Originally, I wanted to change the title to 6000 points, 5000 points, but in the end, I still changed the small target back to 4000 points.

The A-share market's curse of 3000 points cannot be shaken off, and 4000 points have to be recalled to July 27, 2015.

Time flies, and 4000 points have been away from us for more than 8 years.

The possibility of returning to 4000 points in the next 2 years is actually not very big.

That is to say, we may bid farewell to 4000 points for a full 10 years.

Someone told me that in the past 10 years, China's GDP has grown by more than 70% (compound growth), but the stock market is going down.

But if we look at the underlying, the market value of A-shares has not decreased, but has grown wildly.

Advertisement

In 2015, the market value at the peak of the bull market was only 52.96 trillion yuan, which was 5178 points at that time.

In 2023, at 3000 points, the total market value of the Shanghai Composite Index was 47 trillion, and the Shenzhen Component Index was nearly 32 trillion, totaling 79 trillion, close to 80 trillion.

That is to say, in these 8 years, the index has fallen by 42%, but the market value has increased by 51%.If the current index is to rise back to 4,000 points, with an increase of 33%, the total market value would need to be 106.5 trillion, which is twice the market value at 5,178 points.

What's even more terrifying is that there is no sign of slowing down in the Initial Public Offerings (IPOs).

That is, the longer the time, the larger the market value, the more funds are needed for the rise, and the lower the height of the rise relatively.

This is also why it couldn't rise above 5,178 points; theoretically, the funds for speculation at that time had already exceeded the 6,124 points.

The total market value at 6,124 points was only 34 trillion, and it had already reached 53 trillion at 5,178 points, which had already increased significantly.

It's like asking a constantly gaining weight fat man to keep climbing high buildings, the difficulty will definitely become greater and greater.

If, let's just suppose, if the A-shares return to 4,000 points, what conditions are needed?

1. The average daily turnover exceeds 1.5 trillion.

The A-shares at 4,000 points are expected to have a total market value of 120 trillion, or even higher, reaching 150 trillion.The current trading volume is averaging around 800 billion, and the market is in a state of stagnation.

Occasional transactions of a trillion yuan cannot support the market.

If you look back at the average daily transaction amount during the bull market, almost all of them exceeded 1% of the total market value.

That is to say, a trading volume of 1.2 trillion yuan is the starting point, and an average daily transaction of 1.5 trillion yuan may be more reliable.

Increasing the average daily transaction by 500 billion yuan is actually more difficult than climbing to the sky.

This means that a large amount of capital needs to enter the market and remain active for a long time.

In the last bull market, public funds were the main driving force for entering the market, but after the bull market, nearly 10 trillion yuan of funds disappeared like a clay ox entering the sea.

In the long term, continuous, and high trading volume, the market needs a long cycle to cultivate to achieve this.

In other words, attracting funds requires many reasons, and these reasons are not temporarily available at present.

2. The total net profit of the market grows by 30-50%.The market needs not only to grow in size but also to elevate its stature.

For the index to rise, it implies that listed companies must experience growth, assuming the overall valuation level remains unchanged.

From 3,000 points to 4,000 points, a 33% increase in net profits is essential.

Only when net profits grow and listed companies truly develop can a positive cycle be achieved.

Of course, achieving a 30-50% overall market growth is actually quite challenging.

If we consider the CSI 300 as relatively high-quality listed companies, their average growth rate is only about 10%.

Considering the overall economic situation and the slowdown in growth, this 30-50% increase may take at least 5-8 years.

And in these 5-8 years, it is uncertain how much the market will grow in size.

However, looking at the annual issuance of 500-800 listed companies, at least a 30% increase in size is expected, which in turn will demand higher net profits from listed companies.

This is also an important reason why even if listed companies are growing slowly, the index may still decline.3. High-quality listed companies, the birth of new weight.

At present, the weight companies in A-shares are mainly state-owned enterprises.

For example, Moutai, the four major banks, China Mobile, and so on.

It's not that these listed companies are not good, they are the cornerstone of ours, but the cornerstone of the last era, not the example of the next era.

Compared with the weight of the United States, mainly in technology companies, the weight of the S&P has been relegated to the second line, and the NASDAQ has become the protagonist.

The weight of A-shares also needs to change over time.

When new weights emerge and continue to develop and grow, the overall market value growth, point growth, is naturally reasonable.

These companies, theoretically, still have the possibility of high growth, but the old batch of weights, the era of high growth has passed.

But if you expect the old batch of weights to drive the index to rise further, to 4000 points.

It's not impossible, but the time cycle will be very long, and the proportion of these weights will actually gradually decrease, because new listed companies have come.4. Long-term capital enters the market, even transferring from bank savings.

The funds that drive the market up cannot all be liquid capital, because the characteristic of liquid capital is that it can enter and also exit the market.

A healthy market can continue to rise over the long term because of the entry of long-term capital.

The main goal of this part of the capital is to buy out the shares of high-quality individual stocks at low positions and then hold them for a long time to obtain long-term returns.

In the market, there is always a part of the capital that holds stocks for a long time, waiting for company dividends and company growth.

If you simply rely on the entry of capital from the capital market, their goal is to make money by cutting the leeks.

Only the entry of long-term financial products such as bank long-term financial management and insurance funds, which were originally not needed in this round, will lead to an essential change.

The long-term capital in this market was originally passive long-term.

That is to say, because it was trapped, it became a long-term holding of stocks.

In theory, a healthy market should have a large amount of capital that actively holds for a long time, and this proportion needs to be increased.Here is the translation of the given text into English:

Conclusion: The next round of the stock market rising to 4,000 points will not be due to speculation.

This point is very certain.

Because no funds are willing to be the "big fool", they would not want to rush to 4,000 points and then get trapped at the peak.

Only when the entire market has the foundation to rise to 4,000 points will the trend unfold.

This is also why the index stopped at 3,700 points in 2021.

Because funds felt that if they continued to speculate, the space would be extremely limited.

Therefore, the next round of the 4,000+ trend, even if it comes a little late, will be more solid than the current situation.

In 3 to 5 years, I think most investors can still wait.

Of course, if the economic situation is not optimistic, the time cycle may need to be postponed.

(Note: The original text contains some Chinese slang and expressions that may not have a direct equivalent in English. The translation provided aims to convey the general meaning and context of the original text.)As an ordinary investor, don't be too obsessed with the index; otherwise, you will be trapped in it and unable to get out.

As long as the times are developing, there will be a continuous emergence of high-quality listed companies, and there will be good investment opportunities.