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I must mention a friend of mine who is an associate professor of economics at a certain university. He conducted research and analysis on national industrial policies and stock financial information and concluded that Stock A was severely undervalued and would rise in the future. However, after buying the stock, it continued to fall for three years, leaving him feeling helpless. We will explore the question of whether prices fluctuate up and down with the value later on.
Now let's delve into the application of the second strategy in securities trading. The crux of this strategy is to anticipate which stocks others will want to purchase. While the strategy itself is not flawed, in practice, many individuals also use this approach. Thus, this strategy can easily morph into the third strategy, which involves predicting what others will anticipate about which stocks to buy. Of course, this never-ending guessing game may seem unprofessional in the investment industry, so it is given a more sophisticated name: tracking hot sectors.
My point is simple - many investment maxims espoused in traditional investment and finance textbooks have little practical value in actual investment operations. This is akin to how we often read in children's books that rabbits enjoy munching on carrots, yet those who have raised rabbits know that they do not like carrots. Practical experience is necessary to discover truly effective investment approaches.
As mentioned earlier, the market is comprised of various participants, each with their own unique personality. When these participants are constantly speculating about each other's thoughts, an imaginary "personality" can easily be constructed. This invented personality is, in fact, a reflection of the group's culture, values, and historical events. The outcome of this projection is an erratic behavioral output, making it exceedingly difficult to predict market movements. Someone once likened the market to a person with bipolar disorder, exhibiting depressive symptoms at times and manic tendencies at others. When the market is in a depressed state, it responds very sluggishly (or not at all) to positive news, and the opposite is true when it's in a manic state. Therefore, we should purchase securities from the market when it's in a depressive state and sell them back to the market when it's manic.
As the market is fundamentally composed of people and money, it's crucial to examine how information affects human behavior, especially since our research focuses on people. Some argue that changes in security prices are a result of information being disseminated. This information doesn't solely consist of financial news, but also includes events such as selling stocks to pay off debts, which can also impact the market. The effect of information on groups of people is typically more powerful and longer-lasting than on individuals, leading to overreactions in the market. To further illustrate how information influences human decision-making, let's consider the following example.

The chart shown above displays the weekly closing prices of a particular stock in the securities market. The section from the leftmost low point to point A demonstrates a clear bull market, while the section from point A to point B shows a clear bear market. Our main focus in this study is on the responses of traders involved in trading this stock to relevant information. Through data collection, we discovered that during the A zone, positive news related to the listed company would