WE Think — The Hardest Part of Investing: What to Do After Missing the Rally

In the current market environment, consensus on a bull market is gradually strengthening. The A-share market showed significant acceleration in August, with the Wind All China Index and CSI 300 Index rising by 10.93% and 10.33%, respectively. The Hong Kong market, however, saw more modest gains. Despite the overall strong market performance, many investors have yet to benefit and are facing the dilemma of having missed the rally. This article explores why investors miss out and how they should respond when they do.

1.  Why Do Investors Miss the Rally?

(1)  For Retail Investors:  Lack of Ongoing Market Attention

For retail investors, the primary reason for missing the rally is a lack of continuous attention to the market and limited understanding of market cycles. These investors are often preoccupied with work and fail to track market developments in a timely manner, causing them to miss participation during upward moves.

(2)  For Professional Investors:

(2.1) “Bull Market Mindset” Has Faded

For professional investors, one key reason for missing out is a lack of confidence in the bull market. After an extended bear market, many have developed a mindset that “every rally is just a bounce,” believing that a true bull market is unlikely. This “bull market mindset fade” leads them to adopt a wait-and-see approach during early-stage rallies, ultimately causing them to miss the boat.

(2.2) Inadequate Research Preparation

Another major issue is insufficient in-depth research on individual stocks or sectors, and a lack of a well-defined “investment base.” Without prior research groundwork, even if they are bullish on the broader market, professionals may not know which sectors or companies to buy into.

2. What Should You Do After Missing the Rally?

(1)  Rethink  “Market Corrections”

Investors need to develop a comprehensive understanding of what constitutes a correction. It is not limited to sharp declines in broad indices. Style rotations, intraday volatility driven by large block trades, and sector rotations are also forms of correction. Focus should be placed on adjustments within specific sectors or companies, rather than relying solely on movements in broad benchmarks.

(2)   Wait for a Correction or Embrace Value Opportunities?

In a bull market, waiting for a pullback is not the optimal strategy. Maintaining a high position and actively seeking value is more prudent. Instead of passively awaiting a market correction, investors should proactively identify undervalued sectors or companies — those that have not yet participated fully in the rally. While these value opportunities may have certain shortcomings, their key advantage lies in their attractive valuations and strong upside potential.

(3)   Take Action, Avoid Ending Up Empty-Handed

Investors should recognize that missing the initial rally only means having missed some leading sectors or themes. There are still many mid- or late-cycle sectors and companies that present good opportunities. Actively buying into these undervalued names is wiser than staying on the sidelines. Avoid being drawn into the market at high valuations later in the cycle, which could turn you into net loss in the wealth redistribution process.

3. Recent Market Strategy

The current market remains relatively healthy, with strong trading volumes and potential for adjustments. However, there are no clear signs of a bull-bear inflection point. From a strategic standpoint, it is advisable to maintain a relatively high level of exposure, with no major changes needed to portfolio structure. Fine-tuning and optimization can be made as necessary.

Conclusion

One of the hardest aspects of investing is knowing how to respond after missing a market rally. By analyzing the reasons behind such misses, this article outlines strategies to adopt afterward — including rethinking the nature of corrections, actively seeking undervalued opportunities, and avoiding passive inaction. Investors should maintain a proactive mindset during market upswings, conduct adequate research, and build a solid foundation of core holdings to adapt flexibly to changing conditions and avoid losses caused by missing the boat. Staying heavily invested and continuously refining the portfolio will lead to better returns in a bull market.

Wu Weizhi

On a flight to Seoul, 31-August-202

本期《偉志思考》簡體中文版鏈接：

伟志思考：投资中最困难的事—踏空后该怎么办？