Taking advantage of the Labor Day holiday, it's a good time to review the content of stock selection strategies.

After all, the world has changed, and the ideas and directions for stock selection will undergo significant changes.

Let's first look at the stocks that have seen significant increases in the past four months, and in which directions they lie?

1. Low-altitude economy. Among the top 10 annual gainers, six are in the low-altitude economy, with many doubling in value.

2. Solid-state batteries, transportation equipment, complete vehicles, non-ferrous metals, and CPO, the leaders in each major branch, are also on the list, with a large number of stocks having gains exceeding 50%.

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3. Blue-chip direction. There are not many big gains in home appliances, petroleum, electricity, and banks, but there are quite a few with gains between 30-50%.

4. Some speculative stocks. Many speculative stocks have seen their highest interval gains reach four times, but after the capital tide receded, they all experienced a significant drop.

Judging from the results, if you want to buy stocks that make money, there are four directions in total.

Among them, buying speculative stocks is not suitable for the vast majority of retail investors.

Therefore, if you want to make a lot of money, the corresponding stock selection strategy is reduced to three major directions.First and foremost, absolute hot spots.

In this market, each round of growth gives birth to an absolute hot spot.

During 2020-2021, it was liquor + pharmaceuticals. In 2022, it was photovoltaics + lithium batteries.

In 2023, it was AI + Huawei. In the first half of 2024, the low-altitude economy took the lead.

Most of the absolute hot spots are new concepts, and they are also the most sought-after sectors in the market and the opposite direction.

A large number of bull stocks will emerge in these directions.

If the market is a bull market, then these stocks have the potential to increase by 5-10 times.

If it is just a rebound in a bear market, then these stocks also have a space of 2-5 times.

Absolute hot spots focus on two points.

1. New concepts.Translate the following passage into English: Absolute hot spots must be new and cannot be reheated old news.

It's not that old hot spots won't rise, but their explosive power is insufficient.

The majority of old hot spots, corresponding to stock prices, are no longer at a low level, and the willingness to speculate with funds is not strong.

Especially some hot spots have already seen a large number of trapped positions, making it difficult to attract funds for a second round of speculation.

Everyone is still confused about new concepts, which is the most suitable time for speculation.

When it just starts to rise, there are more bottom chips, which is more suitable for the layout of funds to seize chips.

2. Imagination space.

Absolute hot spots also need to have a large enough imagination space.

If the space is not big enough, it will be very troublesome for the operation of funds.

The upper limit must be high, and the story will be better told.The best stories are those that go from zero to one, which are most favored by capital.

Whether it's AI changing the world or the trillion-dollar scale of the low-altitude economy, the first step is to draw the pie well.

As for whether it will eventually be realized and whether it will fail, it is not within the scope of capital consideration, because they make money after speculation and then retreat.

Absolute hot spots can be participated in, with low risk and high potential returns, but absolute hot spots will only appear at least in the weekly line level rebound market, and there will be no in the bear market that has been falling all the way.

Some hot spots fall as soon as they are chased because they are not born at the right time and cannot reach the level of absolute hot spots.

So, chasing hot spots is not wrong, but it also depends on the timing, and not all times can be used to select stocks by chasing hot spots.

Second, absolute leaders.

The so-called absolute leaders actually refer to the leading stocks in various industries.

The leaders referred to here are actually large market value leaders, high growth leaders, not leaders in the sense of speculation.

The market value of such leaders is small, tens of billions, and large, hundreds of billions.It may seem that these leading companies do not have much room for significant increases, but they are never absent in every round of rising.

In today's world, the main direction of institutional capital grouping is the leading companies in various tracks.

Especially in high-growth tracks, they are often locked up by many public funds, private equity, insurance capital, etc., and are continuously optimistic.

There are two key points for the layout of absolute leading companies.

1. Let the big money choose.

These absolute leading companies are not measured by retail investors themselves, but are chosen by the capital.

Usually, these stocks will have a large trading volume every day, ranging from 1 to 2 billion, and up to 3 to 5 billion.

Because there are many institutional capital participants, the trading volume will not be low, and the capital has been repeatedly playing inside.

The listed companies that can build up the trading volume in stages must be the absolute leaders of the industry plate, and there is no need to question this point.

2. Trend entry point.The rise of leading stocks also has a cyclical nature; they do not rise every single moment.

At the very least, one should choose the uptrend at the weekly line level and get involved in the absolute leaders of this part of the market.

The so-called cyclicality is actually the divergence and convergence of large capital.

When the market falls, there is divergence in the capital's valuation of these leaders; there will inevitably be capital that believes the valuation is too high and therefore wants to abandon it.

When the downtrend ends, the capital has re-converged, believing that these leaders are worth grouping together, and then the next round of rise begins.

Of course, the growth potential of the leaders' performance is also one of the key points that create the trend.

Many leaders' performance has slipped, which can easily lead to a significant downtrend.

Third, low-position blue-chip stocks.

In the past two years, the market's weather vane has truly changed.

Or rather, the big cycle of blue-chip stocks has arrived.Many low-priced blue-chip stocks have started to rotate, with one batch after another showing an increase in value.

For example, in the banking sector, the four major banks that many retail investors look down upon have seen significant gains over the past two years.

Agricultural Bank and Bank of China have seen an increase of more than 50% over two years, while ICBC and China Construction Bank have also seen gains of over 30%.

Leading home appliance companies such as Midea, Gree, and Haier have all seen gains ranging from 20-40% this year.

Including China National Petroleum Corporation (CNPC) and China National Offshore Oil Corporation (CNOOC), they have both doubled in value over the past two years, with annual gains of 40-50%.

A couple of years ago, when these blue-chip stocks were mentioned, retail investors would sneer at them, but the trend over the past two years has definitely slapped many people in the face, it's just too beautiful.

The market will not force retail investors to buy any blue-chip stocks, but the market has already guided capital to layout in the direction of blue chips.

There is a key point here, which is not to let you chase high to buy blue-chip stocks, but to layout relatively low-priced blue-chip stocks when they are adjusting.

Blue-chip stocks also rise in stages, then adjust cyclically, and will not keep rising.

Even if the performance grows, the increase is limited, and after a cyclical rise, there will definitely be a period of adjustment.The layout must prioritize relatively low valuations, rather than those blue chips that have already seen significant increases and are overvalued.

Good price, good company, good stock, that is a good investment. Blue chips will never become outdated; they just take periodic naps.

For ordinary retail investors, buying well-known large companies will never become outdated, nor will it be a disadvantage.

Each person's trading system is different, so the stock selection ideas will vary.

However, in terms of results, the market's profit effect corresponds to the above three major stock selection directions.

When we invest and feel a bit lost, it might be better to work backwards, starting from the results to find methods and see which one suits our investment style better.

If the stocks you have chosen are not within the above three categories, it's time to reflect.

Because in this market, the general direction of low risk and high returns is almost all covered.