Today, let's talk about an interesting topic, which is about market hotspots.

It is a common occurrence to speculate on market hotspots in the stock market.

Even in a bear market, there will be a period of alleviation where everyone can speculate on a round of hotspots and make some money together.

However, many people who speculate on hotspots end up not making money, but instead find themselves standing on a high mountain peak.

Many people have encountered the same situation and have many questions.

Why are there different outcomes for the same hotspot? Why do some stocks in the hotspot rise more, while others rise less?

Let's discuss some of my personal views on these issues.

Personal opinions, for reference only.

1. Where do market hotspots come from?What often sets off hot topics are certain themes or short essays.

Investors must understand that the essence of a hot topic is the speculation in a certain direction.

The market's hot topics don't need themes at all, because there are always paid writers who will write short essays.

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A bunch of self-media are also accomplices in hyping up hot topics, and then a bunch of people go to piggyback on the hot topics.

Of course, if there is trend-supporting assistance, such as new energy or AI, this kind of story will be easier to tell.

A hot topic is a story, and with a story, there is room for speculation.

Where do the market's hot topics come from? They are created by capital, coupled with the hype of paid writers.

2. Which kind of hot topic is likely to have a big speculation?

For a hot topic to have a big speculation, the first prerequisite is not that the theme is explosive enough, but that the sector must be large enough.

If a theme is related to only 1-2 listed companies, with a market value of a few billion and a few hundred million in circulation, how can capital make money?So, the first characteristic of a major hot spot is actually that the plate is large enough for capital to enter.

Usually, a plate starts with at least 50 companies, and it is best to have 100-200 listed companies to have room for speculation.

Each listed company can accommodate 500 million to 1 billion in capital, so tens of billions of capital are needed to speculate.

Some hot spots pass by, actually because the plate is too small, and subsequent capital is unwilling to enter.

The major speculation of hot spots often chooses large plates, as for the reason, if there is none, just make one.

3. How much impact does the market environment have on the speculation of hot spots?

Bulls and bears, in fact, there will be speculation of hot spots, this history has witnessed many times.

But the speculation of hot spots in the bull market and the bear market, the routine is actually not quite the same.

The hot spots speculated in the bull market, we call it the main line.

That is, in the bull market, the line with the largest increase is the most sought after by capital.The hot spots in a bear market, sometimes also referred to as the main line, have completely different meanings.

In a bear market, hot spots are places where capital needs to vent emotions and make money by huddling together for warmth.

It can be said that the hot spots in a bear market offer more excess returns, but the cycle is shorter.

In contrast, the hot spots in a bull market not only have more excess returns, but also last for a very long time.

The market environment also determines the success rate of hot spot speculation, almost 100% in a bull market, and only 30-50% in a bear market.

That is to say, in a bear market, hot spots that are abandoned halfway and die out prematurely are actually quite common.

Many hot spots in a bear market are transient, and may be extinguished in just 3-5 trading days, without the characteristics of a long cycle.

4. How does the leader of a hot spot sector come about?

The leader of a sector is actually also speculated out, and it is a result of capital advancing step by step.

At the beginning of the rise, in the early stage of speculation, capital does not know who the leader is.One board, two boards, three boards, the stock that is still continuously hitting the upper limit of the board is the leader of the sector.

To put it bluntly, the stock chosen by the most capital becomes the ultimate leader.

Do not think too complicated about the leader, it is not selected from the beginning, but comes from a relay.

Of course, in terms of technical form, the leader that starts from the oversold position is relatively the most.

Do not think too complicated about the leader, it is actually a product of emotion, driven by a large amount of capital, and eventually dies because of the withdrawal of capital.

Any leader is almost a bubble, especially the short-term hot leader, which is fried to a sky-high price, and then there is no more.

The law has always been like this, and there is no need to mythologize it, it is naturally fried like this.

5, how does the capital chasing hot spots run away?

Many investors are puzzled about how the capital chasing hot spots runs away.

The ebb of the hot spot is ultimately reflected in the trading volume.You will find that popular stocks ultimately die from the shrinkage of trading volume, and it is a gradual shrinkage.

That is, a part of the funds enter but ultimately do not come out, which is to say they are stationed.

Speculative capital to hype hot spots is not something that can be withdrawn all at once.

Unless the opportunity is particularly good, and there are a lot of following funds, which can let him exit in one go.

Otherwise, it must be a step by step downward, and each stage will have the behavior of luring more, attracting funds to take over the plate.

Step by step down, and then the trading volume gradually shrinks.

That is, each step traps a small part of the people, including some people's blind replenishment funds.

In the end, the funds withdraw and disappear, leaving a lot of retail investors holding the stock waiting for the rise.

There are not many retail investors who take over the high position, but there are also many retail investors who keep buying in the process of falling all the way.

6, can retail investors chase hot spots?It is often said that retail investors who want to make money must chase hot spots.

I don't necessarily agree with this, after all, chasing hot spots can make money if done well, but if not done well, it can also lead to losses.

It's important to understand that after a hot spot is hyped, the main force eventually leaves with the money, leaving behind those who are left holding the bag.

The number of retail investors who can make money is ultimately a minority, and most of them are also left holding the bag, it's just a matter of who gets the last stick in the game of hot potato.

For retail investors who strictly set stop losses, the opportunity to make money by chasing hot spots is relatively large, and the losses are controllable.

However, for some retail investors who are indecisive and prone to illusions, the end result of chasing hot spots is being deeply trapped and suffering significant losses.

Therefore, in terms of investment style, retail investors can find their own place and determine whether they are suitable or not.

In addition, chasing hot spots emphasizes entering early, being quick-witted and agile, and the risk of holding the initiative is small, while the risk of entering later is very large.

When a high mountain has already appeared, it is better to be more cautious, missing out is much better than losing money.

Masters in the stock market like to gamble in risks, and playing hot spots is a required course.But not everyone can become an expert, can take risks, and are so disciplined.

Understanding the pros and cons, and more importantly, understanding whether you have such abilities, is very important.

After all, after making quick money, it is very difficult to slow down the pace.

The stock market has trends every day, even if only more than 100 stocks rise, there will still be more than a dozen stocks to hit the daily limit, and the hot spots are always there.

But hot spots are like pigs on the wind, if you don't have the ability, don't chase them, it is very painful to fall.