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NOTE

Investment Strategy

English translation of the original VNote “Investment Strategy”, preserving its structure with only necessary small corrections.

InvestingUpdated 2 min readhistorical

This is a historical learning note and may contain outdated or incomplete understanding.

Note: The original VNote structure and historical views are preserved. Product rules, returns, policies, and specific assets are time-sensitive; only clear errors or changed institutional rules are corrected minimally. This is not investment advice.

Historical strategy record: the northbound-fund-flow rules, fixed premium rates, margins of safety, and buy/sell levels below are examples from the original note, not universally validated rules.

1. Investment Strategies

1.1. Top-Down

Analyze the macro economy first, then the industry, and finally select individual stocks.

1.2. Bottom-Up

Analyze individual stocks first, then generalize to the industry or the overall market.

1.3. Other

1.3.1. Northbound-Fund-Flow Strategy

(1) When the day’s net northbound inflow > the average net northbound inflow over the past 252 trading days + 2 standard deviations, buy the CSI 300 with the full position.

(2) When the day’s net northbound inflow < the average net northbound inflow over the past 252 trading days - 2 standard deviations, sell the entire CSI 300 position.

(3) Buy a CSI 300 ETF at the opening price on the next trading day.

Sharing a Strategy for Investing in the CSI 300 Index Huatai Financial Engineering: Northbound Fund Flows May Signal Short-Term Market Volatility

2. Top-Down

2.1. Choose Which Country to Invest In Based on Exchange Rates

International Finance (original VNote internal link; not migrated yet)

2.2. Choose Different Assets Based on the Business Cycle

  1. Identify the business cycle: Business Cycles
  2. Apply the MVP model.

2.3. Choose Different Industries Based on Policy

  1. Understand the overall picture of China’s economy.
    1. Population, technological innovation, etc. in China Economy (original VNote internal link; not migrated yet).
    2. GDP and related material in Economic Growth.
  2. Understand the latest policies.
    1. How to Read Policy (original VNote internal link; not migrated yet)

2.4. Analyze an Industry

How to Analyze an Industry (original VNote internal link; not migrated yet)

2.5. Stock Pool

  1. Select from stocks held by northbound funds: How to Pick from Thousands of A-Shares? This Stock Pool Is Enough
  2. Select companies ranking highly in GF Securities’ financial diagnostics: Quickly Screening Companies for Financial-Management Thesis Cases - Bilibili

2.6. Individual-Stock Analysis

2.6.1. Fundamental Analysis

Fundamental stock selection.

How to Analyze a Company (original VNote internal link; not migrated yet)

2.6.2. Technical Analysis

Use technical analysis to choose an entry point.

  • Content
    1. Moving averages
    2. Indicators
    3. Price and volume
    4. Position/cost distribution
    5. Conclusion: patterns
  • Three assumptions
    • Price contains all information.
    • Stock prices move in trends.
    • History can repeat.

2.6.3. Psychological Analysis

Behavioral Economics

2.6.4. Quantitative Analysis

3. Buying and Selling Strategy

3.1. Buy

  • Set a premium rate (20%) and margin of safety (10%).
  • Initial position price = valuation * margin of safety.
    • Example: if estimated value is 100 yuan per share and the margin of safety is 10%, the initial position price = 100 * 90% = 90 yuan. In actual purchasing, buy below 90 yuan, meaning estimated value is above the market price.
  • Add-to-position price = initial position price * (1 - premium rate).
    • 90 * (1 - 20%) = 72 yuan.
  • Heavy-position price = add-to-position price * (1 - premium rate).
    • 72 * (1 - 20%) = 57.6 yuan.

3.2. Sell

  • Set a premium rate of 20%.
  • Initial position price is 100 yuan per share.
  • First selling level = 100 * (1 + 20%) = 120 yuan.
  • Second selling level = 120 * (1 + 20%) = 144 yuan.

4. References