Financial Mom Weekly Summary 142: Two Paths for Beginners to Achieve Stable Profits in the Market

“ The more you understand yourself, the more you know what you are good at and what you can get from the market, the more stable you can be in taking a sip from the market accordingly.”

Today, the three major Hong Kong stock indices fluctuated and closed lower. At the close, the Hang Seng Index (HSI.HK) fell 0.11%, the Hang Seng Tech Index (HSTECH.HK) fell 0.33%, and the HSCEI fell 0.08%.

Over the weekend, I had time to flip through the book Market Wizards: Interviews with Top Traders,

and found that these legendary traders have diverse styles, which shows that

success in financial markets is not a one-size-fits-all approach; there are many paths to Rome.

Therefore, for novice investors, reading such books is beneficial—at least they won’t blindly worship a single investment strategy without considering whether it suits them.

Instead, they can choose the style they most identify with and matches their personality, then focus on mastering it.

The more you understand yourself, the more you know what you are good at,what you can get from the market,the more stable you can be in taking a sip from the market accordingly.

Personally, there are currently two paths for novices to achieve stable profits in the market:

First, stock picking—only investing in assets you genuinely believe in and building a portfolio; but this requires the ability to identify and stick to value.

Second, trend selection—only trading trends you understand, even without stock-picking skills, you can trade major market indices; but this requires the ability to identify and capitalize on trends.

Of course, experts have a third path—combining both—but novices can do well by mastering just one.

In the first four years of investing, I chose the stock-picking path but failed to achieve stable profits. Upon reflection, I realized I still have a long way to go in identifying and sticking to value, especially in cutting losses decisively.

Over the past two years, the more I understand myself, the more I realize I might be better suited for the trend-selection path. For the next five years, I plan to focus on mastering this path.
 

01—Live Portfolio Statistics and Capital Flow Tracking 

This week's live trades: None

This week's live portfolio statistics:

Last week, Tencent Holdings (hk00700) rose 1.33%, Lead Intelligent rose0.73%, Muyuan Foods (sz002714) fell 5.93%, Changchun High-Tech (sz000661) fell2.78%, Focus Media fell1.46%,

Starting from November 2023, live portfolio performance statistics will be disclosed at the end of each month or the week with trades. No statistics this week due to no trades.

This week's capital flow tracking:

The purpose of tracking weekly capital flows is to help ordinary investors assess whether the fundamentals of stocks/industries have begun to improve from a capital flow perspective, identifying turning points in odds.

Because institutional capital only flows in significantly when they see real improvements in company/industry operations and gain confidence. Otherwise, rallies driven solely by buybacks are short-lived.

Note: When tracking weekly capital flows, pay attention to whether the company has announced buybacks/executive purchases and the amounts. It’s best to track stocks after weekly oversold conditions or around earnings reports.

Perfect case study:

The weekly capital flow chart of Tencent’s last oversold rally, which doubled in a short time. Even during adjustments, institutional capital never net outflowed—a perfect example of capital flow and price synergy. Placed here for reference.

Two weeks after earnings, the focus of capital flow tracking shifts to weekly oversold stocks. This week, Changchun High-Tech and Lead Intelligent are highlighted. A brief tracking of their weekly capital flows:

1. Changchun High-Tech

This week, Changchun High-Tech hit a four-year low, but few funds are showing confidence. Continued tracking is needed.

2. Lead Intelligent

Lead’s capital flow this week is interesting—the stock rose, but institutions net sold. Likely, fundamentals still lack confidence. Continued tracking.
 

02—Live Portfolio Fundamental Tracking

1. Muyuan Foods: Post-earnings, institutions conducted their 6th research visit in 3 months. Key takeaways from the latest report:

Cost reduction and efficiency: Focus on R&D innovation. While smart tech can’t fully replace humans yet, improving staff skills and management efficiency is core to cost-cutting.

Feed formulas will adjust to raw material prices to lower costs. African swine fever is managed primarily through prevention.

2. Capital expenditure, debt repayment, and dividend plans

All three plans are reasonable, and the company remains stable. This week’s pullback is likely due to technical correction after earlier gains.

2. Lead Intelligent: Finally, a normal "Share Buyback Completion Announcement" after six months
 

Last week, I mentioned that Lead’s 350M buyback plan, completed last year, was repackaged monthly as "Progress Announcements,"

misleading investors who didn’t read closely into thinking the company was still buying back.This made the disclaimer at the start of each announcement seem like a joke.

This week, the company finally released the "Share Buyback Completion Announcement" that should have been published six months ago.
 

Whether it’s because they noticed investors like me calling out their misleading announcements or other reasons, at least we won’t see such self-deceptive "progress" reports anymore.

I hope my insights help you. See you in the next post.

Disclaimer:This article shares my trading system philosophy and investment logic, not advice. Any stocks mentioned are not recommendations. The market carries risks—invest wisely!