Founder: The end of the year is often an important time for market changes. Industries with higher profit margins are more likely to experience a reversal.

The Founder released a research report stating that the end of the year is an important time for market reversal. There are two possible reasons for this: first, the end of the year is often a period for performance evaluation, with investors who are leading in performance possibly choosing to take profits at high levels, while those lagging behind may seek out low-priced securities with potential for "make-up" gains to narrow the gap. Both have motivations to switch positions. Second, as the performance of the current year becomes clear, valuation "anchors" will gradually shift towards expectations for the next year's performance, forming a "valuation switch". The report compiled the rankings of the top five and bottom five industries in terms of performance in the first three quarters (or 11 months) and their performance rankings in the fourth quarter (or December). Looking at the quarters, industries that performed strongly in the first three quarters often show a reversal in the fourth quarter, rather than momentum characteristics. Over the 15-year period from 2010 to 2024, industries that were in the top five in terms of performance in the first three quarters had a median ranking in the top half in the fourth quarter for 11 years, accounting for 73.3%. However, the opposite is not significant, as industries with lower performance in the first three quarters do not have a clear advantage in the fourth quarter only 7 out of 15 years could "turn around" to the top half, accounting for less than 50%. If we narrow the timeframe to December, the same pattern holds true. Over the 15-year period from 2010 to 2024, industries in the top five in terms of performance in the first 11 months had a median ranking in the bottom half in December for 11 years, while industries in the bottom five in terms of performance only ranked in the top half in the last month for 5 years. Overall, there is a higher likelihood of a reversal in industries that have performed well in the early stages of the year at the end of the year, but the probability of weak sectors "turning around" is not clear. Risk warning: Historical experience does not represent the future, stock market may experience significant fluctuations, and industry fundamentals may not meet expectations.