What is the biggest risk of capital allocation?

Even if the stock market does not continue to fall, I do not recommend investors to continue to allocate funds. After all, adding leverage is endangering the normal order of the market, and this CSRC is strictly checking off-exchange fund-raising. Of course, the biggest risk of capital allocation is leverage. The limit of 5 times leverage will lose all the principal, and the limit of 10 times leverage will lose all the principal. This shows the terrible degree of capital allocation. Why not? At present, the stock market situation is still in a state of chaos. Capital allocation and leverage can be said to be hovering on the edge of a cliff, and one day it will fall into an infinite abyss.

After the May Day holiday, the market opened and ushered in Black Monday, and the global stock market was in turmoil. A shares directly fell below the stable support level of 3000 points in the previous period, until they fell below 2900 points, and once again there was a situation of 1000 shares falling below the limit. Fortunately, the closing price rebounded to recover 2900 points. In fact, as we all know, the tug-of-war will definitely last for some time, so the market trend is not optimistic in the short term.

Since the beginning of this year, the indexes of A-shares have increased greatly, and a technical bull market began at the beginning of the year. So far, there has been no obvious decline. In fact, there is a gap below 2800 points. If this gap can be filled, it will bring more preparations for the rise of the market outlook, so this decline is not a bad thing, and the market can slowly repair it.

If the stock market continues to fall, I suggest giving up the stock market with capital allocation as soon as possible, because the stock market crash of 20 15 is a lesson from the past. The reason for the stock market crash is the allocation of funds. The market environment at that time was a little similar to that now, and the uncertain factors outside the market have been affecting. Many leveraged funds could not bear this protracted war and began to lighten or close their positions, so the stock market began to plummet and the CSRC began to crack down on fund allocation.

However, the impact of capital allocation on the market has not appeared at present, and the CSRC has strengthened the investigation and supervision of capital allocation. For investors with capital allocation, they will immediately close their positions and leave the market if they have profits, and stop their losses in time to avoid the loss from expanding or even losing their principal.