This week, the market overall exhibited a volatile and corrective trend, accompanied by a noticeable shift in market style. Sectors that had previously seen significant gains, such as technology and resources, experienced substantial pullbacks. In contrast, consumer sectors like branded baijiu, which had been consolidating for an extended period, staged a historic rebound. The financial sector also showed signs of recovery.
Looking back at 2025, the market displayed a typical "barbell" characteristic. One end of the barbell consisted of high-dividend sectors, represented by banks, which saw substantial gains due to attention from large funds seeking stable returns; many bank stocks even hit new highs last year. The other end comprised technology and innovation sectors benefiting from the "14th Five-Year Plan," such as humanoid robots, chips and semiconductors, computing power and algorithms, solid-state batteries, quantum technology, controlled nuclear fusion, and commercial aerospace, which showed alternating活跃 activity. Many traditional sectors, humorously referred to as "old stalwarts," formed the middle part of the barbell and generally delivered平淡 performance.
At the end of last year, I released my "Ten Predictions for 2026." Among them, I clearly stated that market styles in 2026 would become more diverse, with more sectors experiencing rotational gains. Technology stocks would remain a key主线 but not the only one. The expected sequence of this bull market's rise was forecast as "first the small growth stocks rise, then the medium cyclicals, followed by the old stalwarts." Technology stocks are termed "small growth stocks," while defense, non-ferrous metals, and new energy are considered "medium cyclicals" due to their characteristics falling between small growth and old stalwarts. Traditional sectors like consumer blue-chips belong to the "old stalwarts." So far, the rotational rhythm of the market's rise has largely aligned with this judgment.
At the beginning of this year, the market launched a strong upward attack, with the Shanghai Composite Index experiencing consecutive gains at one point. Market sentiment became亢奋. Daily trading volume in the two exchanges once approached the 4 trillion yuan mark, while the margin lending balance hit a new historical high, surpassing approximately 2.7 trillion yuan. When the market shows signs of overheating, it often signals the start of a short-term adjustment, as seen when the rally began to cool. This market cycle is a typical "slow and long bull market" and must not evolve into the "fast and crazy bull market" seen a decade ago. Only by maintaining a slow pace can this rally last longer and allow more investors to achieve favorable returns. Rapid rises and falls are often the main reason many investors lose money. Deeply understanding the logic behind a slow and long bull market is crucial for grasping market rhythms.
Over the past two weeks, the market has undergone a phased adjustment. Particularly, technology stocks with significant prior gains have seen noticeable declines under profit-taking pressure. However, this has not altered the overall upward trend of the market. While many worry whether this bull market has already ended, I believe it has not; this is merely a normal correction period within the slow and long bull market.
As the Spring Festival approaches, it is foreseeable that "how were your investment returns last year?" will become a hot topic during holiday visits. The wealth effect is likely to spread during the vacation. If overseas markets remain calm during the holiday, post-holiday market performance is值得期待.
Regarding the classic question of "holding stocks or cash over the holiday," my answer is: the key lies in the持股 structure. If you hold high-quality stocks or quality funds, there is generally no need to rush to sell; you can confidently hold stocks over the holiday and await further performance afterward. If you hold stocks that were previously overheated by speculation and lack fundamental support, you should consider taking profits timely and holding cash over the holiday, embracing the break with a踏实 mindset.
The Year of the Snake market is concluding, and the Year of the Horse market is arriving. The Horse Year market is expected to continue its previous trend amidst volatility, with rotations occurring between sectors. Compared to the U.S. and Hong Kong stock markets, the A-share market is likely to see larger capital inflows, thus presenting more opportunities. The A-share market in 2026 holds great potential. Investors can seize opportunities by selecting优质 industries and companies, or by allocating to related funds.
The Hong Kong stock market has experienced significant adjustments over recent months, with the Hang Seng Tech Index falling over 20%, entering a technical bear market and prompting accelerated capital outflows. Last year, the total funds raised from Hong Kong IPOs again ranked first globally. While this brought new listed company resources to the Hong Kong market, it also placed considerable pressure on secondary market liquidity. Consequently, the adjustment in the Hong Kong market has been relatively pronounced recently.
Overall, 2026 will see more sectors participating in rotations. For allocation, it is recommended to maintain a balanced approach rather than concentrating bets on a single theme. For example, consider allocating one-third of the portfolio to the technology sector, one-third to "medium cyclicals" (such as defense, non-ferrous metals, new energy), and the remaining third to "old stalwarts" (like branded baijiu and other consumer blue-chips). Such a portfolio aims to achieve a balance between offense and defense.
Furthermore, it is still advisable to maintain approximately 20% allocation to gold-related assets within the investment portfolio, adding them on dips to enhance long-term portfolio stability. Recently, gold prices surged significantly, accumulating substantial profits and triggering a sharp correction, even an epic decline. When gold prices soared above $5,000 per ounce, many investors became excited and chased the rally, leading to short-term套牢. When prices fell to the $4,400 low point, panic prevented them from buying the dip. Recently, international gold prices have been volatile around the $5,000 psychological level. Such high volatility has left many investors uncertain. For most investors, this serves as a vivid lesson in risk警示: avoid chasing rallies, especially after sharp price increases, as it often increases the risk of short-term套牢. The famous quote by investment master Peter Lynch, "Sell when the crowd is euphoric, buy when it's despondent," applies equally to stock and gold markets. Warren Buffett also advises, "Be fearful when others are greedy, and greedy when others are fearful." Yet, in reality, many investors do the opposite, leading to "buying high and selling low," ultimately harmed by market fluctuations.
From a long-term perspective, the core logic supporting the rise in international gold and silver prices remains intact. The U.S. government's massive debt, coupled with sovereign nations and institutions selling U.S. Treasuries and shifting allocations to assets like gold and silver, reflects the global trend of "de-dollarization." The U.S. Dollar Index has also retreated from highs around 110 to approximately 95. De-dollarization may be a direction for the coming years or even decades, driven by frustration with dollar hegemony. Since taking office, actions perceived as逆行倒施 and unreliable have led some to joke that the only one who can defeat Trump is Trump the next day. As president of the world's most powerful nation, his policies have exacerbated global instability. Recent visits to China by leaders of Western developed nations like Germany, the UK, and France can also be seen as a response to perceived U.S. hegemony, indicating even allies find it difficult to tolerate. This has further intensified international capital's selling of U.S. Treasuries and adjustments in allocations towards precious metals like gold and silver.
Therefore, the long-term upward trend for gold and silver prices has not changed. Investors are advised not to focus excessively on short-term price fluctuations but to view gold and silver as long-term asset allocations. Each significant decline presents a buying opportunity. Adopting a strategy of "buying heavily on big dips, buying moderately on small dips, not buying when flat, and坚决 not chasing rallies" can help achieve a favorable entry cost and preserve and grow assets through long-term holding. This may be a sound investment strategy for assets with long-term upward trends.