Stock Selection Methods in the A-Share Market and How to Pick Stocks

Value Investing

Value investing focuses on fundamental analysis, including a company’s operations, market position, financial health, profitability, and growth potential. It can be categorized into value investing and growth investing.

1. Value Stock Selection

   • Key factors: Profitability, market dominance, financial stability, and dividends.

   • Ideal candidates:

     • Stable earnings, industry leadership.

     • Strong financials with minimal risk.

     • Consistent cash flow and dividends.

2. Growth Stock Selection

   • Key factors: Future potential (e.g., earnings growth, product competitiveness, expansion).

Method: Analyze financial statements to evaluate investment value, operational efficiency, profit authenticity, and growth prospects.

Trend Investing

Trend investing relies on technical analysis, emphasizing price movements and market trends. Typically, investors select stocks with stable uptrends and high liquidity.

1. Trend Selection by Time Frame

   • Long-term: Focus on primary trends.

   • Medium-term: Balance primary and secondary trends.

   • Short-term: Target short-term fluctuations (speculative plays).

   Note: Tools must align with the investment horizon (e.g., long-term indicators shouldn’t guide short-term trades).

2. Common Technical Tools

   • Moving averages, chart patterns (e.g., head-and-shoulders), candlestick formations.

   • Volume analysis (e.g.,筹码分布, volume profiles).

   • Bollinger Bands, MACD, KDJ, etc.