Chapter 108: Only by observing the general trend can you make big money

In a flash, several days passed.

In the past few days, the Shanghai Composite Index climbed out of the 2850-point pit, and pulled two large positive lines in a row, going straight up to 3232 points. Then, it fought back and forth around 3000 points, and the market seemed to have stabilized again.

Li Feng's trading room moved back to Honggu Technology Building and was located in Room 703.

This room is about ten square meters, with three computers placed in a row, a tea table next to it, a whiteboard stuck on the wall, and three pots of green plants placed around it, making it look elegant and quiet.

"Finally cleaned up!"

Zhao Xinyue put away the rag, rolled her eyes, and said to Li Feng, "Li Feng, the trading room has moved in, and August is just over. Shouldn't we talk about what stocks to buy?"

After hearing this, Lin Menghan turned around and looked at Li Feng.

Li Feng was very surprised. It had been five days, but Zhao Xinyue was still thinking about it.

He sat down next to the tea table, poured a cup of tea, took a sip, and said, "Well, since Menghan is here today, I'll talk about this topic."

After a pause, Li Feng continued, "I've said before that when investing in the stock market, cognition is the most important thing. Only by looking at the big picture can you make big money."

"So, what city do you think it is now?"

Zhao Xinyue said without thinking:

"Of course it's a bear market. Look at the past few months, the stock market has plummeted... Investors have lost everything..."

Lin Menghan was overthinking it, blinked, and said, "The early stages of a bear market?"

Li Feng waved his hand and said, "Yes, but not right."

"Why?" Zhao Xinyue was puzzled.

Li Feng stood up, picked up a whiteboard marker, and said:

"Because this is an unsuccessful bull market, a bull market that died halfway. For many stocks, their bull market has passed, but for other stocks, their bull market has not yet begun."

As he spoke, Li Feng drew a vertical line on the whiteboard.

Lin Menghan suddenly had an idea and said:

"The eight tech and internet stocks have already completed their bull run, while the blue chip stocks, commonly known as the two stocks, have not yet finished their bull run."

Upon hearing this, Li Feng praised: "Yes, I have told you about this phenomenon before, but few people can think of it so deeply."

As Li Feng spoke, he wrote "Internet stocks" and "blue-chip stocks" on both sides of the line.

Zhao Xinyue was puzzled and asked, "Why is this happening?"

"That's a good question," Li Feng said, tapping the blackboard. "In a typical bull market, stocks rise and fall together, but this time it's been a seesaw market. Tech stocks are the only ones that are thriving, soaring dramatically, while blue-chip stocks are like turtles, motionless."

"This made many value investors so angry that they vomited blood. Many people, unable to bear it, rushed into the wave of speculation and suffered a terrible fall."

"In fact, this requires analysis from the perspective of macro-policy arrangements."

The more Li Feng spoke, the more mysterious it sounded, and Zhao Xinyue began to doubt it.

Lin Menghan listened with great interest and asked, "What arrangements?"

Li Feng wrote "four trillion" on the whiteboard again and continued:

"Today's results are the result of yesterday's causes. Many things are often interconnected, even stretching back years, and the stock market is no different. This is precisely the advantage of experienced stock investors, and also the disadvantage of new investors."

"You should know that during the 2008 global financial crisis, our country implemented a 4 trillion yuan economic stimulus plan. It was very successful, but it also had a side effect: severe overcapacity. This has led to overcapacity in industries like steel, coal, and building materials in recent years, leading to price wars that have rendered them unprofitable or even operating at a loss. A large number of listed companies have suffered devastating losses."

"Externally, the Federal Reserve is planning to exit QE. Against this backdrop of slowing domestic and foreign demand, a bull market has been launched."

Li Feng then wrote the words "Federal Reserve" and "Bull Market".

Seeing that Li Feng's words were getting more and more outrageous, Zhao Xinyue retorted, "Why is our country involved with the Federal Reserve again?"

Li Feng said seriously:

"Whether you like it or not, the United States remains the world's leading superpower, and the dollar remains the world's currency. To a certain extent, the Federal Reserve is the world's central bank. Its every move, every expansion and contraction, affects the whole world."

After saying that, Li Feng brought the topic back to the topic and said:

"So, to break the situation where both domestic and external demand are slowing down, we have no choice but to initiate economic transformation and improve the quality of economic development. This is why we launched 'mass entrepreneurship and innovation,' which naturally triggered a bull market led by theme-based tech and internet stocks, hoping to burn money and create a few tech leaders."

"If you don't believe me, just go and see. During this bull market, those monster stocks, those leading tech stocks, which one didn't have dozens of institutions investing in them?"

"The original intention was to hold down the market and speculate on eight stocks to achieve a slow bull market, but unexpectedly, an accident happened."

Li Feng wrote the word "accident" on the whiteboard again.

Zhao Xinyue understood the situation and said, "The accident is leverage?"

"That's right," Li Feng continued, writing the word "leverage." "In the end, they ignored human nature, and even more so, the gambling nature of our people. In just a few months, they pushed the Shanghai Composite Index to 5,000 points. Not only that, they also used leverage to increase the financing amount from hundreds of billions to trillions!"

"He created a huge thunderbolt out of thin air!"

"Big thunder that had to be dealt with."

“This is why there are a series of follow-up measures: reducing leverage, reducing financing, and saving the stock market…”

"Really? They die when caught, and become chaotic when released..." Li Feng sighed and wrote this sentence on the whiteboard.

Very profound meaning.

Lin Menghan saw it and asked, "What does this mean?"

Li Feng explained:

"This is the economic characteristic of our Guojia. No matter what field, as long as encouragement is loosened, people will rush in and quickly expand like raising insects. Conversely, once the restrictions are tightened, it will be like the arrival of a severe winter, with all things withering."

"It's like farmers growing green onions. In the past few years, they were selling them for four or five yuan per jin (approximately 100,000 to 100,000 yuan) and could earn 40,000 to 50,000 yuan per mu (approximately 100,000 to 100,000 yuan) per jin (approximately 100,000 yuan). But the next year, everyone started growing green onions, driving the price down to 20 cents per jin (approximately 100,000 yuan). Labor costs weren't even enough, and all the green onions rotted in the fields."

At this point, Zhao Xinyue was completely dizzy. She looked at the whiteboard, tried to organize her thoughts, and asked, "After all this talk, does this have anything to do with the stock market?"

"Why not?" Li Feng said, "Since you want to identify the general trend, you must master these common sense. Look, eight stocks have been ruined. Two blue-chip stocks, which didn't rise much to begin with, were caught in the crossfire during the stock market crash. Some of the stocks have even fallen back to their pre-bull market levels. Now is the time for us to strike hard and save them."

"This is what I said before, crisis, crisis, there are opportunities in crisis. The greater the crisis, the greater the opportunity!"

Li Feng wrote the word "crisis" on the whiteboard again and continued:

"If there hadn't been this stock market crash, or if this had been a normal, comprehensive bull market, would you have been able to buy desirable blue-chip stocks at current prices?"

Lin Menghan thought about it and said, "Impossible."

Zhao Xinyue also shook her head.

Li Feng then continued, "So, we should be grateful for this bear market and this stock market crash, which has given us the opportunity to re-enter the market."

As Li Feng spoke, he wrote two big "thank you" on the whiteboard.

Zhao Xinyue and Lin Menghan felt a little strange watching this.

Everyone else was wailing and suffering, but Li Feng was feeling grateful.

This made them feel very strange, as if they were not in the same dimension.

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