In the post epidemic era, the world's major economies have basically ushered in economic recovery, but the economic growth rates of various countries are different. China continues to supply the world and export goods and services to the world by virtue of its strong supply chain. Corresponding to the capital market, we will find that, thanks to the monetary easing of major economies such as the United States and the superimposed economic recovery cycle, the valuation of the stock market has been pushed up again, and the prices of bulk commodities have also soared year-on-year. Therefore, taking this opportunity, the author also tries to talk about whether there are investment opportunities in the current copper aluminum cycle industry.

When it comes to cycle, I personally think that the book Cycle, written by Mr. Howard Marks, explains the characteristics and laws of cycle very well, which can be consulted by interested readers. Back to the secondary market, investment cycle stocks need to judge the position of the industry in which they invest, which is crucial. The author believes that the most direct factor in investing in cycle stocks is that the shortage of supply leads to a sharp rise in the price of the company's products or services in a short term, which leads to a sharp rise in the company's profits. Most of the stocks in cycle stocks are speculative stocks. Therefore, investors who invest in such stocks will suffer heavy losses in cycle stocks if they do not have complete investment rules, Because most people's losses come from blind optimism and lack of risk awareness.

Here are some suggestions to share with readers:

1. Industries with low price elasticity of products or services should not participate as much as possible, because the risk of investment cycle stocks is higher than that of ordinary value stocks or growth stocks. Investors buy cycle stocks in the hope of obtaining high returns. If the elasticity is not high enough and the duration of funds is not long enough, the market may end soon and be easy to be passive.

2. Cycle stocks need to be seen while walking. If the market logic changes, it is necessary to stop profits in time. The difficulty here is to grasp the logic of cycle stocks and track some data, such as spot prices. The profits must be quantifiable. If the profits of cycle stocks cannot be quantified, it will increase the difficulty invisibly, and the logic of funds is easy to change in the process of speculation; Finally, we should also track the changes in supply and whether there will be a precipitous decline in demand in the short term.

It is well known that nonferrous resource companies represented by copper and aluminum have been abandoned by mainstream funds for a long time from 2007 to 2020 because of their long-term losses and the high debt ratio of resource companies.

Why does this dilemma arise?

In general, it is the disorderly expansion of the industry and insufficient superimposed effective demand. In terms of the company, there are also reasons for the company's misjudgment cycle and investment failure. The increase of copper and aluminum in this year should be higher in the subdivided industries, because the Federal Reserve released water wantonly, leading to the soaring price of bulk commodities denominated in dollars, which led to the first stage of stock price repair for the relevant targets in the secondary market.

In the second stage, it depends on the persistence of the spot price at a high level, superimposed on the demand logic brought by the economic recovery. From the current tracking of the status of the spot, copper and aluminum prices fluctuated at a high level, and the early dumping of reserves by the State Reserve was less than expected, which only suppressed some illegal hoarding activities of speculators, allowing the trading market to return to the normal track. Of course, this is a short-term negative impact on investment in copper and aluminum cycle stocks.

In the long run, it depends on the impact of supply and demand. In terms of supply, China is a copper deficient country, and the core copper resources are in the hands of a few giants in Europe and the United States. Except for a few excellent companies that have mastered a certain amount of capacity in overseas expansion, most companies have bottlenecks in their capacity, so there is not so much room for profit imagination. Such companies should try to avoid it. In terms of demand, in addition to traditional demand, In addition, the new demand for new energy vehicles, photovoltaic, wind energy and other new energy vehicles has provided another level of support for copper prices.

For aluminum, as electrolytic aluminum is a high energy consuming industry, the introduction of carbon neutral policy and the limited new capacity lead to a ceiling of supply, which is good for the existing electrolytic aluminum players. The demand level also benefits from the new demand in the future, which is expected to raise the price center. Related companies are expected to usher in the second stage of performance improvement and stock price rise.