鸿运777

Over the past period, the overheated sentiment in semiconductors was obvious. Even if you know nothing about the stock market, you could tell, but you chose to ignore it.

When there are no dissenting voices around you, it means you're about to step into a big pitfall.

1. On Monday's opening, semiconductors continued to face pressure. After giving the judgment that semiconductors need to rest for a while, they have actually been adjusting. 2. We wrote before that the 85% profit in memory is definitely unsustainable. All the previous stock price increases were indeed because the companies earned more money, but the profit increase comes from two parts: one is selling more products, the other is price increases. 3. During this period, memory relied entirely on price increases and did not sell more products. 4. As long as you judge that prices won't rise further, then the rally driven by price increases should be terminated. Failing to control oneself is against human nature. 5. A truly good buying point often feels emotionally depressing when you buy in. When you feel very comfortable buying in, it's basically over. 6. Because there's no noise against you around you, and everyone agrees with you, you feel very comfortable, so you should lose money. 7. The stock market is where a minority make money and the majority lose money. If you stand with the crowd, who else will lose money if not you? You need to stand with the smart people. 8. No matter how good the company or how confident you are in a stock, you must avoid the peak of sentiment. If you buy at the peak of sentiment, you will inevitably suffer some losses when sentiment recedes. 9. Trend breakdown - we also reminded about the right side. The right side is the breakdown of the entire trend. 10. However, writing a separate point, I am not bearish on semiconductors. I think memory is just a mid-game adjustment because sentiment ran too high before. For those who want to buy, it's actually a relatively good buying point. 11. What the market is trading now is the peak of pricing power. In other words, the market cannot accept higher memory prices. But even if prices don't rise, or even if there is a 10%~20% pullback, memory companies are still very profitable. 12. It just needs time to digest. As time passes, the company's cash on hand becomes more and more, so the company's market value will also be pushed higher, and the stock price will naturally rise. 13. Another issue is whether their buyers made more money after buying memory. We need to look at the ROI of these companies because the earnings reports of big tech companies are about to come out, and the market is waiting. 14. There's a tricky part in the middle: if the earnings reports of these big tech companies are good, funds will definitely first go to boost these big tech companies, not semiconductors as the first choice. Semiconductors are a transmitted positive. 15. So if I were to judge subjectively, if the earnings reports of these big tech companies are good, big tech companies will rise first, and then it might be transmitted to semiconductors to rise next quarter. 16. Of course, if the earnings reports of big tech companies are not good enough, then it's collective suicide.

1. Good companies are mostly similar, while bad companies each have their own problems.

2. They have sustained demand, pricing power, high profit margins or high return on capital, moats, the industry is still expanding, and the growth quality is high.

3. Customers can't leave, price increases won't cause massive churn, high gross margins, high renewal rates, high customer stickiness—all essentially stem from this. This is what we often call stickiness.

4. A good company is a multiplication formula: Long-term value = Industry space × Moat × Profit margin × Growth quality × Management × Balance sheet × Valuation.

5. The explosion of each excellent point can bring huge profit realization.

6. Naturally, you need to see through the surface to the essence. High growth, a big narrative, and the core beneath high profits require us to think a bit; you can't directly 'get' it.

7. High growth but low quality: Relying on price cuts, subsidies, M&A, burning capex to exchange for revenue.

High narrative but low profit: The story is big, but gross margin, cash flow, ROIC show no sign of realization.

High profit but low growth: Cash flow is great, but the industry is already mature, valuation cannot be too high.

High moat but overvalued: The company is indeed excellent, but the stock has already priced in the next 3-5 years of EPS.

High capex AI narrative: Upstream revenue is explosive, but beware that the customer's return on investment is unclear, which may ultimately backfire on demand.

8. Consult crcl to see which one it fits at this stage? High narrative but low profit (the company is not yet profitable), high growth but low quality (subsidizing to grab market share stage).

9. After realizing the problem, the next step is to think about whether there are paths to improvement for these two issues; the answer is yes. Banks won't open an account for an agent, but on-chain it can have an identity.

10. The mutual realization of currency flow between agents is also an irreversible major trend; it's just a question of who ends up with it. As for price cuts and subsidies, they are to achieve scale and quickly capture the market.

11. But for companies in their early growth stages, it's better for everyone to keep positions under 5%, otherwise, it's easy to have a mental breakdown. The difficulty with crcl now is not itself, but whether btc can hold the $60k level.

12. The correlation with the crypto circle is still too strong now. If it can weaken and cut into its own payment narrative, that's when it will be truly recognized by the market. Otherwise, it will just be priced as a linked product of the crypto circle and have no future at all.

13. If you want to buy into the crypto circle, just buy btc directly. Why take the detour?

Compression

1. SpaceX went public last night, so there should be many people wanting to talk about it today. I won't discuss it then, and will continue to do some opportunity mining for everyone.

2. Continuing to analyze the wrongly sold-off AI applications sector. I've mentioned before that stock price increases are mainly due to two factors: one is the expansion of valuation, and the other is profit growth.

3. The reverse is the contraction of valuation and the reduction of profits.

4. The software sector has fallen quite badly over the past period, it's the year with the lowest returns in the past 10 years, with a YTD return of -12%, second only to medical devices.

5. The main drag on this big drop in software stocks is the contraction of valuation.

6. Because investors are worried about the moat of SaaS software companies loosening and the loss of pricing power, they started to compress their valuation multiples. For example, compressing from the original 30x valuation to the current 20x, naturally causing the stock price to fall.

7. With profits unchanged, a 1/3 contraction in valuation would cause the stock price to fall by 30%. This is the main reason.

8. Under this expectation, the market believes the profits of software stocks will be greatly affected. In plain language: it won't be as profitable in the future as it is now. But is that the actual situation?

9. No, it's not. Actually, the overall profits of software stocks this year are still rising. For such a high-market-cap sector, this profit increase is not low. You can check the above chart yourself, because originally it already had a growth rate of over 20%.

10. If it has a 20% growth rate, and you increase it by another 5%, that's a 25% growth rate. Just think of it simply like that. Although cash flow adjustments and profit adjustments aren't exactly the same, this rough understanding is fine. Actually, if you calculate it, it would be even higher than 25%.

11. This creates the typical divergence between expectations and reality we talked about. The market is saying, "I think you won't make money this year," but the reality is, "Not only did I meet my performance targets this year, I exceeded expectations."

12. The market will recognize the opportunity in this sector at some point, and you can be the hunter who gets in early.

13. When will it rise? Will it rise? No one knows. But the risk-reward ratio objectively exists.

14. There is no such thing as a risk-free trade. A real trade is when you can clearly see its risks and are still willing to trade.

I thought the ladder wouldn't work either, but luckily it was the brokerage firm that crashed.

2026-06-09 15:35

U.S. President Donald Trump has claimed that an Iran deal is "imminent" 37 times, but no deal has been reached to date.

Valuable patience is required; you sow in spring to reap in autumn. If you don't sow in spring, how can you have an autumn harvest? If you want to sow and reap in the same spring, that goes against the natural order.

Breaking Cognitive Biases

1. I've been thinking a lot lately about how to break my own cognitive biases. From the perspective of lifelong growth, when things are going particularly smoothly at a certain stage, it's actually a good time to challenge your assumptions.

2. When things are going well, you're more easily fooled by rewards.

3. For example, if you make consecutive profits in investing, it's easy to attribute it to skill, but it might just be that the market's style happens to favor you.

4. If a company you bought goes up, it might just be a combination of liquidity, sentiment, and crowded capital giving it a push.

5. Consistently collecting option premiums doesn't necessarily mean your strategy is unbeatable; it could just be a temporarily favorable volatility environment, and tail risks haven't arrived yet.

6. Don't stay trapped in the "Wow, I'm so good" mindset. Instead, shift your thinking: this time it went well, what part was skill, what was luck, and what was just the environment being favorable?

7. Am I currently amplifying risks because things are going smoothly? This is the question I keep asking myself over and over.

8. Being able to actively doubt yourself even when things are going well shows you're leveling up.

9. What truly skilled traders can do: in favorable conditions, they reduce leverage, shed illusions, and avoid self-deification.

Rebalancing

1. The core consideration of portfolio rebalancing is not "sell when it rises too much, buy when it falls too much," but rather to think from the perspective of risk control.

2. Bring the portfolio back to your acceptable risk level, while moving money from assets with declining cost-effectiveness to assets with higher cost-effectiveness.

3. Rebalancing itself is a form of risk control. If many people don't rebalance now, their portfolios would basically be semiconductor industry ETFs, which is poor risk control.

4. A more practical approach is: target allocation + trigger threshold + batch execution + investment logic review.

5. Don't adjust positions just because you look at the market every day. This easily leads to a profit ceiling. It's like when you sell call options, why you keep getting squeezed is precisely because your profit-taking room is too narrow.

6. A simple monthly check and a formal quarterly review are fine. Try not to make the unit shorter than monthly. If the deviation is small, don't move; if the deviation is large, then adjust.

7. Like the current semiconductor market, the deviation is large, so you need to act; but if it was before April this year, then you wouldn't need to move.

8. However, rebalancing is not a mechanical action. If a stock rises because its performance, profit margins, orders, and AI monetization capabilities have all improved, then it may not be expensive after the rise, such as NVIDIA, Broadcom, and Amazon.

9. Unless there is an extreme situation where a single stock affects life and death, I believe many people's storage holdings have encountered this situation.

10. When buying during rebalancing, also think from multiple dimensions.

11. Has the investment logic broken down? Is the valuation attractive? How will the company release profits? Does the portfolio already have similar or correlated risks?

12. Focus on companies where the investment logic is intact, the valuation is better, and the future risk-reward ratio is higher.

13. Also, when rebalancing, don't adjust everything at once, and don't cut strong thematic positions too early. Leave some room for yourself.

14. Controllable portfolio risk, reasonable capital allocation, and continuous optimization of the long-term risk-reward ratio—this is the charm of rebalancing.

With Composure

1.Why could I buy software stocks so calmly when they were wrongly sold off, and continue to add to my position a few days before they took off again? Because everything was planned out long ago, so there's no need to overthink, just execute the plan.

2.Composure on stage comes from hard work off stage. The 'now' I wrote about yesterday rose 15%.

3.Of course, the logic behind software stocks benefiting from AI isn't so straightforward; it's more like a second-order logic that requires a bit of deduction.

4.The more AI proliferates, the more enterprises need data governance, identity security, process orchestration, automation platforms, cloud data warehouses, observability, and compliance systems.

5.But the short-term narrative is: AI Agents will replace SaaS. This is simpler, more exciting, so it spreads faster and causes more anxiety.

6.And then, so many people's anxiety overwhelmed their reason.

7.With the big reversal in software stocks, this account of mine has finally squeezed into the top 1%. It's not easy to get into the top 1% without being fully loaded on semiconductors.

8.So, as of yesterday, my trading days for the first half of the year are basically done. Because December and January were mainly for thinking about how to rebalance my portfolio, not trade-driven. So for me, once May is over, the trading days for the first half are over, and June marks the start of the second half.

9.But the annual KPI was completed long ago.

10.Being able to catch the software stocks this time also benefited from portfolio rebalancing. I'll write about portfolio rebalancing in the next post.

11.One last thing to add: this time, AI will cause a divergence in software. The good ones will get better, the bad ones worse. The most dangerous are: software with single functions, low stickiness, charging by seat count, no data moat, and low customer switching costs.

12.Over, everyone have a pleasant weekend.

It's so hard

1. A newly joined analyst told me that investment research is really hard.

2. Apart from relying on parents, there's no industry that isn't difficult. You're already very lucky to be in this line.

3. The profit chain in this industry is almost the shortest one ordinary people can access. You don't need to build connections, manage a team, have great entrepreneurial ideas, or attract talent.

4. You just need to give your money to excellent companies and their excellent management teams. You can let the best people in the world make money for you.

5. This industry is much fairer compared to others. After all, everyone makes money when the market rises; you just need to be on board.

6. Fortunately, we have AI now. Getting started is not difficult; what's hard is mastering it, which requires some persistence.

7. AI is amplifying the gap between people.

8. I built an agent; the recent stock picks were all chosen by AI for me. By the time it gets to me, it's just review.

9. Actually, the screenshots above were all made by the Agent for me. The results are known.

10. Truly integrate AI into your own workflow; don't just scratch the surface. Such a huge leap in productivity will inevitably bring enormous economic value. If it hasn't brought you huge economic value, you might not be using it properly.

11. Finally, if a group of people can only amplify each other's FOMO or EMO emotions when they get together, then this circle has no value or meaning whatsoever, and it might even hold you back. Leaving as soon as possible is the best choice.

12. When a good company falls to a good price, you should buy it. At most, just consider when to buy.

Simple Wealth

1. The main portfolio for long-term wealth should be as simple, low-cost, and sustainable as possible.

2. The theme is the title of this book, and it's also the fundamental reason why my long-term holding account may not move once a year—simple and sustainable.

3. When you have income, lean toward stock index funds; after retirement or nearing financial independence, you can increase bond index funds to reduce volatility.

4. Because income itself smooths out the volatility curve of your wealth, a bit like when we implement a SP strategy, though not exactly the same.

5. Last night, I continued to hoard some unwanted software stocks. I just like picking up trash, I don't go where the crowd is.

6. In business, you always need to consider how to retain your customers. Homogeneous products and services can only trap you in endless price wars. When will this internal competition ever end?

7. The premise for investing in growth or recovery is that the company has solid basic factors. If the cash flow breaks, then you can just walk away, no need to look further.

Snowballing

1. The gap between people isn't widened by a few major decisions, but by long-term repeated small choices, small habits, and small environments, compounded like interest.

2. When I first read that line about 'Compound Interest,' my eyes lit up. It also laid the foundation for my daily review habit, which I've quietly accumulated for 1100 days, up to today.

3. For trading, the daily choices are small, but the long-term outcomes are huge. What to eat, what to watch, who to interact with, what assets to buy, whether to review, whether to trade on impulse—in the short term, it seems insignificant, but in the long term, it's a fork in the road of fate.

4. But the hardest part of compounding is the early stage, because you can't see the results. Many people give up before takeoff. The real key is to endure the 'insensible accumulation period.' Reading, exercising, investing, writing, researching companies—they're all like this.

5. If you endure it, you can break out of the cocoon and become a butterfly. No success is achieved without persistence, no accomplishment is gained without effort.

6. Telling you to buy, to buy with leverage when the market is overheated is a crime; telling you to cut losses when it's fallen so much you don't even want to look at your phone is also a crime. Our public account doesn't do that kind of thing.

7. What content you consume long-term, who you communicate with, and what viewpoints you accept will determine your judgment framework. This is especially obvious for investors: long-term exposure to emotional viewpoints makes trading increasingly short-sighted; long-term reading of financial reports, earnings calls, and industry data makes judgment increasingly stable.

8. Everyone should build their own information sources. High-quality information sources are the foundational basis for resisting interference and short-term noise. If you're surrounded by noise every day, it's hard to make the right judgment.

9. Compounding doesn't just help you; it can also harm you. Bad habits, bad debt, bad positions, bad emotions, and bad circles all generate 'reverse compounding.' A single loss isn't scary; what's scary is continuing to add leverage, get carried away, and engage in revenge trading after a loss.

10. Bad habits can also let you accumulate little by little, eventually committing an irreparable major mistake. Do not do evil even if it is small.

$Tencent(TCEHY.US) $TENCENT(00700.HK)

Cherish the Divergence

1. The new round of 13F reports are gradually being released, and some individual stocks are starting to show divergence in everyone's holdings. The biggest divergence is in software.

2. Some have liquidated their positions, some have added to their positions, and some have heavy positions.

3. Positions most directly reflect attitude. Cherish the divergence. Every time divergence occurs, it's a rare opportunity to add to positions for companies with good fundamentals.

4. There's a classic saying in the investment circle: buy on divergence, sell on consensus.

5. This phrase can well summarize the guiding significance of capital behavior for operations.

6. There are always counterparties in the market.

7. The moat of software has never been in technology. Is it hard to write a WeChat? Is it hard to write a Tonghuashun? Can you get Tonghuashun's data? Will anyone use the WeChat you write? Tonghuashun has a full license, can you manage that?

8. Even before AI, we could make WeChat, we could write Tonghuashun. Only companies with real data accumulation and data privileges, combined with AI, can exert the maximum effect.

9. I maintain an optimistic attitude towards the divergence in software.

South Korean government: Memory is a cyclical stock.

Memory company executives: We are cyclical stocks.

Big tech company executives: They are cyclical stocks.

Wall Street and content creators: Memory is no longer a cyclical stock.

Recently, stories have started circulating online about celebrities and KTV hostesses trading stocks, mostly focusing on tech sectors like memory and semiconductors. The impact of this narrative is too obvious. Every cycle peak has such narratives. It's simple: they want capital to keep flowing into these hot sectors so they can exit. While it can't be said that the peak is immediate, this is clearly not a good sign.

Even if you're a complete novice who knows nothing, you should know that when the crowd is at its most exuberant, it's never a good time to get in.

It's actually quite reasonable.

If Anthropic is valued at $1T, with year-end ARR/run-rate reaching $100B, that's only about a 10x price-to-sales ratio (not expensive for a company that's still early-stage and growing rapidly).

If the profit margin can reach 40%, the corresponding PE would be about 25x (large tech companies have long maintained PEs above 30x), which is very cheap.

To get to the point: if it goes public with a $1 trillion market cap, I think it's worth buying.

Current stage: Fierce competition means prices can't be raised temporarily, and profits can't increase. Programming is the only area where AI has deeply penetrated.

Future stage: Once the competitive landscape settles, companies will start focusing on profitability, with deep penetration across various sectors and unlimited potential.

A 10% expansion in profit margin, from 40% to 50% (software companies have long-term profit margins of 70%+), translates to a 25% growth in the company's profitability. Over 4 years, that's 100% profit growth, easily achieving the exaggerated gains of a Davis Double.

Nowadays, what company doesn't pay for large models? And this payment is just beginning. In the future, there will definitely be a large model company with a market cap exceeding $10 trillion.

Goldman Sachs has finally come around. Last year, I talked with one of their analysts until my mouth was dry.

Actually, Copilot has more paid seats than ChatGPT and Gemini, but capital is currently speculating on hardware, and the rotation hasn't reached software yet $Microsoft(MSFT.US)

Does investing require such complex logic? Just figure out whether to invest in an industry and company that has grown 14 times in 8 years, and that's it.

Since the war began, SOXX has risen 30%, the Mag 7 has risen 10%, the S&P has risen 5%, while the equal-weighted S&P has fallen.

This chart is good, it shows that companies affected by the war are still falling; while the ones rising in this wave are mostly companies with little relation to the war and real profits. These companies are supporting the index's rise. Most tech stocks have little to do with the war.

This is why we focus on buying those highly profitable companies. If you haven't done that, you're likely still losing money in this wave.

In plain English: This rally is profit-driven. If you want to buy, buy profit-driven companies. Valuation expansion is just riding the wave, over.

Nothing to say, never look for your own problems, this is the same both inside and out...

This is the advantage of Microsoft's distribution channel. No matter how great an ordinary company is, it's impossible to sell 740,000 membership seats all at once, but for Microsoft, it's so easy$Microsoft(MSFT.US)

Reduced some leaps calls again. When the price rises, you need to gradually reduce leverage. Don't get it backwards.