On August 27, A-shares climbed to 3,800 points. What is the core logic behind this market rally? Which sectors present more definitive opportunities? Sun Jiaying, General Manager of Xinhui Quan, appeared in a live broadcast to provide investors with an in-depth analysis of market dynamics.

Sun Jiaying believes that we cannot view the A-share market too short-term, as it has very distinct operational characteristics. Over the past twenty-plus years, A-shares have consistently demonstrated a clear cyclical pattern called "two years climbing to the peak, two years returning, three years of bottom oscillation."

According to this pattern, have we just experienced three years of decline? Then there was one year of gains, but this included nearly seven months of sideways consolidation before finally breaking through the high point from October 8 last year. From both temporal and morphological perspectives, we can currently judge that the market is in the early stage of the "two-year peak climbing" phase.

Regarding the current market's cyclical position, we need to recognize two aspects: First, what characteristics each cyclical stage possesses. On this point, it was actually mentioned in my first book "Boundaries of Investment Thinking" published in 2018, where I proposed the "Eight-Stage Bull and Bear Theory." Now I can clearly state that the current market is at the end of the second stage of the bull market and the beginning of the third stage. The third stage of the bull market, commonly referred to as the "main upward wave," is a trend that can sustain for a relatively long period.

Looking from the perspective of market sentiment, sentiment itself also experiences cyclical rotations between bull and bear markets. Regarding sentiment cycle analysis, I included this in the latter third of my second book "China's Prosperity," providing detailed explanations of how markets perform under different sentiment conditions. Based on the current market's displayed sentiment, phenomena, and overall situation, we are more inclined to judge that we are currently at the end of the second bull market stage, which is the sideways consolidation period, after which we will enter the third stage—a period that will make everyone very happy. Of course, even more exciting market conditions will emerge after the third stage.

Sun Jiaying also reminds everyone not to be easily swayed by single-day market fluctuations. Everyone has heard the saying: "Bear markets have many long green candles, bull markets have many long red candles." Although market enthusiasm has been high recently with retail funds gradually returning, retail investors' high-position emotions remain relatively prevalent.

For new market investors, Sun Jiaying states that he does not recommend touching sector ETFs. From individual investors' perspective, although sector ETFs might earn more and faster returns, their volatility is relatively large, more aligned with a "gambler's mentality." This is because sector ETFs require relatively deep understanding of business models, industries, and future development trends to truly perform well.

For individuals, the best choice remains investing in broad-based ETFs. So-called broad-based ETFs allow us to position ourselves within a relatively long time cycle, treating ourselves as "simple people" using the most "simple" methods to make money, standing on the same front as pension funds—because broad-based ETFs are the main targets for long-term pension fund allocation. Options like CSI 300 ETF, CSI 500 ETF, and others, although CSI 500 and CSI 300 may have some issues in index compilation, and CSI 500 has been continuously optimizing, overall, broad-based ETFs are relatively suitable choices for individual investors, with less volatility and greater psychological tolerance.