As the market continues to adjust recently, more and more investors are questioning the bull market. If it is indeed a bull market, buying during market adjustments is one of the best strategies; the question is, what if it's not a bull market? After all, in the world of investment, there is no 100% certainty beforehand.

In this article, let's discuss whether there is a strategy that can make a high probability of profit, regardless of whether it is a bull market or not.

Based on medium-term trends, the market is usually divided into bull market, bear market, and volatile market. A bull market corresponds to the continuous rise of major indices, constantly setting new highs; a bear market corresponds to the continuous decline of major indices; a volatile market, on the other hand, is characterized by back-and-forth movements within a certain range.

Returning to the A-share market, most investors define a bull market as a significant rise in the Shanghai Composite Index, corresponding to expectations such as the index surpassing 4,000 points, breaking through 5,000 points, and challenging 6,000 points; correspondingly, if the Shanghai Composite Index continues to fluctuate within a certain range, such as 3,200-3,700 points, it can be understood as a volatile market; and if the Shanghai Composite Index breaks below 3,000 points again and probes towards 2,800 points and 2,600 points, there is no doubt that a bear market has arrived.

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If a bear market scenario emerges later, then there will be no unscathed eggs under a collapsed nest, and it will be difficult for investors to find strategies that can benefit with a high probability. Therefore, we must first rule out the possibility of a bear market.

Will the bear market make a comeback? Will the Shanghai Composite Index break below 3,000 points again? The probability is very small.

The Shanghai Composite Index breaking below 3,000 points again is most likely to happen only if confidence collapses again, leading to a liquidity crisis in the stock market. With the significant shift in macro policy in September, and the central bank's introduction of two tools, the non-bank financial institution swap facility and the repurchase and repurchase of additional loans, the probability of a confidence collapse and liquidity crisis in the A-share market in the short term has been greatly reduced, so low that investors do not need to price it in. After all, any low-probability event can happen, but if investors price in all low-probability events, it is not suitable for risk investment, and they can only deposit all their money in the bank, and even this is not reassuring.

After excluding the risk of a bear market, is there a strategy that can outperform in both bull and volatile markets?

The characteristic of a bull market is that all industries rise across the board, with those with strong logic rising more and those with weak logic rising less; the characteristic of a volatile market is a structural market, with those with strong logic rising, and those without logic not rising or even falling.

Therefore, as long as we find industries and individual stocks with strong fundamental logic, we can achieve excess returns through alpha, without being constrained by the assumption of bull market beta.

Based on this, from a medium to long-term perspective, the following strategies deserve close attention:

First, stable high dividends. One of the future macro environments is low interest rates. In the context of low interest rates, the market continues to face an asset shortage, and stable high-dividend stocks continue to benefit.

The premise is low interest rates. Some may argue, won't interest rates rise if the economy bottoms out and improves? After all, the global macro environment is high interest rates. Once the economy reverses, the stock market will go to a bull market, and high-dividend stocks will have a market without relying on low interest rates; if the economic reversal rhythm is lower than expected, monetary policy will continue to be loose, interest rates will continue to decline, and the high-dividend sector will have excess returns. In any case, stable high dividends are not bad.

What is a stable high dividend? It requires that the performance in the next few years remains stable to ensure the sustainability of high dividends. For example, based on the closing price on November 22, a total of 344 A-shares have a dividend yield of more than 4% for the year 2023; in terms of net profit growth in the first three quarters of this year, 235 have negative growth, of which 174 have a decline of more than 10%, and the sustainability of dividends is questionable.

Therefore, the stable high-dividend strategy requires investors to have a relatively sufficient understanding of the fundamentals of the selected stocks to avoid stepping on mines.

Second, the industry's prosperity is on the rise. Although the overall macro economy is sluggish, there are still bright spots at the industry level. Finding industries with a reversal in performance or a continuous rise in prosperity, even in a volatile market, is not difficult to achieve excess returns.

Combining the consensus expectation data from Wind, among the 124 secondary industries of Shenwan, a total of 19 industries have a net profit growth rate of more than 100% in 2025, and 27 industries have more than 50%, see the attached table for details. Among them, the optical and optoelectronic, film and television, education, automotive services, photovoltaics, aviation infrastructure, IT services, military electronics, and other sectors have very obvious repair expectations for profits.

The problem is that looking back at history, the accuracy of the market's consensus expectation data is not high, so it is for reference only. For investors, it is also necessary to combine the industry's fundamental logic for further judgment.

For example, in the TMT sector, (1) after local debt, domestic basic software and hardware related to trust creation are expected to return to a period of prosperity; (2) AI applications are changing rapidly, and the AI industry chain may be ignited at any time due to a popular application, which could be software or hardware terminals; (3) correspondingly, domestic computing power, data elements and other related companies still have a rich imagination space.

For example, in national defense and military, independent of the macroeconomic fundamentals, combined with its own industry cycle bottoming out and reversing, regardless of the index trend, it is expected to achieve excess returns in the medium term.

For example, in the pharmaceutical and biological sector, as a necessary consumer, except for specific varieties, the demand is essentially independent of the macroeconomic fundamentals. In recent years, valuations have mainly been suppressed by the logic of anti-corruption in the pharmaceutical industry and medical insurance cost control. On the contrary, as long as there are clear signs of relaxation in policy, the pharmaceutical sector will have an independent market at any time. Patient investors, who lay out in advance, will eventually see the flowers bloom.

For example, in the financial real estate sector, (1) if the real estate market stops falling and stabilizes, then big finance and the real estate chain will have a more obvious beta opportunity, but whether real estate can stop falling and stabilize still needs to be seen as it goes, and it is difficult for investors to place a heavy bet in advance; (2) if the real estate market continues to fluctuate and fall, then the real estate chain will not have opportunities, bank valuations will be suppressed, and the non-bank sector will not have a sustainable market; (3) in summary, financial real estate is not a sector that can stably outperform.

For example, in the food and beverage sector, among the sub-sectors of baijiu, dairy products, meat products, beer, condiments, and leisure food, there are many opportunities at the individual stock level, but if the willingness of residents to consume does not significantly increase, it will be difficult for the entire sector to have a sustainable market.

For example, in the export chain, suppressed by the uncertainty of Trump's tariffs, regardless of the overall market trend, it is difficult to achieve excess returns. Instead of looking for alpha in negative beta, it may be a better choice to stay out of it.

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Above, no more examples will be given one by one.

In short, investment should focus on the medium and long term, and then wait for better buying opportunities in the short term, with the focus on seizing the opportunities to buy low during market adjustments. The market has continued to adjust recently, pessimistic sentiment has spread, and the window to buy has opened.