When the world faces significant issues such as inflation, war, or tensions between nations, the stock market typically turns somewhat pessimistic, and stock prices tend to fall. However, for smart investors, this is actually a good opportunity to buy shares in good companies because the stocks might be particularly cheap at that time.

Great investors like Warren Buffett have said that when everyone is afraid, it is actually a good time for investors because you can buy good stocks at a low price. But if you are also afraid and sell your good stocks upon hearing bad news, that is usually an unwise decision.

During bad times in the stock market, there are several principles that investors should keep in mind:

1. The ability to identify good companies. Good companies are like good land; even if you don't check their market price often, they can still produce good returns. Even if the stock market is closed for ten years, these companies can still make money for you.

2. Having sufficient long-term capital. If the money you have on hand is not urgently needed, you won't be forced to sell stocks at a low price due to a temporary drop in the stock market, thus actually losing money. The stock market's price fluctuations are very large, but as long as you can hold for a long enough time, the stock price will usually reflect the company's true value.

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3. The courage to go against the trend. Most people like to follow the crowd, which is in our nature and feels safer. But smart investors know that it takes learning and experience to stay calm when everyone else is afraid, such as understanding more about financial history to know what market bubbles and panics are all about.

4. A long-term perspective. Most investors only focus on immediate benefits and may only look at the situation in the next few months or even days. But truly rational investors will look further ahead, with their sights set on three to five years in the future, because good investments need time to prove their value.

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When a stock has been consolidating for a long time and suddenly breaks through, its stock price may rise sharply. For example, if the stock has increased by 187% over three and a half months, it shows strong upward momentum.

If you want to seize such investment opportunities, the first thing to pay attention to is the moment of the stock's breakthrough. For instance, if one day the stock closes with a large bullish candlestick or a long upper shadow, this is usually a positive signal, especially when such an increase crosses through several closely intertwined moving averages. If there is strong support below, it is usually safer to enter in the early morning of the next day or when the price is relatively low.Additionally, if the stock breaks through multiple moving averages the previous day and does not fall below these moving averages the next day, the risk will be relatively small. Unless there is significant adverse news in the market or for the stock itself, this situation is rare.

It is also important to pay attention to the changes in trading volume. If the stock experiences an increase in trading volume for the first time over a period, and the volume is more than three times that of the previous trading day, accompanied by the divergence of moving averages and the MACD indicator forming a golden cross near the zero axis, this usually indicates that the stock price is about to rise. Even if you enter the market the day after the stock hits the upper limit, it is possible to gain some profits.

The upper limit often signals a reversal in stock prices. For example, after a period of continuous decline in stock prices, a sudden upper limit may indicate that the stock price is about to hit bottom and rebound. Or after the stock has successfully built a bottom, if it hits the upper limit when breaking through the recent resistance level, this indicates that new funds are actively entering the market, which is a signal for the stock price to start. Furthermore, if the stock price briefly adjusts or retraces after breaking through the resistance level and then hits the upper limit, this usually indicates that the washing of the market has been successful or the breakthrough is confirmed to be effective, and the stock price may further accelerate the rise.

As for the moving average strategy, tracking the 5-day and 10-day moving averages can often find good buying opportunities. After a strong stock has risen, if it retraces to the 10-day moving average, it is often a good buying opportunity. If the stock price falls below the 5-day moving average and approaches the 10-day moving average, this usually means that a new rise may be about to occur.

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If you are a newcomer to the stock market and want to select stocks, there are several key points to pay attention to. These are not just a few stocks that can be picked at will to make money. Here are some points you need to pay special attention to:

Clarify your investment positioning: Before starting to invest, you must first understand your goals and the risks you are willing to bear. If you are not clear about the purpose of your investment, it is difficult to make the right stock selection. The stock market is not a place where you can make money by luck. Good luck may allow you to make money temporarily, but when luck is not on your side, you will lose money quickly, and even the principal may not be protected.

Learn to observe the main forces in the market: There are some entities in the market known as "big players" who control a large amount of funds and can influence stock prices to some extent. For newcomers, identifying and following the trends of these main forces can sometimes allow you to enter the market more safely. However, this also requires you to have enough information to judge which stocks are operated by big players. If a stock does not have obvious financial support, the possibility of it rising is very small.

Choose high-quality companies: Choose stocks of companies with stable performance and good development prospects. These types of stocks are usually called "blue-chip stocks," which are more likely to bring stable returns compared to "junk stocks" with unstable performance and many problems. The quality of a company should be assessed from various aspects such as its financial reports, industry status, and management capabilities.

Investment insights:The principle of making money in the stock market is actually quite simple—buy low and sell high. However, achieving this is not easy because you are facing many intelligent and astute opponents. In this market, everyone seems very small, and we can only control the timing of our entry and exit.

Once you participate in trading, you must always observe the changes in the market. When the market sentiment is good, you can enter appropriately; when the market sentiment is not good, you should exit in a timely manner. It is like fishing, which requires patience and calmness, while making quick and accurate decisions at critical moments. Keeping calm can help you see the surrounding environment more clearly and make reasonable investment choices.