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

Last night, the Dow Jones Industrial Average fell for the 10th consecutive trading day, marking the longest consecutive decline period since October 1974. As of the close,$Dow Jones Industrial Average (.DJI.US)$it dropped by 1123.03 points, a decline of 2.58%. The S&P 500 Index fell by 2.95%,$Nasdaq Composite Index (.IXIC.US)$falling by 3.56%, with the declines further expanding at the close.

European stock market futures and Asia-Pacific market futures are also plummeting across the board. As of the time of writing, the three major indices of the Hong Kong stock market have fallen by more than 1%;

$Nikkei 225 Index (.NKY.US)$ Down by 1%.

The virtual currency market has also crashed.$Bitcoin (BTC.CC)$Prices have fallen over 5%, approaching the $0.1 million mark;$Ethereum (ETH.CC)$A decline of over 6%,$Dogecoin (DOGE.CC)$and a drop of over 9%.

At 3 AM Peking time on December 19, the Federal Reserve announced its decision to lower the benchmark interest rate by 25 basis points, reducing the target range of the federal funds rate from 4.5% to 4.75% down to 4.25% to 4.50%. Following the initiation of a loosening cycle for the first time in four years in September 2024, this marks the third consecutive rate cut, totaling a reduction of 100 basis points. Meanwhile, Fed Chair Powell's hawkish remarks are undoubtedly the main reason for the decline. So, how significant will the actual impact be?

It is worth noting that on the morning of December 19, Peking time, the Hong Kong Monetary Authority announced a 25 basis point decrease in the benchmark interest rate to 4.75%.

Stunned by the drop.

Last night, U.S. stocks encountered a historic moment. By the close, all three major indexes in the USA plummeted sharply. The Dow Jones Industrial Average fell by 1,123.03 points, a drop of 2.58%, marking the largest decline since August and the second time this year that the Dow Jones fell over 1,000 points in a single trading day. The S&P 500 Index dropped by 2.95%, while the Nasdaq Composite Index fell by 3.56%. Last night, the Dow Jones also experienced a decline for 10 consecutive trading days, the longest streak since 11 consecutive days of decline in October 1974.

On the sector front, all 11 major sectors of the S&P 500 Index saw declines, with Real Estate and Consumer Discretionary leading the fall.

Stocks related to Cryptos also fell sharply, exacerbated after Powell stated that the central bank would not hold Bitcoin and would not seek legal changes to do so. However, some speculate that Trump's new government may seek to establish government-held Bitcoin stocks. The virtual currency market experienced even greater losses, with Bitcoin crashing over 5%, approaching the $100,000 mark; Ethereum dropped over 6%, and Dogecoin fell by more than 9%.

Meanwhile,$USD (USDindex.FX)$up by 1.22%, breaking through 108. $U.S. 10-Year Treasury Notes Yield (US10Y.BD)$ Rising nearly 12 basis points to 4.504%, and hovering around the key level of 4.5% during afternoon trading. $U.S. 2-Year Treasury Notes Yield (US2Y.BD)$ Soaring more than 10 basis points to 4.348%.

In addition, Canada's major stock index saw its largest decline in 10 months. The Toronto Stock Exchange S&P/TSX Composite Index closed down 562.71 points to 24,557 points, a drop of 2.2%, marking the lowest closing level since November 5. Canada's 10-Year Treasury Notes Yield rose by 8.2 basis points to 3.224%, following the trend of U.S. Treasuries. All ten Sectors reported declines. Technology stocks fell 4.5%, and E-Commerce companies.$Shopify Inc (SHOP.CA)$Dropped 7.3%. Major futures indexes in Europe and the Asia-Pacific region all experienced declines. Commodities such as Gold and Oil also showed weak trends.

Disparity still exists.

Clearly, Wall Street is pessimistic. According to the CME Group FedWatch tool tracking federal funds futures trading, the likelihood of the Federal Reserve cutting interest rates again at its next policy meeting in January has dropped below 10%. "Bond King" Gundlach stated that if energy prices rise significantly, we may not see the Federal Reserve cut rates until 2025.

However, institutional investors have also noted another point, which is that the U.S. economy remains strong, and Powell mentioned this in his speech, which is fundamental to investment. Carol Schleif, Chief Market Strategist at BMO Private Wealth, stated that the market's reaction to Powell's remarks is somewhat surprising. Traders hope that the Federal Reserve does not focus too much on inflation issues, but Powell has repeatedly pointed out that the economy is still strong, especially compared to other parts of the world.

Robert Pavlik, Senior Portfolio Manager at Dakota Wealth in Fairfield, Connecticut, said that the market's response to the Federal Reserve is somewhat surprising, with massive sell-offs. However, Powell’s statements did not, first of all, make the economic situation worse; secondly, everything that has happened since the Fed took action has been basically expected.

The Chief Equity Strategist at LPL Financial in Boston stated that excessive positioning and sentiment have made the stock market susceptible to sell-offs. The significant rise in inflation expectations and the related bond sell-off is just an excuse. The Executive Partner at Harris Financial Group in Richmond indicated that the Fed has played the role of the Grinch, retracting two rate cuts in 2025. The market often has overly high expectations for rate cuts, and even the slightest sign of a policy change can lead to significant market corrections. Ironically, considering the direction of the labor market, the likelihood of the Fed taking action that exceeds expectations in 2025 is much greater.

Another issue worth noting is that, in the short term, the significant rise in the USD means a sell-off of non-USD currencies, primarily represented by the performance of the yen. Recently, the yen has shown a trend of depreciation again, which could be favorable for a brief recovery of yen carry trades, presenting a positive side for the market.

In fact, there are mainly two issues to focus on regarding the stock market: First, in the short term, whether a market crash will trigger a wave of derivative liquidations, exacerbating stock market volatility; second, in the medium to long term, whether it will pose a significant impact on the positive expectations of the real economy and trigger a wave of capital withdrawals.

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Following the Federal Reserve's decision to lower U.S. interest rates, most central banks in the Gulf Cooperation Council also lowered their benchmark interest rates on Wednesday.

Oil and gas-exporting countries in the Gulf region typically follow the Fed's rate adjustments because most currencies in the region are pegged to the dollar. Only the Kuwaiti Dinar is pegged to a basket of currencies, including the dollar.

The largest economy in the region, Saudi Arabia, has lowered its repurchase agreement (repo) rate and reverse repo rate by 25 basis points to 5% and 4.5%, respectively. The UAE has also reduced its overnight deposit benchmark rate by a quarter of a percentage point to 4.4%.

Most regional economies have fundamentally not been affected by the persistent high inflation in other regions and have implemented ambitious economic diversification plans to promote growth in non-oil sectors.

According to national news agency reports on Wednesday, the Oman Central Bank has also lowered the repo rate by 25 basis points to 5%. The Qatar Central Bank has slightly reduced its three main rates by 30 basis points, while the Bahrain Central Bank has lowered its overnight deposit rate by 25 basis points to 5%. The Kuwait Central Bank stated in a statement that it has adopted a gradual and balanced approach to adjust the discount rate, noting that it has lowered the discount rate by 25 basis points to 4% since September 19.

Editor/Rocky