Hexun Investment Advisor Yu Rongzhuo: How Can A-shares Break Through Chaos? Starting from Entropy Reduction!

This A-shares market is really tough to navigate, right? The main reasons are probably well known—external factors and various other causes. But in fact, we can summarize it with a simple theory—the Law of Entropy Increase. Currently, the market is in a state of increasing entropy, with various opportunities. For example, OLED and LED can rise for a couple of days; helium and carbon fiber can also rotate in and out. Some sectors might last a bit longer, like integrated power under sedimentation, which is doing okay. But things that can last as long as before, like those that can break through for a long time, are indeed more difficult.

There are two main reasons: first, external interference is quite strong; second, there is significant divergence in capital flows. From a style perspective, speculative funds are now very strong in arbitrage, with a fast pace, but trying to break through sustained daily limit-ups is still difficult—like the 6-limit point, which remains under pressure. So, arbitrage-driven momentum is very quick, with multiple sectors blooming, but mostly lasting only 1 to 2 days, with a very rapid rhythm.

In this context, how to break the deadlock? The breakthrough must come from moving from disorder to order. Ultimately, only two or three main lines will remain, with one line going further and becoming stronger. That is, a clear main theme must emerge, along with profit-making effects, to guide the market from chaos to order.

In this disorderly state, some strategies can be used, such as broad net casting and batch trial-and-error. But for most people, it’s hard to do well because too many variables and chaos increase the risk of mistakes. So, the primary focus should be on the points you’ve researched well, looking for opportunities to buy on dips. Alternatively, focus on defense, control risks, preserve strength, and wait for an orderly phase to emerge.

During this period, you can choose not to participate in various trial-and-error nodes, but you should track, study, and understand them. When a sudden breakout happens, you’ll be ready to act effectively.