The A-share market as a whole has been sluggish recently. There is not much stock capital in the market and many investors (or speculators) have mostly experienced negative returns. In fact, apart from the two products of arbitrage and index increase, other domestic market ETFs and active funds have also been in a state of floating losses on the year (of course, this does not include ETFs allocated overseas).

1. Performance of the two main product lines in the domestic asset market this year

The above picture shows an arbitrage product, which has positive returns every year. The compound APR in the past 15 years is about 14%, the absolute return this year is 5%, Sharp is 1.6, and the volatility is 3.4%. It is a defensive product that does not seek big wins, but stability is the key.

The excess of index-added products is the yellow curve, with a Sharp of 1.4 and a volatility of 7.5%. After experiencing an 18-year bear market and the compound annualized bear market of the past two years of 20%, the excess this year is very average.

Other product lines, such as CTA, had already been redeemed last year, thus avoiding the further decline this year.

In addition, there is the broad and narrow base ETF product line.

2. Subsequent focus areas

1. Stocks

In fact, I have been operating fewer and fewer stocks this year due to lack of energy. The overall stock pool has not been updated this year. Currently, there are only 2 stocks that have been tracked for more than 3 years and are held for a long time. I do not rule out investing in some stocks in the second half of this year. In the future, my principles for buying stocks will be more stringent: stocks in the stock pool, I know them well enough; the company has strong barriers, and the management has not had any dishonest behavior (even if there is one, it will be eliminated, see my thoughts on July 1 for details); the safety margin is sufficient, and no future PE improvement is required to meet my expectation of more than 15% Apr.

In addition to these, one thing I am particularly concerned about is whether it can withstand the extreme stress test of population variables. Those who understand this will understand.

2. Several types of bonds

It should be noted here that friends who are familiar with me know that I do not touch "fallen angel" bond products, or even corporate bonds, etc. I only focus on government bonds, interest-bearing bonds, and convertible bonds.

①Convertible bonds

In the past year, there have been very few new convertible bonds as the rate of return is not worthwhile. We should focus on opportunities of mispricing. Opportunities like those in the beginning of 2021 may appear in the second half of this year. Just be patient and wait. If the opportunity is not good, don't invest.

② U.S. Treasury bonds

If there is no exchange rate risk in US Treasury bonds, I would give priority to 20-year US Treasury bonds. In fact, I have been tracking them for more than a year. It is expected that there will be a relatively good configuration window in Q3 or Q4 when interest rates will turn from rising to falling. What I want to say here is that we don’t need absolute accuracy, as long as the relative bottom is sufficient. (As shown in the figure below)

③ Interest rate bonds

There may be long-term bullish opportunities in the future. Currently, domestic inflation is very low and even shrinking, because the population structure affects both inflation and credit, which will ultimately have an important impact on interest rates.

④ Treasury bond reverse repo

The rest are reverse repurchases of treasury bonds, which are done by securities firms with idle funds at the end of the month and quarter.

I personally would not invest in other bonds, as they are either products with limited returns and unlimited risks, or products with super asymmetric information. My current information channels do not support investing in similar targets.

3. Trust

I am currently researching some crypto trust products. After a few days of research, I feel that they are relatively good investment targets. I will write a separate article to explain the details later.

4. Options

For now, I personally believe that for conservative investors, the combination of fixed income products such as arbitrage + options is a very comfortable investment portfolio. Options can be used as an auxiliary strategy, or options can be used as a main strategy in another product line.

The two strategies require investors to have a very different level of knowledge and familiarity with options. It is actually very good for ordinary investors to do a good job of auxiliary strategies. If you want to have higher returns, you still have to wait for the big wave in April last year in the domestic A-share market. The crypto market needs to use theta to support some long Gamma strategies and wait for some big events or big waves such as thunder. However, this year's big wave has not been seen yet. In fact, there will be opportunities every year. I think there will be opportunities in the second half of the year, and we can't rush it.

A good hunter must be good at waiting.

5. Others

In fact, there were three other asymmetric investment opportunities in the web3 field in the first half of this year. Starting in the second half of the year, I don’t think there are no opportunities with limited losses and very high returns. If they appear, you need to pounce on them after careful research. You must use all your resources here and cannot be content with a small fortune.

Human resources, resources (on and off the field), division of labor, execution, etc.

Conclusion

In fact, I think this year's market, even the so-called regional market A, will be much better than in 2018. At least the CSI 300 and CSI 500 are both positive.

I have a vague feeling that there will be large fluctuations in the second half of the year. Opportunities often appear when there are large fluctuations. Now I am waiting for the opportunity to come with a relatively comfortable position and exposure.