A-share Market: If you bought 50,000 shares of Luye Pharma at the highest point of 5178 in 2015 and held until now, how much would you have made? You've lost if you don't understand this.

(Source: A-shares Collection)

Recently, along the banks of Pujiang, one of Shanghai’s most eye-catching landmarks—the Lujiazui Citibank Tower LED screen—lit up for Hengrui Medicine! The eight characters “Hengrui Medicine, the Original Research Light” kept scrolling, witnessing the shining of Hengrui Medicine with millions of people from around the world.

Recently, Hengrui Medicine’s impressive achievements echo its shining presence in the magical city of Shanghai.

On June 22, Hengrui Medicine’s market value broke through 500 billion yuan intraday for the first time, ranking among the top ten in A-shares by market cap. From listing to surpassing 100 billion yuan took 16 years; from 100 billion to 500 billion, it only took 20 months. Hengrui’s speed is comparable to a “rocket” in China, and its glory is closely linked to its strong innovative original research.

On June 19, Hengrui Medicine’s self-developed PD-1 inhibitor Camrelizumab (AeriCa?) was approved for indications in lymphoma and liver cancer, and officially received approval from the National Medical Products Administration (NMPA) for treatment of lung cancer and esophageal cancer. It is China’s first domestically produced PD-1 inhibitor approved for both lung and esophageal cancers.

The approved indications are: 1. Camrelizumab combined with pemetrexed and carboplatin for first-line treatment of unresectable locally advanced or metastatic non-squamous non-small cell lung cancer (NSCLC) with negative epidermal growth factor receptor (EGFR) mutations and anaplastic lymphoma kinase (ALK) negativity. 2. Camrelizumab for patients with locally advanced or metastatic esophageal squamous cell carcinoma who have disease progression or are intolerant after first-line chemotherapy.

Hengrui Medicine has dedicated nearly 20 years to anti-tumor drug research and development, and its abundant harvest today is the result of persistent independent original research.

If you bought 50,000 yuan worth of Hengrui Medicine five years ago and held until now, how much profit would you have?

Hengrui Medicine has maintained an annual net asset return rate of over 20% for nearly thirteen years, with a debt ratio around 10%, mostly interest-free liabilities. Revenue, net profit, and other indicators have steadily increased, and profit margins remain stable. This stock pays dividends and issues bonus shares every year, and some years even involves share conversions. The stock I’m talking about is Hengrui Medicine (600276), a rare value investment target.

Let’s assume you invested 50,000 yuan in Hengrui Medicine stock five years ago and meet the following conditions:

1. Invested 50,000 yuan in Hengrui Medicine five years ago without additional investment.

2. No calculation of stamp duty or dividend tax (long-term dividend tax was canceled after 15 years).

3. Purchase based on the opening price of the day, with holidays deferred.

4. Reinvest dividends.

On May 11, 2015, you bought Hengrui Medicine (600276) with 50,000 yuan, with an opening price of 56.7 yuan. At that time, you held 800 shares, with a balance of 4,640 yuan.

On June 15, 2015, a 10-for-2 stock split and a 1 yuan dividend were announced, resulting in 80 yuan dividend income (80 * 1). Your holdings increased to 1,040 shares, with a balance of 4,720 yuan.

Year 1, June 16, 2016: a 10-for-2 split and a 1 yuan dividend, dividend income 104 yuan (104 * 1). Holdings increased to 1,248 shares, balance 4,824 yuan. The opening price was 38.42 yuan. You bought 100 more shares, holdings now 1,348 shares, with a balance of 982 yuan.

Year 2, May 31, 2017: a 10-for-2 split and a 1.35 yuan dividend, dividend income 181.98 yuan (134.8 * 1.35). Holdings increased to 1,618 shares, balance 1,163.98 yuan.

Year 3, May 30, 2018: a 10-for-2 split and a 1.3 yuan dividend, dividend income 210.34 yuan (161.8 * 1.3). Holdings increased to 2,103 shares, balance 1,374.32 yuan.

Year 4, March 28, 2019: a 10-for-2 split and a 2.2 yuan dividend, dividend income 462.66 yuan (210.3 * 2.2). Holdings increased to 2,524 shares, balance 1,836.98 yuan.

By May 9, 2020, the closing price of Hengrui Medicine (600276) was 97.05 yuan, so the market value of holdings was 2,524 * 97.05 + 1,836.98 = 246,791.18 yuan.

The total return over five years of long-term compound investment of 50,000 yuan is (246,791.18 - 50,000) / 50,000 = 393.6%. The gains are quite substantial.

This purchase was made during the peak of the Shanghai Composite Index in 2015. It shows that choosing stocks based on growth potential is very important, and companies that regularly distribute two shares to investors each year are rare.

How to pick big winners in the current A-share market?

1. Market overview

2. Basic K-line analysis

3. Moving averages

4. Trendlines

5. Indicator analysis

6. Statistical analysis

7. Stock selection methods

8. Sector rotation

9. Various market knowledge

10. Complete formulas

11. Original pattern trading strategies

Follow the trend you understand, and be one step ahead to catch strong stocks.

A top trader’s insight: Opportunities in different market conditions

(1) Opportunities in a bull market: Refers to a cycle formed on the weekly chart, showing a process of bottoming, rising, mid-term consolidation, topping, and decline. It includes more than two intermediate cycles.

Such opportunities are not common every year in the domestic market.

They are long-term opportunities, with the greatest upside and longest duration, usually over a year.

The pattern involves: after a long decline, the bottoming process is complex, mainly with a complex-shaped bottom.

The rise is diverse, with more than two phases of consolidation or pattern formation, and the top often involves complex shapes with a potential trap.

Risks: No risk at the bottom in the long term; medium-term consolidation risks exist, and risk control involves adding positions.

Suitable for: trend traders, trend investors, and value investors.

(2) Opportunities in a mid-term cycle: Refers to a cycle formed on the daily chart, showing a process of bottoming, rising, mid-term consolidation, topping, and decline, with more than two secondary cycles.

On the daily chart, clear five-wave upward and three-wave downward patterns can be identified. In China’s market, at least one mid-term opportunity occurs annually.

The opportunity belongs to mid-term.

Potential: 30%-50% upside.

Duration: longer than three months.

Pattern: after a mid-term decline, the bottoming is simple, mainly with a single bottom pattern. The upward process is diverse, with large rises and small dips, and more than two pattern consolidations. Tops are mainly single-pattern, sometimes with traps.

Risks: No risk in the mid-term; short-term risks come from consolidation. Risk control involves adding positions.

Suitable for: trend traders and trend investors.

Low volume at the bottom means wait; waiting is better than rushing in

Low volume indicates the main force is still absorbing low-cost chips and preparing for a rally.

Once accumulation is sufficient, a surge will occur. When volume increases significantly and the stock price jumps, why do I advise waiting? Because volume hasn’t yet expanded or broken through resistance.

You don’t know how many months the main force will oscillate sideways absorbing chips at the low, possibly three months without a rise. Why not wait for volume to break out before entering?

High volume at the top with stagnation means exit; better to exit early

After a significant rise, if the stock is at a high level but volume continues to increase while the price stagnates, it indicates a high-level volume-price divergence, likely signaling the main force is starting to distribute shares, locking in profits. Investors should exit promptly.

After the first wave of rise, the second rebound often sees volume reaching new highs but little price increase, instead oscillating at high levels—classic main force distribution. Subsequently, the stock price declines, trapping many investors.

High-level volume-price divergence, exit when necessary

After a big rise, if the stock is at a high level and continues upward, but volume shrinks instead of expanding, it indicates the upward momentum is exhausted, like an empty gas tank. It’s time to exit decisively.

For example, during a slow upward trend at high levels, shrinking volume is a typical divergence. Be alert to avoid risks.

Strong upward attack

What is a strong upward attack?

First, it means a market in a very strong environment.

Its main feature is that the rebound continuation is excellent, with a very fierce trend and many opportunities. This pattern is crucial for spotting chances.

Mostly, strong upward attacks appear in the main index, indicating a potential big trend. For example, recent index movements:

Current index trend is a typical strong upward attack—continuous rebound without pause!

Such patterns are abundant, and multiple opportunities can arise across different sectors.

This means, during this phase, we should do our best to find opportunities—take as many as possible!

Next time it appears, remember: don’t be afraid, try to act.

Weak decline

What is a weak decline?

Conversely, the pattern involves continuous decline in individual stocks and the overall market without pause. No matter how much you want to buy, entering at this stage will likely result in losses.

Such market conditions are common and often cause failed bottom-fishing attempts. If you can’t recognize a weak decline trend, I tell you: trade once, lose once!

Once in this pattern, remember: run as far as you can. Don’t get caught in the trap, or it will be very painful.

The difference between expert and ordinary investors in stocks

First: true experts don’t hold full positions most of the time; they often stay in cash. They also never use high leverage. Using high leverage can lead to unstable mentality, and while it can generate huge wealth quickly, it can also wipe you out in a short time.

To survive long-term in the stock market, avoid high leverage. New investors should understand how terrifying leverage is and never use it.

Second: they don’t act impulsively. They wait in cash for big opportunities. Ordinary investors trade almost daily and switch stocks frequently. Remember: the more you trade, the higher the chance of losing money.

Third: they don’t blindly follow the crowd. When most market participants are optimistic, experts tend to exit early, never chasing the last penny. In a bear market, when the market is bad and negative news abound, stock prices have no bottom—only lower levels. Experts never chase the tail or seek the lowest points; they aim to profit from the middle of a bull market.

The stock market is full of opportunities and traps. Resist all kinds of temptations. Giving up some opportunities allows you to seize others. If you pursue profits blindly, you will often end up losing.