Summary of Key Points
Recently, A-share technology stocks have suddenly shifted from continuous new highs to wide-ranging fluctuations, not due to external market influences (technology stocks in the US and South Korea are still rising), but because of internal capital shifts—active investors are leaving the market, and there is poor liquidity between high- and low-position holders. The real actions of four different types of investors (experienced traders reducing their positions, new investors making regular investments, defensive investors avoiding the market, and those who missed out trying to enter) reflect the market's divisions: confidence remains, but fear has caused them to reduce their holdings. The future performance of technology stocks will depend on whether their valuations are supported by actual earnings, and whether off-market capital flows back into the market. Ordinary investors need to decide whether to pursue stability or take risks based on their understanding and investment costs.
Why Are A-share Technology Stocks Fluctuating First?
It's not the external markets causing the issue; it's the internal flow of funds within the A-share market. While technology stocks in other countries (US, South Korea) are still rising, those in the A-share market have started to show weakness. This is not because global risks have increased, but because the capital supporting these stocks has weakened. Simply put, active investors who made profits earlier are beginning to withdraw, and those looking to buy at lower prices or sell at higher prices are having difficulty connecting (lack of liquidity). For example, some experienced traders, seeing the excessive enthusiasm in the market (such as discussions about the Sci-Tech 50 index), have reduced their positions from 150% to less than half, fearing being trapped. These fluctuations are the result of internal capital reallocations, not fundamental problems with the stocks.
Real Actions of Four Types of Investors
The article highlights four typical investors to illustrate the current market's decision-making landscape:
1. Experienced Traders (Xinduoduo): They exit the market first and wait for prices to fall significantly before returning. This trader, who entered the market in 2015 and made profits with Northern Huachuang, understands both conceptual and industrial logic behind technology stocks. Seeing the rapid gains (Northern Huachuang rising by 50-60% in a short period), they reduced their position to less than half, preferring to sell rather than get stuck in a losing position.
2. New Investors (Huaqiang Buffett): They use spare money for regular investments, focusing on companies within their area of expertise. As someone new to the market and working in the PCB industry, they buy semiconductor and PCB stocks they understand, or opt for ETFs if those aren't available. Believing in value investing, they are not afraid of price fluctuations since they are using spare funds and focus on the long-term potential of the companies (supported by orders and domestic substitution trends).
3. Defensive Investors (Lao Zhang): They avoid technology stocks, fearing taking heavy losses. Previously profitable from lithium mining, they lost money this year as technology stocks outperformed other sectors. They are optimistic about technology but cautious about buying, due to their lack of technical knowledge, high valuations (PE multiples in the hundreds), and fear of being trapped in rising prices (they got stuck with an innovative drug fund in 2021). Their goal is to avoid further losses.
4. Those Who Missed Out (May): They enter the market cautiously, trying small amounts to test the waters without risking too much. A newcomer who made mistakes last year (losing money after selling GPU leaders and then doubling their position when it adjusted) now buys just 200 shares of SMIC as a trial. The volatile market makes them hesitant to take big risks.
How to Choose Technology Stocks Moving Forward
The article suggests that the focus should shift from mere concepts to tangible fundamentals:
- Earnings and Industrial Logic: Focus on companies with actual orders and revenue (e.g., Shenghong Technology, which received large orders).
- Invest in What You Understand: Buy only companies in industries you know well, such as semiconductors and PCBs.
- Don't Just Look at Low Prices: Defensive investors should consider more than just low stock prices; there needs to be a logical reason for the price increase (e.g., a turnaround from a difficult situation or marginal improvement).
- Avoid Pure Speculation: Experienced traders point out that while AI speculation may follow similar patterns, long-term trends like domestic semiconductor substitution and AI applications remain strong.
Should You Be Greedy or Stable in Times of Divisions?
The article emphasizes that only those with knowledge and cost advantages can afford to be aggressive. For example, experienced traders with lower costs can wait for prices to fall before buying again; new investors with spare money and industry knowledge can hold onto their investments in the long term. For defensive investors and newcomers without these advantages, stability is key—like Lao Zhang avoiding high prices and May testing small amounts.
Does Technology Have a Long-Term Future?
Despite short-term fluctuations, the long-term logic for technology stocks remains strong:
- Innovation drives demand (for example, AI will lead to developments in robotics and commercial aerospace).
- The domestic substitution of semiconductors is still ongoing, and applications like AI are just beginning.
- As long as investors can withstand volatility and manage their positions, they can ride out the next cycle.
In summary, the challenge for technology stocks is not whether there is a future, but whether one can endure current fluctuations and identify truly valuable targets.
This article uses real-life examples to explain the reasons for market fluctuations, investor attitudes, and future directions in simple language, making it understandable even for non-professionals.