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: Shi Qian. Will this be the arrival of the "real wolf"? The consumption tax rumors suddenly spread in various investment groups yesterday after the close of trading. There are reports that a trillion-level consumption tax reform will be approaching, and luxury goods and high-end services may be the first to test. As of the close of trading this morning, consumer stocks suddenly rebounded collectively, and retail and duty-free areas led the rise. Among them,
This morning, Market A in Hong Kong experienced a major adjustment.
A-shares$SSE Composite Index (000001.SH)$Opened low by 1.79%. Recent IPOs significantly retreated, with real estate, cultural tourism, food and other pro-cyclical sector showing obvious pullback. Both Citic Securities and East Money Information hit the limit up, obviously having a significant impact on market sentiment.
Regarding Hong Kong stocks, $Hang Seng Index (800000.HK)$ Rising then falling back. Mainland real estate and autos stocks rose before turning lower. Among the constituents of Hang Seng Index, HKEX led the decline, with network technology stocks Tencent, Alibaba, and Meituan following suit.
From the perspective of news, yesterday's heavy trading volume and high opening followed by a decline, as well as the external sharp decline, have had a certain impact on the market. The appearance of mass shareholding reduction last night also impacted the market. From the funding perspective, the People's Bank of China conducted a 61 billion yuan 7-day reverse repurchase operation today, with a bid interest rate of 1.50%, unchanged from yesterday. There will be 196.5 billion yuan of reverse repurchase maturing today. Some analysts believe that there are variables in the interbank liquidity at the moment. Due to the excessive heat in the stock market and the excessive bank positions (including required reserves), the interest rate level is also not low. According to past patterns, it is now necessary to increase liquidity injection.
So, how significant is the impact on the market?
Market Tremors
On October 9th, the A-share SSE Composite Index opened 1.79% lower, while the Wind A-share Index fell by 2.36%. Recent IPOs experienced a significant retreat, with sectors like real estate, culture & tourism, and food showing clear adjustments in the pro-cyclical direction; core assets generally declined.$Aier Eye Hospital Group (300015.SZ)$,$Imeik Technology Development (300896.SZ)$opened more than 8% lower,$Contemporary Amperex Technology (300750.SZ)$,$Yihai Kerry Arawana Holdings (300999.SZ)$,$Sungrow Power Supply (300274.SZ)$Dropped more than 6%. After the low opening, major indexes quickly fell back, with the SSE Composite Index dropping 200 points, while the Gem plummeted over 10%. From the morning call auction, the listing of Citic Securities and East Money Information had a relatively large impact on the market.
Today the Hong Kong stock market is gradually following the A-share market. After the opening,$Hang Seng TECH Index (800700.HK)$Once rose more than 3%,$Hang Seng Index (800000.HK)$Once rose more than 2%, consumer, technology, and mainland real estate sectors rose before falling back. As of the time of writing, the Hang Seng Index and the Hang Seng Tech Index both turned lower.
So, what are the reasons for the market's major turmoil?
Firstly, the recent market has seen huge gains, resulting in substantial profits. Yesterday, the market actually experienced a clear high and then fell back. There were even some trapped positions above.
Secondly, last night Chinese assets plunged in the international market, and domestic listed companies also witnessed a phenomenon of mass reduction of shareholdings.
Thirdly, from a fund perspective, the People's Bank of China conducted 61 billion yuan 7-day reverse repurchase operations today, with a bid rate of 1.50%, unchanged from yesterday. There will be 196.5 billion yuan of reverse repurchase maturing today.
How will the market evolve?
The market cooling down may be a trend. So, after the cooling down, how should it be interpreted?
Citic Securities believes that looking ahead, the overall assessment is as follows: First, the bottom is clear, and the trend is reversing. Judging from policy triggers, valuation levels, sentiment improvement, and external environmental influences, the downtrend in the A-share market has been reversed, the bottom is clear, and a new round of asset price increase cycle has officially begun. Second, short-term sentiment boost, fast bull run. In the short term, due to the concentrated release of the pent-up sentiment from the previous period, communication among multiple parties during the holidays, resonance of sentiment in the Hong Kong stock market, and the influx of a large number of retail funds into the market, the market is expected to rise rapidly in the short term, reaching a historically high level in stages. Third, long-term upward volatility, slow bull trend.
In fact, the focus of the subsequent market will be more on policies.
In their research report on 'What policies can we expect in the future,' CITIC Securities stated that fiscal efforts include supplementing the general fiscal deficit through issuing special national bonds to maintain necessary expenditure intensity and promote economic recovery. Monetary easing may include a reserve requirement ratio cut once during the year, and potentially a larger interest rate cut at the end of the year or next year. Real estate policies aim to promote the sales of commercial housing and the recovery of the real estate fundamentals by further reducing mortgage loan rates and stabilizing house price expectations on two dimensions.
Editor/Rocky