Source: Brokerage China Author: Qu Hongyan Recently, China Yangtze Power hit a historical high and once again showed the slow bull stock trend of "tripling in ten years". The slow bull market has left behind many passers-by and brought good returns to the steadfast investors. It is "rare for those who triple in one year to be like carp jumping over the dragon gate, while those who double in three years are few and far between." On the other end of the investment world, however, violent collapses are also deafening, with many financial products suspected of "Ponzi schemes" ceasing payments, leaving investors with no hope of recovering their investments. Both positive and negative cases illustrate the importance of forming a suitable mentality towards money in one's lifetime; otherwise, sooner or later, you will divorce yourself from your money. "I call this the money mind, a person's IQ can reach 120, 140, or even higher levels, and perhaps some people's minds are good at doing one thing, while others are good at doing another. They can do things that most ordinary people can't do. But I know some very smart people who make very foolish decisions because they lack the money mind." Buffett once said so. The so-called money mind refers to believing in common sense, believing in compound interest, being cautious and rational, thinking independently, prioritizing security over return, not dealing with people with questionable character, not easily guaranteeing for others, not believing in windfall profits, and not trying to cross legal norms for extra benefits. In today's world of ubiquitous information, everyone's wealth may become the "prey" of those with ulterior motives. Only with the money mind, can one form good behavior habits and shield oneself from separating from one's wealth. Do not entrust your wealth easily. Wealth is easy to lose but hard to accumulate, and trust is a vital reason leading to the rapid loss of wealth. "Do not allow anyone else to manage your business unless you can watch their every move closely and understand their behavior; or you have strong reasons to believe in their character and ability. For investors, this criterion determines when you can let someone else make investment decisions for you." Graham's criterion written eighty years ago is so clear. Almost all the investors who lost their wealth in the financial products have violated the above two criteria. They did not have the ability to closely supervise the whereabouts of their funds, nor did they have sufficient reasons to believe in the character of the product issuers. They easily invested their own wealth solely based on others' glib tongue and a piece of commitment paper. They did not act as gatekeepers of their own wealth and ended up with nothing left even if the government punished the wrongdoers. "An ounce of prevention is worth a pound of cure." This is a phrase Munger often says. Destiny must be in one's own hands, and investors with a suitable money mind will try their best to find suspicious points in their investments to protect the safety of their principal. For example, whether the manager is trustworthy, whether the underlying assets are profitable, whether oneself can timely monitor the risks in the investment process, and whether the sales staff is obtaining large commissions. As long as any unreliable signs are found, these investors firmly will not invest their money. Do not desire to get rich quick. As in the capital market and anywhere else, making money is not easy, and desiring to get rich quick will lead to quick loss of wealth. In the capital market, the desire to get rich quickly often leads to investors over-allocating specific stocks, industries, or assets at the worst time. For example, buying high-risk stocks that can gain huge returns once an adventure succeeds, but the chance of success is very small, also known as "whispering stocks" by legendary fund manager Peter Lynch. "They often tell investors a story with explosive effects. These 'whispering stocks' have a hypnotic effect on people, and it is easy for you to believe that the story the company tells has an emotional appeal that can easily confuse you." This is like hearing a very tempting "sizzling" sound, making you salivate, but you did not notice that there is no steak on the grill. In the eyes of investors who lack the money mind, stable yield provided by blue chips such as China Yangtze Power cannot meet their demands. However, historical experience clearly shows that buying stocks lacking in safety solely based on imagined high yields is unwise. The long-term average investment return of general stocks is 9%-10%, which is also the average investment return of stock indexes in history, a benchmark to measure one's investment performance and the benchmark to measure fund investment performance.
Author: Zhou Le.

On the eve of the Federal Reserve's interest rate meeting, market expectations for a 50 basis point rate cut have been reignited. The latest data from Fedwatch shows that the probability of a substantial rate cut by the Federal Reserve next week has suddenly risen to 50% in the swap market, while on September 12th, Eastern time, this probability was only 15%.

Stimulated by expectations of a substantial rate cut by the Federal Reserve, global markets have started to stir. Among them, U.S. stocks have rebounded strongly, with the S&P 500 index and the Nasdaq posting their largest weekly gains of the year, rising by 4% and 6% respectively; gold prices have surged, with spot gold hitting new historical highs.

It is worth noting that calls for a 50 basis point rate cut by the Federal Reserve are growing more intense. Former New York Fed President Dudley said that at next week's Federal Reserve interest rate meeting, there is still a possibility of a 50 basis point rate cut, and the reasons for a 50 basis point rate cut are very compelling. Nick Timiraos, known as the 'Fed Whisperer' at The Wall Street Journal, also said that a 25 basis point rate cut is the 'path of least resistance,' but starting with a 50 basis point rate cut can reduce market debate on the extent of future rate cuts. Analysts believe that the impact of Nick Timiraos reigniting market expectations for a 50 basis point rate cut by the Federal Reserve in September cannot be ignored.

Significant variables.

With only 3 days left until the Federal Reserve announces its interest rate decision on September 18th, the market has suddenly increased its bet on a 50 basis point rate cut.

According to the latest data from Fedwatch, derivatives market traders expect the probability of a large interest rate cut by the Fed next week to suddenly rise to 50%, while on September 12th, the probability was only 15%.

Looking back at previous rate-cutting cycles, the Fed has generally lowered interest rates by 25 basis points each time. However, if Fed officials believe that the US economy is at risk of slowing too quickly, a 50 basis point rate cut may be used as a preventive measure.

Tim Duy, Chief US Economist at SGH Macro Advisors, stated that the least regrettable path for the Fed would be to first cut rates by 50 basis points, which is the only logical policy choice.

Stimulated by the expectations of a large interest rate cut by the Fed, the global markets have already started to stir.

In particular, the US stock market staged a strong rebound, with the S&P 500 index and the Nasdaq Composite Index registering their largest single-week gains so far this year, jumping 4% and 6% respectively.

The price of gold has also continued to soar. In the early hours of September 14th Beijing time, the main 12-month contract of gold futures on the New York Mercantile Exchange (COMEX) surpassed the $2600 per ounce mark, reaching a new high since its listing. On September 13th, after breaking through the new high of $2550 per ounce overnight, the spot gold price in London once again broke through the $2560 per ounce mark, reaching as high as $2568.18 per ounce.

Analysts pointed out that the start of the Fed rate-cutting cycle, actual US bond yields, and the low running of the US dollar have been the core factors driving the current rise in gold prices. The euro strengthened against the US dollar after the European Central Bank decision, which in turn weighed on the US dollar index. Coupled with data showing a slowdown in the US economy, this strengthened expectations for a rate cut by the Fed, causing gold prices to soar.

IG analyst Tony Sycamore stated, "This is another turning point in the Fed rate cut debate, as the probability of a 50 basis point rate cut by the Fed has suddenly soared, prompting a reassessment in the market."

Jun Rong Yeap, market strategist at IG Asia Private Limited, said that the PPI data "left some room for the Fed to consider a more substantial rate cut in the future." "Gold price hitting another historical high consolidates the overall upward trend of precious metals." He predicts that after breaking through its range, the gold price may rise to $2670 per ounce.

Market debate

Currently, there is an increasingly intense debate in the market about whether the Fed will cut interest rates by 25 basis points or 50 basis points.

On September 13, local time, William Dudley, former president of the Federal Reserve Bank of New York, stated that there is still a possibility of a 50 basis points rate cut at the Fed's interest rate meeting next week. He believes that there are strong reasons for a 50 basis points rate cut.

He said at the annual Future of Finance Forum of the Bretton Woods Committee in Singapore, "I think there is a strong case for a 50 basis point rate cut. I know what I'm fighting for."

Dudley served as president of the Federal Reserve Bank of New York for nine years. As the president of the New York Fed and vice chairman of the Federal Open Market Committee (FOMC), he had a fixed voting right in monetary policy decisions. During his tenure working with Bernanke, Yellen, and Powell, Dudley has always been a hawk favoring tighter monetary policy.

In his latest remarks, he called for a 50 basis point rate cut by the Fed next week, citing a slowdown in the US labor market. He pointed out that the risks facing the US job market are greater than the ongoing challenges of inflation. He also emphasized Fed Chairman Powell's speech at Jackson Hole last month, where Powell stressed that he did not want to see further weakness in the job market.

In addition, Nick Timiraos, a Wall Street Journal journalist known as the "Fed Whisperer," has also released some information, saying that a 25 basis points rate cut is the "path of least resistance," but at the same time, starting with a 50 basis points rate cut can reduce market debate about the magnitude of future rate cuts.

Analysts believe that the impact of Nick Timiraos reigniting the market's expectation of a 50 basis point rate cut by the Federal Reserve in September should not be underestimated.

Faust, a researcher at the Johns Hopkins University Financial Economics Center, said, "I'm also more inclined to start with a 50 basis point rate cut, and the Federal Reserve can completely address investors' concerns about a larger rate cut by providing a large amount of rhetoric to make it less scary."

Michael Feroli, Chief U.S. Economist at JPMorgan, reiterated his expectation of a 50 basis point rate cut by the Federal Reserve in September in his latest report.

Feroli stated that although the Federal Reserve may only cut rates by 25 basis points, he still maintains his original expectation that they should cut rates by 50 basis points.

However, some Wall Street institutions still maintain the expectation of a 25 basis point rate cut. Among them, Goldman Sachs strategist Paolo Schiavone believes that a 25 basis point rate cut by the Federal Reserve next week is still the most likely scenario; Bank of America analysts Aditya Bhave and Shruti Mishra state that the possibility of a 50 basis point rate cut is still very small.

Schiavone pointed out that although the upcoming FOMC decision may trigger market volatility, the Federal Reserve is more likely to choose a relatively moderate 25 basis point rate cut. This judgment is based on experience and market logic.

He further explained that "if a 50 basis point rate cut means that the Fed may be more inclined to a significantly loose monetary policy, which typically means that the Fed is more concerned about economic slowdown and believes that a larger rate cut is needed to stimulate economic growth."

Some officials of the Federal Reserve have also expressed similar concerns, believing that if they were to cut rates by 50 basis points initially, it would easily cause market panic and would not be conducive to managing market expectations and controlling inflation.

Editor/Jeffy