A friend asked, "Have you ever experienced some rather bleak moments in your investments?"

After having such experiences, why do you still have confidence in the stock market?

From historical experience, even in the bleakest moments, as long as you persist, you will still welcome the dawn.

This is because the continuous growth in profits of listed companies will also drive the stock market to rise in the long term.

A memorable period: the great bear market of 2012-2014

What left a deep impression was the bear market in the A-share market from 2012 to 2014.A-shares plummeted in 2008 due to the global financial crisis.

From 2009 to 2010, the market rebounded, leading to another mini bull market, which rose to a 1-2 star level, indicating a bubble.

However, after 2011, A-shares embarked on a long bear market.

By 2012, some indices began to enter an undervalued state.

From 2012 to 2014, A-shares intermittently experienced several 5-star periods, totaling more than half a year.This is also the cheapest moment in the history of A-shares.

How cheap were A-shares at that time?

• The price-to-earnings (P/E) ratio of the CSI 300 reached its historical low, only 8 times.

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• Moutai's P/E ratio had once fallen below 10 times in 2014.

• A considerable number of stocks had P/E ratios of only three to four times.

In the middle of 2014, A-shares as a whole were 10% cheaper than H-shares.

Looking globally, A-shares were among the cheapest at that time.On the one hand, the stock market has been in a slump for over three years, and investors are almost "utterly disappointed" with A-shares.

At that time, the daily transaction volume of A-shares on the Shanghai Stock Exchange was only over 50 billion, and the stock market was virtually deserted.

On the other hand, money market funds, bank wealth management products, and similar investments were highly sought after.

The well-known "baby" products also gained popularity during those years.

After all, during those years, money market funds and bank wealth management products offered annual returns of 6%-7%, and the annualized returns of wealth management trusts could also reach 7%-10%.

Who would be interested in the stock market?

The Great Bull Market After the SlumpHowever, hope is born out of despair.

By the second half of 2014, a series of consecutive, intensive interest rate cuts began.

At that time, I was still working at a bank, and for a while, after work, I would occasionally see news of interest rate cuts.

With the decrease in interest rates, there was more money in the market, which propelled a bull market.

In the second half of 2014, many varieties began to rise rapidly.In this bull market,

- The CSI 300 has more than doubled;

- The CSI 500 and CSI 1000 have seen gains of more than two times.

By June 2015, the valuations of many varieties also reached their historical peaks, with valuations of the CSI 500 and CSI 1000 reaching over a hundred times.

The overall A-share market reached a 1-star rating.

Many investor friends who persisted have essentially achieved good returns.The Underlying Logic of Long-Term Market Growth

The stock market fluctuates with its ups and downs, and the alternation of bull and bear markets is nothing unusual.

On the investment journey ahead, we may also encounter many bearish markets that are in a slump.

However, as long as we invest in undervalued areas and hold on patiently, the returns will naturally follow.

In the long run, the stock market gradually moves upward.

Taking the CSI All-Share Index as an example:* 2012-2014: 5-star rating, the CSI All-Share Index bottomed out at over 2,000 points;

* End of 2018: 5-star rating, the CSI All-Share Index bottomed out at over 3,000 points;

* 2022: 5-star rating, the CSI All-Share Index bottomed out at over 4,300 points.

If we connect every 5-star bear market rating on a line, we will find that this line also trends upward over the long term. The driving force behind this upward trend comes from the long-term growth in profits of the underlying listed companies.

This is because listed companies represent some of the most outstanding assets in society.

In the long run, technological advancements and improvements in production efficiency will drive the gradual increase in profits of listed companies, which in turn will push the stock market upward over the long term.If one compares the profits of a publicly listed company to its owner, then the stock price is akin to a little dog.

In the short term, the little dog may jump around the owner; but if the owner moves forward by 1000 meters, the little dog will eventually also move forward by 1000 meters.