Making a Profit in a Market Stuck for 16 Years

China’s economic story over the past few decades is nothing short of incredible. What was once a closed-off, largely agricultural nation transformed itself after the economic reforms led by Deng Xiaoping. It quickly earned the nickname "the world's factory," throwing its doors open to global markets and attracting a flood of capital from both large institutions and everyday retail investors. This was a massive shift in the world of .

But as any seasoned investor knows, explosive growth can often lead to dangerous bubbles. That’s exactly what happened in 2007 when the Shanghai Stock Exchange soared to historic highs, fueled by a wave of what can only be described as irrational exuberance. The crash that followed was swift, and the 2008 global financial crisis only made things worse for the Chinese economy.

Even today, 16 years after hitting a peak of 6,124 points, the Shanghai Composite Index is still trading at nearly half that value. It has been stuck in a massive triangular pattern on the charts, leaving countless investors who bought at the top still underwater. This is a classic example of a market that has trapped people at high prices, making long-term here a real challenge.

Putting Our Strategy to the Test

Given this tough environment, how did our strategy perform? The results were surprisingly positive. Out of 17 trades made, 16 of them were profitable. We achieved an average annual return of 4.15%, which, while not the highest on our list, is quite solid considering the circumstances.

More importantly, this approach to grew our initial capital of $42,500 by 80.4%, turning it into $76,689.35. In a market where many have lost money or have been waiting years just to break even, walking away with a positive result feels like a significant win. It demonstrates that a disciplined strategy for can protect capital and find opportunities for growth, even in the most challenging of markets.