit different people. Personal financial growth is really the process of finding the method that suits your temperament.
I am impatient in daily life and like to finish things quickly, but I am also capable of a lot of patience over time. That combination eventually pushed me toward a slow, steady, old-ox style of investing—moving forward little by little and letting small gains accumulate. I chose this route because I do not have the quick instincts or specialized skills needed for technical trading. That style simply does not fit me.
The funny part is that it took me many years to accept that. More than a decade ago, when I first entered the stock market, friends taught me how to read candlestick charts and technical patterns. To this day, I still have not really learned it. Worse, I spent years feeling frustrated that I could not master it, and even traded for a long time using half-understood technical ideas. Only in the last two years did it really click for me: if you cannot learn a style that suits someone else, stop forcing it. There is more than one road to Rome. Pick the one that fits you instead of insisting on walking someone else’s path. I think many people are still stuck in that confusion.
Investing is also psychological training. When the market falls, pressure rises. When it surges, pressure rises too. Even a long stretch of flat performance can wear on the mind. Building emotional resilience is not optional.
I have read a number of books on value investing. One recent book I found especially agreeable was Investing Made Simple; in fact, I would mainly recommend just the first chapter, which I thought was the most valuable part. As for classic value-investing writers like Fisher and Graham, I found them difficult to get through, and personally I did not gain as much from them. Oddly enough, brief lines from Buffett and Munger have helped me more—sayings like “in the short run the market is a voting machine, in the long run it is a weighing machine.”
This is only a reflection after a day of violent market movement, not a technical guide to stock trading. I simply wanted to sort out my own thinking while the market was swinging hard.