Group 1 - The A-share market experienced a strong performance on August 18, with the ChiNext Index rising by 3.63% and surpassing the 2600-point mark, breaking through last year's high of 924 [1] - The ChiNext 50 Index (399673.SZ) increased by 4.0%, with notable stocks such as Zhinan Compass and Mango Super Media hitting the daily limit, Tonghuashun rising over 15%, and Zhongji Xuchuang increasing by over 10% [1] Group 2 - The Chuangye 50 ETF (159682) rose by 3.83% with a trading volume of 164 million yuan, tracking the ChiNext 50 Index, which includes sectors like manufacturing, finance, and information technology [2] - East Wu Securities anticipates that the market will maintain relative strength in the short term due to liquidity, although it may experience volatility and consolidation as it attempts to break previous highs [2] - The mid-term outlook remains positive with factors such as policy support, asset scarcity, and the potential for a US dollar interest rate cut contributing to an upward market trend [2]

Core Viewpoint - The article discusses the common misconception that asset allocation is synonymous with chasing rising assets, highlighting the cognitive trap that confuses market price phases with allocation logic [4][5][6]. Group 1: Investment Theory - The classic Markowitz portfolio optimization theory indicates that asset allocation is directly proportional to expected returns and inversely proportional to volatility [9]. - Historical data is often used to estimate future expected returns and volatility, leading to a "chasing" effect where assets with higher past returns receive higher allocation [10][12]. - The Black-Litterman model and other improved versions of portfolio optimization incorporate subjective investor expectations, yet still exhibit a tendency to chase rising assets due to cognitive biases [13]. Group 2: Behavioral Finance - The concept of "availability bias" in behavioral finance explains why investors tend to chase rising assets, as they rely on easily recalled information rather than comprehensive data [14]. - In the digital age, the prevalence of real-time information and social media amplifies this bias, leading to potentially detrimental investment decisions [14]. Group 3: Avoiding Chasing Behavior - Establishing an objective analysis framework is crucial for independent judgment and contrarian investing, as demonstrated by the analysis of U.S. inflation trends [16][21]. - Recommendations for avoiding chasing behavior include distinguishing between long-term logic and short-term variables, minimizing the pursuit of short-term performance, and diversifying asset allocation to create a richer "return stream" [23][24][25]. - Understanding the difference between style beta and alpha is essential for investors to avoid chasing funds based solely on past performance [28]. Group 4: Investment Strategy - The article advocates for a simplified investment strategy, such as the "Snowball Three-Part Method," which emphasizes diversification across global asset classes to mitigate volatility and enhance long-term returns [29][30].

Core Insights - The performance of FOF (Fund of Funds) products has been impressive this year, with over 90% achieving positive returns [1][4] - The asset allocation approach is described as having "no optimal solution," emphasizing the need for a stable analytical framework and diversified investments to avoid common pitfalls like "chasing gains and cutting losses" [1][3][6] Group 1: Asset Allocation Strategies - The manager, Tang Jun, advocates for a multi-faceted asset allocation strategy that includes objective standards and diversified returns to mitigate risks associated with market expectations [1][6] - Tang Jun's experience in quantitative investment has shaped his ability to identify market factors and adjust asset allocations dynamically based on market conditions [2][4] - The current allocation strategy has shifted towards A-shares, reflecting a responsive adjustment to market trends, with a notable increase in A-share allocation compared to Hong Kong stocks [4][5] Group 2: Market Insights and Tactical Adjustments - The positive performance of FOF products is attributed to effective diversification strategies, particularly during stable market conditions [4] - Despite uncertainties in external environments, domestic policy support is expected to provide a solid foundation for the A-share market, leading to a stable and potentially strong performance [5] - Tang Jun has actively engaged in tactical allocations within sectors like innovative pharmaceuticals and military industries, capitalizing on growth trends and market opportunities [5][6] Group 3: Behavioral Insights and Investor Guidance - The common mistake of "chasing gains and cutting losses" is highlighted, with recommendations for establishing an analytical framework based on objective standards to guide investment decisions [6][7] - Understanding "expectation differences" is crucial for avoiding impulsive trading decisions, as market consensus often serves as a contrary indicator [7] - Investors are advised to differentiate between returns driven by style beta and alpha when selecting funds, which aligns with Tang Jun's quantitative research background [7]

Core Viewpoint - The real risk faced by investors is the expectation gap between their predictions and market movements, which is highlighted by the phrase "risk is the difference between your expectations and market trends" [1] Monetary Policy and Market Conditions - The central bank conducted a 4,958 billion yuan reverse repurchase operation, with a net injection of 3,251 billion yuan after 1,707 billion yuan matured [2] - The funding environment is balanced and slightly loose, with funding rates continuing to decline; DR001 is around 1.46% and DR007 is around 1.58% [3] - The central bank's continued large net injections have led to a slight increase in the stock market, while commodities have seen significant declines and bond market rates have fluctuated downwards [4] Market Performance - The interbank funding rates have shown a downward trend, with R001 at 1.49% (down 6 basis points) and R007 at 1.63% (down 7 basis points), indicating a total transaction volume of 68,928.38 billion yuan [5] - The commodity market experienced a sharp decline, with various products hitting their daily limit down, while the bond market showed positive sentiment with the 10-year government bond yield fluctuating around 1.715% [5] Social Policy Impact - The introduction of a child-rearing subsidy policy, providing 3,600 yuan per child per year, marks a significant breakthrough in social policy aimed at improving birth rates [6]

Report Overview - Report Title: "Market Expectation Gap Correction, Potential Switch in Stock-Bond Allocation" [2] - Report Date: July 23, 2025 - Research Team: Fixed Income Research Team - Analysts: Chen Xi, Liu Wei Report Investment Rating - Not provided in the report Core Views - In the second half of 2025, the economic cycle is in an upward phase, similar to 2016 - 2017, in the second half of the L-shaped cycle [5]. - The key to the market rally is the correction of the expectation gap. Currently, the pricing in the stock, bond, and commodity markets is weak, and the upward correction of the market expectation gap may drive the market up [6]. - With the economic expectation correction, there may be a switch between stocks and bonds. The bond yield and the stock market are expected to rise [9]. Summary by Relevant Catalog Economic Upward Trend in H2 2025 - The local debt resolution plan launched in November 2024 may drive the economy to recover continuously, as past debt rectification periods were followed by economic rebounds [5]. - After the digestion of policies from 2021 - September 2024 and structural transformation, the year - on - year growth rate of social financing stock has been rising since November 2024 [5]. - The supply - side anti - involution measure proposed on July 1, 2025, is conducive to the recovery of the PPI year - on - year rate, similar to the 2015 supply - side reform [5]. Market Expectation Gap and Its Impact - As of July 22, 2025, the equity risk premium rate of the Wind All - A Index was 3.14%, at the 72.1% percentile in the past 10 years; the 10 - year Treasury yield was 1.69%, at the 4.0% percentile in the past 10 years; the Nanhua Industrial Products Index was at the 43.2% percentile from 2022 to the present, indicating weak pricing in the market [6]. - The market's weak pricing is based on the view that the full - year GDP target of 5.0% is easy to achieve (with H1 GDP growth at 5.3%), leading to low expectations for H2 policies. However, there is a significant expectation gap in the market's pricing of the economic recovery [6]. - The all - around policies from July 2025 are expected to gradually realize the market's expectation of economic recovery, forming a positive feedback loop for market confidence and expectations [7]. Stock - Bond Switch - The economy is similar to that in 2016 - 2017, in the second half of the L - shaped cycle. The economic growth rate in H2 2025 is not expected to decline significantly, and with the solution of structural problems, there may be a switch between stocks and bonds, with bond yields and the stock market expected to rise [9].

Core Viewpoint - The global equity market is expected to improve in the second half of 2025, but uncertainties and policy changes remain [1] Market Resilience - The A-share market experienced volatility driven by "uncertainty" in the first half of the year, with market fears stemming more from unpredictability than from the disturbances themselves [2] - The actual interest rate is currently at a favorable level, and if it remains in the 1%-2% range, the probability of positive returns for the CSI 800 index in the next year is expected to increase significantly [2][3] Asset Allocation Insights - Chinese investors currently allocate about 12% of their household assets to stocks and funds, compared to approximately 40% for American households, indicating a significant gap [3] - The long-term investability of the Chinese capital market is improving, with an increase in stock buybacks and dividend distributions by listed companies [3] Structural Opportunities - Three main asset categories are highlighted: dividend assets benefiting from declining real interest rates, new productivity focusing on technology-driven private enterprises, and new consumer trends aligned with experiential consumption [4] - The potential for revaluation of private enterprises is emphasized, with recent policies signaling a recovery in capital expenditure and return on equity (ROE) [4] Investment Strategy - The core strategy involves focusing on long-duration assets, which can be categorized into stable cash flow types and sustainable growth types [4] - Diversification in investment is stressed, with a focus on thorough fundamental research to identify individual stocks rather than betting on sectors [7] Future Outlook - The transformation of the Chinese economy is expected to continue, with long-term investment value in the stock market gradually becoming apparent despite short-term uncertainties [6] - The relationship between the Hong Kong and A-share markets is viewed as complementary rather than competitive, with each market serving different capital flows [6]

Core Viewpoint - The article discusses the importance of avoiding "chasing gains" in asset allocation and emphasizes the need for a scientific and objective analysis framework to make independent investment decisions [9][38]. Group 1: Asset Allocation Strategy - The author, 唐军, manages a diversified asset allocation strategy that includes various asset classes such as A-shares, Hong Kong stocks, US stocks, US bonds, and ETFs focused on high dividends and electricity [5][6]. - 唐军's approach, termed "Configuration First," is based on a three-step framework: assessing credit expansion and liquidity trends, evaluating whether market expectations are excessive, and ensuring asset diversification and complementarity [7][6]. Group 2: Chasing Gains Phenomenon - The article highlights that even sophisticated models like the Markowitz portfolio optimization theory can lead to "chasing gains" due to reliance on historical data for expected returns and volatility [11][20]. - The tendency to chase gains is exacerbated by behavioral biases, such as the "availability heuristic," where investors rely on easily accessible information rather than comprehensive data [25][10]. Group 3: Avoiding Chasing Gains - To avoid chasing gains, the article suggests establishing an objective analysis framework that incorporates quantitative indicators and macroeconomic drivers [26][30]. - It emphasizes the importance of distinguishing between long-term logic and short-term variables, as well as the need to diversify asset allocation to mitigate pressure during market fluctuations [31][34]. Group 4: Market Expectations and Investment Decisions - The article warns that consistent market expectations can often serve as a contrary indicator, suggesting that investors should be cautious during periods of high consensus [35][36]. - It also discusses the importance of recognizing the difference between style beta and alpha when selecting funds, as this understanding can prevent chasing based solely on past performance [37].

Group 1 - The core viewpoint is that market reactions to news are often driven by expectations rather than the news itself, as illustrated by the recent comments from Federal Reserve Governor Waller regarding interest rate cuts [1][9] - Waller emphasizes that while the employment market appears stable, there are signs of weakness in private sector job growth, and inflation is close to target with limited upward risks [2][9] - The concept of "expectation difference" is crucial in investment, where market movements are influenced by what investors anticipate rather than actual events [2][9] Group 2 - The performance of two companies, Shengtun Mining and Qifeng New Materials, highlights the disparity in stock reactions to earnings forecasts, with Shengtun benefiting from institutional investment while Qifeng did not [5][8] - Institutional investors often leverage retail investors' focus on concepts to influence stock prices, indicating that market movements are not solely based on the underlying concepts but also on pricing power [5][8] - Data analysis reveals that institutional activity precedes positive earnings forecasts, suggesting that early positioning by large funds can significantly impact stock performance [8][9] Group 3 - Waller's call for a rate cut is understood in the context that the market has already priced in the expectation of such a move, with the actual impact depending on the magnitude and timing of the cuts [9][11] - The importance of market interpretation of news is emphasized, suggesting that the real insights are often found in data rather than headlines [9][10] - Investors are encouraged to focus on data analysis and institutional trends rather than chasing news, as this approach can provide a clearer understanding of market intentions [10][12]

Group 1 - The latest Federal Reserve's Beige Book reveals the harsh reality of the U.S. economy, with all 12 regions reporting rising costs, particularly in manufacturing and construction [4] - The term "uncertainty" appears 63 times in the report, indicating a significant level of hesitation among businesses and consumers, which may signal larger economic challenges ahead [4][6] - Core CPI has increased by 2.9% year-on-year, suggesting that inflation pressures may be re-emerging, especially with new tariffs on the horizon [6] Group 2 - The concept of "expectation difference" is highlighted as a critical battleground in the market, where stock prices are driven more by anticipated changes than by current realities [7][8] - The "dilemma reversal" theory emphasizes the importance of understanding information asymmetry in the market, where institutional investors may act on insights before retail investors catch on [8] Group 3 - Case studies illustrate institutional behavior, such as the semiconductor sector's stock performance, where institutional activity preceded significant price movements, demonstrating the power of expectation differences [11][13] - Another case shows how institutions can manipulate market sentiment, using price declines to shake out less committed retail investors [15] - A cautionary example highlights that even strong earnings reports can lead to stock declines if institutional investors have already exited their positions [17] Group 4 - Recommendations for retail investors include developing a data observation system, recognizing true capital flows, avoiding superficial analysis, and maintaining independent thinking [19][20]

Core Viewpoint - The article discusses the relationship between asset allocation and chasing gains, highlighting that both concepts often appear intertwined in investment practices, despite their theoretical differences [2][3]. Group 1: Asset Allocation and Chasing Gains - The observation that "allocation" is often linked with "chasing gains" suggests that high perceived value in certain assets typically occurs during price increases, while assets with prolonged losses are rarely considered for allocation [2]. - Traditional investment theories, such as Markowitz's Modern Portfolio Theory (MPT), indicate that asset allocation can lead to chasing gains due to reliance on historical data for expected returns and volatility [7][12]. - The tendency to chase gains is not solely a flaw in the models but arises from using past performance to predict future outcomes, which can lead to higher allocations in assets that have recently performed well [14]. Group 2: Behavioral Finance and Subjective Expectations - Behavioral finance concepts, such as availability bias, explain why investors may chase gains based on easily accessible information rather than comprehensive data [18]. - The influence of social media and real-time information can amplify the tendency to chase gains, as investors react to trending assets without thorough analysis [18]. Group 3: Strategies to Avoid Chasing Gains - Establishing an objective analytical framework is crucial for independent judgment and avoiding the common behavior of chasing gains [20]. - Differentiating between long-term logic and short-term variables can help investors avoid misapplying long-term trends to short-term market movements [27]. - Diversifying asset allocation can provide a buffer against the pressure to chase gains, allowing investors to maintain their strategies even when market conditions are unfavorable [29]. - Understanding the distinction between style beta and alpha is essential for evaluating fund performance and avoiding the impulse to chase funds based solely on past performance [32].