Core Viewpoint - The "market capitalization ratio method" is a widely used but flawed analytical approach in investment, leading to simplistic and potentially misleading conclusions about industry performance and stock valuation [1][10]. Group 1: Issues with Market Capitalization Ratio Method - The first major issue is that the market capitalization of listed companies often does not reflect the real economy, resulting in distorted comparisons when assessing industry market capitalization ratios [5][7]. - For example, in the A-share market, there are very few listed railway companies despite China having the largest railway network globally, which skews the perception of the railway industry's market capitalization [5][6]. - Similarly, many leading internet and technology companies are not listed in the A-share market, which can lead to an overestimation of the market capitalization of other sectors like banking and securities [5][6]. Group 2: Oversimplification of Analysis - The second major issue is the oversimplification inherent in the market capitalization ratio method, which fails to consider multiple critical factors when evaluating a company's investment potential, such as profitability, growth rate, asset structure, and industry outlook [8][9]. - Experienced investors often find it challenging to make accurate judgments even after analyzing numerous data points, making it clear that relying solely on market capitalization ratios is overly simplistic [9]. - The method's simplicity and narrative appeal contribute to its popularity in investment analysis, despite its lack of depth and potential for misleading conclusions [10][11].