True Masters Never Do High-Risk Things

Weekly Reflections

The final result of the “Crude Oil Treasure” (Yuanyoubao) incident is still awaiting investigation by the China Banking and Insurance Regulatory Commission and the China Securities Regulatory Commission, to find out whether the bank sold the high-risk Crude Oil Treasure to the elderly in the form of wealth management products, and whether the Bank of China failed to fulfill its obligations as a fund manager, leading to the forced liquidation. Regardless of the result, this is an extremely profound lesson for investors. When investing in any product, one must do some research and analysis. We may not have investment analysis capabilities, but we cannot be without risk awareness.

When investing and speculating, many people like to use “high risk brings high returns” and “wealth comes from danger” as excuses for not doing their homework. The level of risk is a relative concept. Driving on a winding mountain road is a very high-risk thing for a novice, and they may fall into the abyss at any time. But for residents who have lived in the mountains for a long time and need to drive on this road to commute every day, this is a daily activity with almost no risk. The same logic applies to investment.

For everyone, things outside their circle of competence are almost always high risk. True masters never do high-risk things, meaning they rarely do things outside their circle of competence. But they pay attention to high-yield, high-return projects and products, constantly learn and improve, and bring them into their circle of competence.

Weekly Market

Period: 2020420-20200426

Market (%)	Index	This Week	1 Week Ago	2 Weeks Ago	3 Weeks Ago
Shanghai Composite	2808.53	-1.06	1.5	0.58	-0.3
Shenzhen Component	10423.46	-0.99	2.23	1.17	0
ChiNext Index	2003.75	-0.84	3.64	1.72	0.15
Hang Seng Index	23831.33	-2.25	1.71	4.38	-1.06
HSCEI	942.37	-1.38	0.17	4.06	1.25
Red Chip Index	3700.59	-1.66	1.13	5.9	2.06
Dow Jones	23775.27	-1.93	2.21	10.77	-2.7
Nasdaq	8634.52	-0.18	6.09	8.9	-1.72
S&P 500	2836.74	-1.32	3.04	10.4	-2.08

Shanghai-Shenzhen-Hong Kong Stock Connect

Market (CNY, Billion)	This Week	Last Week
Shanghai Connect	18.63	124.99
Shenzhen Connect	5.53	175.22
Hong Kong Connect	75.83	62.1

This week, global indices generally fell, which has a great deal to do with the collapse of the crude oil futures market. Of course, the most direct reason is the impact of the epidemic. Under the collective decline of the three major indices, foreign capital still showed a net inflow. The epidemic in the mainland has peaked, and the market bottom has been established.

Hot Industry Concepts

From the perspective of Wind Level 4 industries, food distribution, personal products, and agricultural machinery led the gains, while support services and oil and gas indices led the declines. This week, soybeans, artificial meat, and vaccines led the gains, while low-priced stocks, IGBT, and GaN led the declines. Compared with last week, market hotspots rotate quickly, and operation is difficult.

Weekly Events

On April 20, the price of US West Texas Intermediate (WTI) crude oil futures dived to zero for the first time and then immediately fell into negative territory. This is the first time negative oil prices have appeared since the birth of WTI crude oil futures 37 years ago. It is rare in the global crude oil trading market, highlighting the serious imbalance between crude oil supply and demand and the dilemma of imminent inventory explosion. Bank of China’s Crude Oil Treasure US Crude Oil 2005 contract appeared with a negative settlement price. Some Crude Oil Treasure customers not only lost their principal but also had to pay additional margin to Bank of China.

Portfolio

Sold Goertek at 18.65 yuan, short position in A-shares. Sold Himax Technologies at $3.29, and bought Valaris (VAL) at $0.46, with a target price of $1.

The second quarter is about to enter the middle stage, and new and old funds + consumption are expected to become the theme for the whole year. Bought GF Domestic Demand Growth Mixed and GF CSI All Share Construction, and sold Galaxy Innovation Mixed which lagged in gains.

Type	Code	Name	Current Dynamic
Stock	SZ002241	Goertek	Clear
Stock	VAL	Valaris	Enter
Fund	F210008	Golden Eagle Strategy Allocation Mixed	Hold
Fund	F519674	Galaxy Innovation Mixed	Sell
Fund	F005311	Wanjia New Economy Momentum Mixed A	Hold
Fund	F000363	Guotai Juxin Value C	Hold
Fund	F005911	GF Dual Engine Upgrade Mixed	Hold
Fund	F161725	CMSC Baijiu Graded	Hold
Fund	F163415	Xingquan Commercial	Hold
Fund	F270022	GF Domestic Demand Growth Mixed	Enter
Fund	F004856	GF CSI All Share Construction	Enter