Insights | "No Stocks in Hand, but Stocks in Heart" – Easier Said Than Done

From a purely short-term perspective, holding positions over the weekend increases risk, and the leverage effect of options expiration amplifies this. Last Friday, the US stock market actually performed quite well. War won’t last forever; once a turning point occurs, the stock market can recover very quickly. The problem is that before the outbreak of conflict, stock valuations were not low, leaving limited room for error, and some risk perceptions have indeed changed.

At the end of last year, I was fortunate to meet a senior expert who is much more successful than I am. One of his mottos, “No stocks in hand, but stocks in mind,” is worth pondering. The idea of “no stocks in hand, but stocks in mind” means not holding stocks physically, but being fully prepared to jump into a bull market at any time. It’s not easy on the surface; many fall into value traps. Besides ignorance and greedily trying to buy cheap to appear smarter than others, it’s also because they think they’ve done their homework and believe the market is wrong. When prices fall, they think they will only get cheaper. Occasionally, they might catch a few good trades, but in the long run, the profit-to-loss ratio is too poor to survive.

I have adopted some of my senior’s philosophy. In recent months, it has been somewhat effective, especially with Korean stocks. Unfortunately, my strategy is still too diversified, and overall efficiency remains low. Avoidance can be shameful but useful; I have again wasted several percentage points trying to understand this principle. My initial feeling is that the number of trades has decreased, but the intensity of operations has greatly increased. Plus, I haven’t been a loser in the past, nor do I need or dare to completely transform.

(Excerpt)

Huang Guoying, Eye of the Hunter

Please refer to today’s Hong Kong Economic Journal for the original article.