How Can Average People Earn Steady Money in the Stock Market?

The current major A-share market trend has been underway for a month now. During this period, the vast majority of individual stocks have seen cumulative gains exceeding 30%, and even a small half of the stocks have risen by more than 50%. However, at the same time, there have been numerous stocks that have given back a significant portion of their gains from the market's peak.

Many people have indeed resolved long-standing positions or made substantial profits in this market trend. Yet, there are also many who, in their frequent attempts to chase gains and cut losses, have essentially given back the large profits they initially made. Some even entered on the "10.8" day, becoming one of the most severely loss-making groups in this market trend. These individuals are generally those who had stopped paying attention to the stock market and only re-entered the market to buy stocks when they saw the entire market fervently discussing the stock market boom during the holidays.

Some argue that it is difficult for ordinary people to truly make money in the A-share market because the stock market is a battleground for both bulls and bears, and ordinary investors who are clearly at a disadvantage find it hard to defeat professional institutions. In fact, this view is somewhat biased because, in many instances, the real opponents of investors are not institutions but their own misconceptions about the stock market and deficiencies in their investment strategies. Despite the A-share index frequently transitioning between bull and bear markets over the past decade, there have been plenty of significant upward trends during this period. As long as one can capture one or two of these trends, it is enough to make substantial profits.

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Especially after the "924" A-share market kicked off a major trend, investment opportunities have become more abundant. So, what can ordinary people do to better seize this new wave?

There are ways, and some of these methods are far simpler than one might imagine.Recently, the A-share market has been experiencing a continuous divergence in trends, but the index has not only stabilized amidst fluctuations and adjustments but has also shown a clear upward momentum.

According to data, on Friday, A-share institutions, main forces, and large investors once again saw huge net inflows at the level of tens of billions, with institutional seats seeing a net inflow of 43.2 billion yuan, becoming an important force to stimulate the market's strength. As I mentioned in recent articles, it is expected that after a round of significant increases, the A-share market will face some回调 risks due to changes in internal and external factors. For example, the upcoming major domestic meeting at the beginning of next month, the approaching results of the U.S. election, international geopolitical wars, and other factors could potentially trigger a shift in the recent market trends.

However, the country is now vigorously implementing policies to guide long-term capital from various sources into the market, bringing crucial support and confidence. The fact that the A-share market has bottomed out on "924" is a foregone conclusion. After more than two weeks of adjustment, it no longer continues to fall. The probability of the A-share market continuing to initiate a second wave of the trend and gradually becoming bullish is quite high.

Sharp rises and falls are important characteristics of a bull market. Currently, the rotation of thematic and conceptual sectors in the market is frequent, and stock market volatility continues to increase. Stock investors have become indifferent to significant fluctuations such as a 3-point rise and fall in the Growth Enterprise Market and a 5% rise and fall in the Beijing Stock Exchange. This indicates that stock investors have generally recognized that the A-share market is currently in a bull market and have an optimistic outlook for the future.

However, the greater the fluctuations in the stock market, the greater the risk of loss for stock investors.

This is also why stock investors who have entered the market in the past two weeks have the feeling that even though they see the stock market rising, they seem to be losing money the more they trade.

Ordinary stock investors are not professional investors. They lack professional investment analysis capabilities and have only a vague understanding of some basic investment logic of stocks. At the same time, they rarely have time to truly delve into market information to understand the fundamentals of the stocks they hold or changes in market trends.

Because their understanding and reaction in the market are always a beat slower than others, they are more likely to become the ones who take over in the rapid rotation of the market, which can be said to be an inherent defect.

But this does not mean that ordinary people cannot make money in the stock market.The stock market fluctuates rapidly, offering quick methods to play; ordinary people's participation pace is slow, and there are also slow methods to play.

For ordinary people, sometimes simple and even seemingly foolish methods are more applicable.

Because the upcoming bull market in A-shares (at least for this cycle) provides the most critical confidence for these simple methods.

Simple methods, such as holding high-dividend assets with the mentality of earning interest.

Currently, the domestic interest rate environment is long-term low, and the long-term deposit interest rate of banks has basically reached around 2.5%. However, in the A-share market, the dividend yield is obviously higher than this level, and there are many above 4%, especially in the core leaders of the banking, insurance, energy, and public utilities sectors.

Policies such as the "New National Nine Articles" have clearly strengthened the supervision of cash dividends of listed companies, enhancing investors' sense of gain, and it is a general trend for listed companies to proactively increase the dividend ratio. It is expected that there will be more high-dividend assets in A-shares in the future.

If ordinary stock investors invest in the core assets of these fields, even if the stock does not rise sharply in the future, the dividends received each year are also considerable.

Assuming a stock's dividend yield is long-term above 5%, then holding the stock for 20 years can recover all the principal just by dividends, and such stocks must be high-quality listed companies, and their stock prices cannot help but rise in the future.

In addition, if the dividends are reinvested, then a 5% dividend yield can recover the cost in less than 15 years just by dividends, and thereafter, the market value of the stock and dividends are all pure profits.

The reason why many large domestic institutions and major stock investors like to allocate core assets in banking and energy, and remain unshakable, is also for the high dividend dividends.Another simple approach is to invest in industry leaders. However, this method requires some understanding of macroeconomics, at least a general knowledge of the cyclical patterns of industries under various economic cycles. If you could have seized the opportunities of leading industry developments in the past two decades, such as the internet, large infrastructure, manufacturing, consumer goods, healthcare, and real estate, you would most likely have achieved financial freedom.

These industries have long periods of prosperity, and the recognition of leading companies is clear enough, making it not difficult to identify them. This is actually a typical value investment strategy.

The challenge lies in adjusting your holdings in a timely manner when the industry's prosperity fades, which is a bit difficult for ordinary investors who adopt the "buy and hold forever" mentality.

In the past two years, many people have mocked this value investment by citing some A-share industries that once saw super high growth but later saw their stock prices drop by 70-80% from their peaks. But this is a misconception; they deny the objective law of industry rotation and ignore the fact that these "Mao" assets have increased tens or even hundreds of times during the industry's prosperous cycles.

Actually, solving this problem is quite simple, which is the third method this article is going to discuss—index investment.

So-called index investment refers to investing in funds that track various broad-based or industry indices. For example, in broad-based indices, the SSE 50 represents the performance of super large-cap stocks, the CSI 300 represents the performance of large-cap blue-chip stocks, and the ChiNext and STAR Market represent the performance of growth stocks.

Industry indices correspond to the performance of various industries, such as semiconductors, chips, new energy, internet, banking, insurance, baijiu, home appliances, food and beverage, and other mainstream industry indices with various styles.

Looking at market indices, the long-term trend of A-shares is actually a continuous fluctuation and upward movement. For instance, although the Shanghai Composite Index created a long-term insurmountable high of 6,124 points in 2008, it is undeniable that its base has been gradually rising, indicating that as long as the time is long enough, the index will inevitably rise. We also have every reason to believe that this historical record will definitely be broken in the future; it is just a matter of time.

Therefore, as long as it is long-term index investment, it is only a matter of time before investors make money. Moreover, the reform of the capital market is accelerating, and the pattern of a long bull market and a slow bull market is taking shape, with higher certainty than before.Recently, there has been a significant phenomenon in the domestic capital market that warrants attention—the issuance and listing of various index funds, represented by the CSI A500 ETF, are occurring at a considerable pace, starting to become an important channel for investors to participate in the stock market.

Reports indicate that many large institutions are now choosing broad-based index layouts for A-shares, and the national team is also heavily purchasing broad-based index ETFs. Data shows that, as of October 21st, equity ETFs have attracted more than 1 trillion yuan in net inflows.

By 3 PM on October 25th, when A-shares closed, the total scale of the first batch of 10 ETFs reached 42.62 billion yuan.

Off-exchange index funds have also received strong capital support. It is reported that the sales of 17 CSI A500 off-exchange funds with statistical data have quickly exceeded 20 billion.

For ordinary investors, the CSI A500 index is undoubtedly the best investment direction to participate in the current A-shares.

This index better balances value investment and the layout of industry leaders in growth tracks compared to other broad-based or industry indices. It covers the most blood-making capabilities in A-shares, such as Kweichow Moutai, Ping An Insurance, China Merchants Bank, and Yangtze Power, allowing investors to steadily enjoy dividend dividends. At the same time, it also includes many emerging industry leaders in power equipment, pharmaceuticals, biotechnology, communications, and computers. It truly achieves the dual characteristics of high dividends and high growth.

Data shows that the dividend yield of the CSI A500 is 2.96%, which has a higher dividend advantage compared to other mainstream broad-based indices.

Therefore, if ordinary investors want to participate in the stock market and layout assets that are both stable and growth-oriented, with both offensive and defensive capabilities, index funds would be a good choice.

The Huaan CSI A500 Index Fund (Class A: 022465, Class C: 022466) began to be issued on October 25th and is currently raising funds. Investing in off-exchange index products does not require opening a securities account and can be purchased through bank branches, online banking, third-party platforms, and other channels.

Compared to actively managed products, the management fees, custody fees, and subscription fees of off-exchange index funds are usually lower, which helps to save transaction costs. Taking the Huaan CSI A500 Index Fund as an example, its management fee rate is 0.15% per year, and the custody fee rate is 0.05% per year, which is the lowest among current equity index funds.In the U.S. stock market, the S&P 500 Index is one of the most closely watched benchmark indices by global investors, with numerous institutions developing their own derivatives or fund products around this index. Options on the SPDR S&P 500 Index ETF have even become the largest-scale trading product for U.S. stock investors, with the total number of related options contracts exceeding 8 million.

The S&P 500 Index covers the largest market capitalization technology giants in the U.S. stock market and also extensively covers the leading companies in various sectors in the United States. As a result, the index has maintained a very considerable steady increase over the years.

Now, with the launch of the CSI A500 Index, the allocation style is similar to that of the S&P 500 Index, and historical data also reflects that this index indeed has good growth potential. We may also look forward to it becoming an important index that A-share investors aspire to, allowing ordinary investors to truly earn money securely by investing in the CSI A500.