[Red Envelope] Top 10 Profit-Making Strategies in A-shares

The apprentice helped organize a document: “Top 10 Profit-Making Models in A-Share Market.” Sharing it here for everyone to review [Taoguba].

The stock market is like a jungle. Some rely on transparent signals and steady strategies, while others focus on deep layouts to break through precisely. Many retail investors find it hard to make money in A-shares mainly because they don’t understand the mainstream gameplay—either blindly following trends or failing to grasp the underlying logic.

This article summarizes twenty years of practical experience from veteran investors, highlighting the top ten core profit models in A-shares. These cover different risk levels and suit various investor types. The content is detailed, actionable, and helps avoid pitfalls, guiding beginners to quickly get started.

Model 1: Extreme Emotional Betting — Modern “Golden Finger”
Key Point: Manipulating minds and attention, leveraging hot money personas and seat premiums to attract retail followings, enabling pump-and-dump or distribution; traditional trading strategies face higher risks as hot money evolves new tactics.
Core Logic: No longer just manipulating individual stocks but controlling “hearts” and “attention.” By creating “stock god” personas and utilizing the龙虎榜 (Dragon and Tiger List) publicity effect, attracting retail followings to generate liquidity for pump or distribution.
Operational Methods:
• Deity Cult: Market collectively creates new-generation hot money idols (e.g., Chen Xiaoqiun, Yu Ge, Chuangshou Xin Yi), with brokerage seats labeled accordingly.
• Seat Premium: When a seat (e.g., China Galaxy Dalian Huanghe Road) is labeled “Top Hot Money,” stocks bought by that seat often see high premiums the next day, forming a self-fulfilling prophecy of “attention drives price increase.”
• Internet Tactics: Hot money first accumulates positions, then actively appears on龙虎榜, using the faith of retail investors in seat rankings to attract follow-on orders the next day, then reverse harvest.
Risks & Evolution: As ChiNext and Beijing Stock Exchange widen daily limits to 20-30%, traditional pump strategies’ risk-reward worsens, with first-day limit hits failing 62% of the time. Hot money has evolved to “pre-positioning buy points” and using quantitative tools for coordinated strategies.

Model 2: Recognizing and Monetizing the Super Bull Investor — Ge Weidong’s “Hidden Heavy Hit”
Key Point: Relying on industry cycle insights, holding large positions in high-quality targets for long-term, earning from value discovery and reversion; tests industry foresight and long-term holding discipline.
Core Logic: “No action, one hit.” Deep understanding of fundamentals and industry cycles allows heavy, long-term, forward-looking layouts to profit from value discovery and reversion.
Practical Tips:
• Cultivate Industry Perspective: Like Ge Weidong, pre-position in sectors on the cusp (e.g., domestic substitution, cloud computing in 2017), rather than chasing hot themes.
• Practice Patience: Once a target is identified, hold heavily without reacting to short-term fluctuations, waiting for industry inflection points (usually 1-3 years).

Model 3: Riding the Trend — Institutional-led “Performance-Driven”
Key Point: Market shifts from “storytelling” to “performance-driven,” with profitability as the core variable; focus on technological innovation, balanced styles, increased investment difficulty.
Core Logic: The market is transitioning from concept narratives to a phase where real earnings matter. The core driver shifts from “valuation” to “profitability.”
Operational Tips:
• Focus on Main Themes: Emphasize tech innovation and new productivity sectors like AI (computing power, optical modules), robotics, commercial space, etc., entering performance realization stages.
• Avoid Pitfalls: Don’t blindly chase concepts; prioritize stocks with real earnings and sustained growth rather than those driven solely by hype.

Model 4: The Ultimate Arbitrageur — Quantitative and Algorithmic Harvesting
Key Point: Using high-speed computation to capture tiny price differences and statistical patterns, achieving stable compound returns through high-frequency trading; emotionless but liquidity-dependent, capital scale limited.
Core Logic: Leverage high-speed calculations to detect micro-price gaps, statistical regularities, and trading sentiment, executing high-frequency trades and diversified positions for steady compounding with low drawdowns.
Practical Tips:
• Leverage for Ordinary Investors: No need to do high-frequency trading yourself; focus on high-liquidity, high-growth sectors favored by quant funds, following their capital trends.
• Avoid Liquidity Risks: Quant strategies rely heavily on liquidity; steer clear of illiquid stocks to prevent sharp declines if quant funds withdraw.

Model 5: The Faithful — National Fortune and Era’s Super Beta (The Art of Lying Flat)
Key Point: Trust in national destiny, invest long-term in core assets via index funds; simple operation, tests faith and patience, no timing or stock research needed.
Core Logic: Believe in national fortune and the best Chinese companies. No timing, no stock picking; become a permanent shareholder through ETFs, sharing the country’s economic growth.
Practical Tips (Beginners’ Choice):
• Regularly Invest in Broad ETFs: Consistently buy CSI 300, SSE 50, or other broad-based ETFs, diversify risk, hold long-term (3-5 years), and share in economic dividends.
• Long-term Industry ETFs: If optimistic about sectors like AI or semiconductors but unsure about individual stocks, buy corresponding industry ETFs to profit from overall sector growth without worrying about individual stock fluctuations.

Model 6: Deep Value Discoverer — Contrarian Reversal & Bankruptcy Restructuring (Vulture Model)
Key Point: Find distressed companies whose core assets remain intact, buy at lows, wait for turnaround; high risk of value traps and long time horizons.
Core Logic: Seek companies in industry downturns, mismanagement, or crises, but with valuable core assets (licenses, brands, channels, patents). Buy at the darkest moment, wait for rebirth.
Practical Tips:
• Avoid Value Traps: Prioritize companies with undamaged core assets (e.g., after plasticizer scandal, Kweichou Moutai), avoid distressed stocks with no core competitiveness or excessive debt.
• Manage Time Cost: Turnarounds may take 1-3 years; unsuitable for short-term investors. Use small positions to avoid impacting cash flow.

Model 7: Information & Resource Monetizer — Industrial Capital & Insider Trading Gray Area
Key Point: Profiting from early access to major information; legal methods include industrial capital operations and supply chain research, insider trading is a red line.
Core Logic: Obtain significant information earlier and more accurately than the market, completing layouts before information spreads.
Practical Tips (Legally Compliant):
• Supply Chain Research: Instead of relying solely on official announcements, investigate upstream/downstream companies (e.g., chip suppliers, mobile phone manufacturers) for more authentic info.
• Stay Clear of Insider Trading: Under big data monitoring, insider trading opportunities are minimal; crossing legal boundaries is costly.

Model 8: Rule Arbitrageur — Institutional Benefits & Derivatives (Dimensionality Reduction)
Key Point: Use trading rules, derivatives, and cross-market spreads for low-risk arbitrage; focus on price mismatches rather than company fundamentals.
Core Logic: Exploit unique A-share trading system, derivatives, and cross-market price differences for riskless or low-risk arbitrage.
Practical Tips (For Experienced Users):
• Low-Risk Arbitrage: Convertible bond IPOs, ETF/LOF arbitrage, simple and low-risk, suitable for beginners.
• Advanced Strategies: Futures arbitrage, cross-border arbitrage (using A/H share premiums), requiring derivatives knowledge and caution.

Model 9: The Veteran Investor’s Mentorship — Industry Thinking & Partnership (From Trading to Building)
Key Point: Transition from stock trading to building companies; acquire potential firms at low prices, inject resources to grow, then realize value in capital markets; requires industry resources and long-term commitment.
Core Logic: Upgrade from “trading stocks” to “creating companies.” Find tech-driven or resource-deficient startups, buy low, help them grow, and eventually cash out.
Practical Tips (For Those with Industry Resources):
• Focus on Potential Companies: Prioritize startups with core tech, reliable teams, but lacking funds or resources, buy at low prices.
• Create Value Actively: Like Hillhouse’s investment in Belle, inject resources and help upgrade, not just wait for stock appreciation.

Model 10: Cross-Market Dimensionality Reduction — Global Allocation & Cycle Linkage (Thinking Globally)
Key Point: Use global economic cycles, monetary policies, and industry chains to allocate assets and capture transmission opportunities; requires global perspective and cycle judgment.
Core Logic: Leverage different countries’ economic cycles, monetary policies, and industry division to allocate assets globally, capturing global supply chain-driven investment opportunities.
Practical Tips:
• Follow Global Cycles: Adjust A-share core holdings based on Fed’s easing/tightening; monitor commodity cycles to find resource stock opportunities.
• Map Industries: Understand global leaders (e.g., Tesla, Nvidia), and project their trends onto A-share sectors (new energy vehicles, AI computing), pre-positioning for growth.