Several reference investment strategies | Including foundational fund knowledge and valuation methods

Benchmark indices: CSI 300, CSI 500, CSI A50, GTJA 1000, ChiNext Index, etc. Sector allocation: Banking, electronics, food & beverage, pharmaceuticals & biotechnology, electric power equipment, non-bank financial services, etc. Suitable for dollar-cost averaging (DCA). QDII Funds: Overseas asset funds used to allocate exposure to foreign markets. III. Defensive + High-Growth Portfolio Core-Satellite Strategy: Diversified allocation—core positions in stable, low-volatility assets; satellite positions in higher-risk, higher-return assets. A vs. C Share Classes: Class A charges a front-end sales load; Class C levies an ongoing fee based on holding period. Choose Class A for long-term holding; Class C for short-term trading. IV. Dividend Strategy Dividend-focused assets: Stable and relatively high-yield dividend payers, concentrated in banking, coal, transportation, and logistics sectors. Characteristics: High dividend yield, low P/E ratio, low P/B ratio. Drivers of growth: Low interest-rate environment + policy support + high volatility in the A-share market. Selection approaches: ・Bullish market, high expected returns: Dual-factor strategy combining dividend yield and quality metrics. ・Pure dividend focus: Single-factor dividend index funds. ・Low volatility, steady investment: Dividend + low-volatility strategy. V. Exchange-Traded Funds (ETFs) vs. Off-Exchange Funds ETFs: Purchased via stock trading accounts; highly liquid and low-cost. Off-exchange funds: Bought through platforms like Alipay or bank apps; higher redemption fees within seven days, better suited for long-term DCA. VI. Fixed-Income and “Fixed-Income Plus” Fixed-Income: Investments generating predictable returns—e.g., bank deposit interest, bond coupons. “Fixed-Income Plus”: Core fixed-income portfolio augmented with return-enhancing instruments (e.g., equities, derivatives). Ideal as a defensive allocation during market euphoria. VII. Corporate Financial Metrics Free Cash Flow (FCF): Residual cash remaining after covering operating expenses and capital expenditures—forms the basis for dividends and share buybacks. VIII. Macroeconomic Indicators GDP: Typically benchmarked at thresholds of 2%, 5%, and 8%; current level ~5%. CPI (Consumer Price Index): Target range is 1%–3%; below 1% signals deflation; above 3% indicates inflation. PMI (Purchasing Managers’ Index): Released monthly by China’s National Bureau of Statistics; 50 is the expansion/contraction threshold—above 50 signals expansion; below 50 signals contraction. P/E, P/B, ROE, etc., must be assessed *by sector*, as reasonable valuation ranges differ significantly across industries. ROE (Return on Equity): Measures profitability relative to shareholders’ equity—the higher, the better. ROA (Return on Assets): Reflects efficiency in using assets to generate profit—the higher, the more operationally sound. IX. Consumer Sector Index Funds Examples: 000989, 931454, 980030. Emerging consumption trends: “Guzi economy” (fan culture-driven consumption), digital assets, and other new consumer themes. X. Stock Market Valuation Methods Assessing overall market valuation involves four dimensions: 1. Historical P/E level: Where does the current P/E rank in its historical percentile? 2. Relative valuation vs. U.S. equities: How does A-share P/E compare to that of U.S. markets? 3. Historical turnover rate: A sentiment indicator reflecting market enthusiasm or caution. 4. Aggregate market capitalization: Total A-share market cap / GDP (i.e., market capitalization ratio or “securitization ratio”). XI. Currently Undervalued Sectors Food & beverage, home appliances, agriculture/forestry/fishery & animal husbandry—all currently trading below fair value (worth monitoring going forward). XII. Portfolio Allocation During Market Euphoria When overall market valuations are elevated, prioritize: ・“Fixed-Income Plus”: Primarily defensive. ・Broad-market index funds: Track market trends without chasing peaks. ・Dividend assets: High yields provide a margin of safety. Final Note After compiling this reference guide to investment strategies, the strongest impression is: Investing need not be complex—but it *must* be systematic.

How to assess whether a stock’s valuation is high or low?

Entry price: RMB 6.47 China National Pharmaceutical Group Corporation (Sinopharm Holdings) Entry price: HKD 15.45 Sales this week: Jiangsu Ninghu Expressway Co., Ltd. Exited at HKD 11.48 Qingdao Port International Co., Ltd. Exited at HKD 8.135 Jiangsu Ninghu Expressway: Purchased at HKD 9.9 on July 31; sold at HKD 11.48 on October 13—holding period: ~2.5 months; gain: 18.87%. Qingdao Port: Purchased at HKD 7.04 on May 28; sold at HKD 8.135 on October 14—holding period: ~4.5 months; plus accrued but unpaid dividends of HKD 0.16 per share, estimated total return: 17.77%. Although both companies’ absolute valuations were not high, their P/E and P/B percentiles had approached the top of their respective 5-year ranges—prompting this week’s stock-swap strategy: rotating out of higher-valued stocks into lower-valued ones. As shown above, public utilities and traditional trading/manufacturing firms inherently possess different valuation ceilings due to distinct business characteristics—hence their valuation caps tend to be comparatively lower than those of other sectors. The 5-year horizon is used as the primary reference because—empirically—it approximates the typical valuation cycle for most companies. Benjamin Graham, in *The Intelligent Investor*, proposed a simplified formula for estimating intrinsic value: Value = Current (Normalized) Earnings × (8.5 + 2 × Expected Annual Growth Rate) He posited that a zero-growth company’s appropriate P/E should be 8.5x, while the “Expected Annual Growth Rate” refers to investors’ average projected annual earnings growth over the next 7–10 years. This formula allows for a rough estimate of a company’s fair share price—and thus supports judgment on whether the current price is high or low. Below are my interpretations of this formula: 1. The book specifies the growth rate applies to the next 7–10 years—implying an implicit investment horizon and payback period of 7–10 years. In other words, the anchor P/E is effectively bounded between 7x and 10x. Graham’s choice of 8.5x likely reflects the midpoint ((7+10)/2) of that range—suggesting he calibrated it to a typical investor’s expected holding period. You may substitute your own target horizon (e.g., 5 years or 20 years) accordingly—but I believe 10 years represents a reasonable standard for most long-term investments. Regarding “zero-growth” classification: I consider a company zero-growth if its earnings fluctuate within ±10% annually—for example, a decline under 10% can reasonably be treated as flat (i.e., 0% growth). 2. The “2×” multiplier applied to the expected growth rate remains somewhat ambiguous. First, forecasting a precise 7–10 year average annual growth rate is practically impossible from an investment standpoint. Nonetheless, one may conservatively input a low figure to establish a wider margin of safety. For instance, although Kweichow Moutai’s 2025 growth rate is projected to decline, assuming a 10% average annual growth over the next 7–10 years remains plausible for long-term analysis—though this ultimately hinges on the investor’s grasp of the company’s underlying business logic.

Dimensional Fund Advisors LP Adds Stepan Co (SCL) Shares – Stock Looks 12% Undervalued on GF Value

Oct 15, 2026

Dimensional Fund Advisors LP increased its stake in specialty chemicals manufacturer Stepan Co by 66,990 shares to 5.20%. Despite negative profitability trends, the stock is considered modestly undervalued with a GF Score of 81.

GuruFocus

2026-02-23

US Stepan to close New Jersey surfactants site; decommission other assets by mid-2026

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Stepan to shutter assets under $100M savings plan

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Stepan Company Launches Cost-Cutting Plan

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Stepan Stock Crosses 200-Day Moving Average Despite Earnings Miss

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