This year's gains are almost gone... Should I add to my position?

Ask AI · How does the Iran conflict affect global stagflation expectations?

The market started off strong in 2026, with floating profits making many investors feel good. However, since the end of February, as international situations continued to be turbulent, international oil prices surged, and under multiple external pressures, the A-shares experienced significant adjustments, with the Shanghai Composite Index dropping below 3900 points, and certain industry themes seeing declines far exceeding the market average…

The major indices like the CSI 300 and CSI 500 have seen their returns effectively revert to zero this year, with the equity mixed fund index also falling into negative territory, leaving many feeling at a loss with the sensation of “gains in hand being given back” (data source: ifind, 20260323).

What should we do now? Should we buy on dips?

01

Why is the market accelerating its decline?

The core factor leading to the recent market weakness is the escalation of the Iran conflict, with market pricing reflecting the continued blockade of the Strait of Hormuz and the prolonged high oil prices triggering “stagflation” expectations.

Since the latter half of last week, funding has been pricing in the stagflation narrative, with various channels flooded with discussions of high oil prices and global stagflation narratives. Over the weekend, both the U.S. and Iran proposed extremely harsh negotiation conditions and applied maximum pressure on each other, with the U.S. threatening to bomb Iranian power facilities and Iran claiming to have laid mines in the Strait, further intensifying panic.

Although it is difficult to predict when this conflict will end, logically, even considering extreme scenarios, oil prices have already reflected a considerable degree of the conflict’s impact. Given global supply and demand and substitutes, it is very unlikely that oil prices will remain above 100 in the long term. From a liquidity expectation perspective, while U.S. inflation may be impacted in the short term, it is difficult for inflation to rise significantly in the medium to long term. Current long-term inflation expectations are stable, and U.S. AI is suppressing salaries of related workers, thereby restraining service inflation, with energy’s weight in personal consumption and CPI significantly declining. According to the dot plot, the Federal Reserve still maintains the judgment of one rate cut this year, but market expectations have overly leaned towards no rate cuts, reflecting market pessimism, which presents potential for correction and could be a good investment opportunity.

In the short term, the market is overly priced, as there are still no signs that the U.S.-Iran conflict has ended, so the market tends to price in panic. Particularly, Hong Kong stocks, which may also be affected by U.S. Federal Reserve liquidity, have already significantly reflected pessimistic assumptions. In this situation, “enduring short-term shocks for long-term gains” is likely a good strategy, allowing for the purchase of long-term assets with decent returns at very low valuations. We should continue to closely monitor the situation in Iran and gradually increase positions by utilizing market panic and the liquidity discount from low-risk tolerance capital, preparing for future investments. Once there is marginal easing, the probability of a V-shaped market reversal is quite high.

The strategy team at Industrial Securities believes that as of March 23, the proportion of individual stocks above the 30-day moving average in the entire market has dropped to 9.9%, with several industries also seeing this indicator fall below 10%. In recent years, whenever this indicator falls below 10%, it has been a key signal of a phase bottom and an important buying point for the market, such as in April 2025, January 2025, and January 2024.

Data source: Wind, Industrial Securities Economic and Financial Research Institute

02

What if I want to increase my position?

If you still have a positive outlook for the future and want to position yourself on dips, you might consider the following keywords:

Position: Flexible Entry and Exit

Maintaining a moderate position that allows for flexibility is a prudent choice in the current highly volatile market. While it is unlikely to maximize gains, it increases the safety of protecting your account. In subsequent operations:

First, control the proportion of stocks in total assets, which varies from person to person. One standard is “don’t go so high that you can’t sleep when it drops”;

Second, maintain defensive assets such as low-volatility dividends and free cash flow within your stock position.

Direction: Focus on the Main Line

Stagflation expectations constrain market risk appetite. In the ongoing volatile environment, focus on petrochemicals, coal, and other bulk commodities as well as dividend assets and wide indices like A500.

As the market gradually prices in the narrative of normalized conflict and adjusts fully, sectors with independent industrial trends, not directly affected by geopolitical conflicts, and supported by domestic policies will become important elastic varieties and layout directions. The technological revolution represented by AI is a clear long-term industrial trend, and the short-term market fluctuations caused by geopolitical conflicts may actually provide better allocation opportunities for quality tech targets. Within the tech sector, focus on industry vitality and narratives, paying attention to hard-core fields such as semiconductor equipment, AI computing infrastructure, and new energy storage.

Pace: Small, Incremental Batches

If you dare to increase your position during a decline, it shows you are a brave investor with contrarian thinking. Declines bring opportunities, but there are too many variables in multi-country conflicts, and global capital is in play, making it hard to say that adjustments can be completed in a day or two.

So, don’t rush the pace of increasing positions; prioritize balanced allocation and patiently wait for market sentiment to warm up. You might consider the following methods:

Regular Investment Method. The regular investment method does not require considering short-term market fluctuations. Invest a fixed amount weekly or monthly, and over the long term, it will naturally average out the cost by buying less at high prices and more at low prices. For example, taking the CSI A500 Total Return Index, despite significant market fluctuations over the past five years, regular investment has yielded positive returns.

Data source: Wind, starting regular investment from March 1, 2021, investing 1,000 yuan on the 1st of each month, ending regular investment on March 2, 2026, with a total of 61 investments. Return = (Total assets from regular investment / Total investment from regular investment) / Total investment from regular investment. Historical data is for reference only and does not represent future performance. Regular investment has risks; investors should be cautious.

Incremental Investment Method. If you have some idle funds you plan to add, it is more advisable to use the incremental investment strategy, dividing the funds into three to five portions and gradually entering the market according to price ranges. For instance, add one portion every time there’s a decline of about 5%, with the later batches being slightly higher in proportion than the earlier ones. Even if the market continues to decline, you still have “bullets” to supplement at lower levels, and your overall holding cost will be much lower than making a one-time all-in investment.

Chart Explanation: This illustration is for reference only; the market has risks, and investments should be cautious.

Dumbbell Configuration. When increasing positions, divide the funds into two parts: one part for the growth targets you are most confident in and logically sound, such as the AI industry chain and high-end manufacturing; the other part in relatively stable assets to hedge against market volatility. This structure can keep pace with market rebounds while also remaining calm during fluctuations.

Chart Explanation: This illustration is for reference only; the assets mentioned in the image are for example only and do not represent investment advice. The market has risks; investors should be cautious.

Finally, regardless of which method you use, it is recommended to set two discipline lines before increasing your position: First, the holding loss trigger line; if the paper loss exceeds a certain level, review the original logic to see if it still holds, rather than relying on emotions to decide whether to stay or leave; second, a phased take-profit line, to lock in some profits ahead of time once the expected profit target is reached, rather than waiting for all to be realized before withdrawing.

Investing in new productive forces is essentially investing in the country’s fortunes. There is a simple yet effective truth in investment: short-term focuses on sentiment, mid-term on logic, and long-term on national fortune. As long as you believe that the country can successfully transform in the future, use the right methods and patiently accompany it to become wealthy gradually.

Data source: Wind, Guojin Securities, Securities China, Huaxia Fund, as of 2026.3.23, individual stocks are not recommendations. This material is for informational purposes only and does not constitute substantial advice or commitments to investors. Fund companies promise to manage and utilize fund assets with principles of honesty and diligence, but do not guarantee that the fund will definitely profit, nor do they guarantee minimum returns. Past performance of funds does not indicate future performance; the performance of other funds managed by the fund manager does not constitute a guarantee of the fund’s performance. The operating time of funds in our country is relatively short and does not reflect all stages of stock market development. All content in this material is as of the publication date, and any changes should be based on the latest information. The market has risks; investors should be cautious. When investors purchase funds, carefully read the fund’s “Fund Contract” and “Prospectus” and make investment choices independently. Investors should fully understand the differences between regular fixed investment and zero deposit to regular deposit. Regular fixed investment is a simple and feasible investment method that guides investors to invest long-term and average investment costs. However, regular fixed investment cannot avoid the inherent risks of fund investment and cannot guarantee that investors will obtain profits, nor is it an equivalent financial management method to substitute for savings.