Chapter 245 The Divergence between Reality and Illusion

Monday, April 22, 2024.

The temperature in the north is getting higher day by day.

Today, the highest temperature in City B is said to soar to a staggering 29 degrees. Li Feng then put on a short-sleeved shirt, carried a thermos cup, and trotted towards the big room.

Perhaps because it was Monday, there were not too many people in the VIP room today. Li Feng walked to his seat, drank tea and read the financial news that happened last weekend.

First: In the first half of April, the penetration rate of new energy vehicles exceeded 50%, achieving this goal 11 years ahead of schedule.

This data is very important.

Because, no matter which country, after housing consumption, automobile consumption ranks second, and automobiles are different from real estate. They are manufacturing products that can be used for export trade.

Moreover, the output value of the automotive industry is as high as tens of billions globally, which has driven the development of countless industries and supported the economic development of several countries (Japan and Germany).

For my country, against the backdrop of a downward real estate cycle, the vigorous development of the automobile industry, especially the new energy automobile industry, has largely offset the impact of the real estate industry on the economy.

Not only that, the manufacturing process of new energy vehicles will greatly increase the demand for metals such as copper, aluminum, and tin, and to a certain extent change the supply and demand situation in the industry.

Therefore, by paying attention to the development of new energy vehicles, on the one hand, we can observe the impact of my country's automobile industry on the international automobile industry, as well as the competitive relationship between countries in which one country grows while the other shrinks. On the other hand, we can observe its ability to drive my country's economy, thereby indirectly affecting economic policies and even monetary policies.

In fact, to be realistic, our country's economy is not as bad as many people imagine. It can even be said to be very good.

This can be seen from the first quarter GDP data just released.

If we ask ourselves honestly, our living standards and quality have indeed improved a lot in the past two years. It is not like what many people say, that the economy is in recession, business is difficult, and life is hard.

We can see this from the four aspects of "food, clothing, housing and transportation".

In the past two years, there have been basically no major changes in "clothing"; in terms of "food", the price of the second brother has been on a downward trend in recent years; in terms of "housing", housing prices have fallen sharply from their highs; in terms of "transportation", new energy vehicles have been defeating gasoline vehicles and their prices have been falling continuously.

This also led to a certain degree of deflation in our country last year.

For us personally, it means that the money in our hands is more real (the same amount of money can buy more things). Of course, for stock investors, it is a different feeling.

This stark difference in feeling, or the divergence between reality and illusion, has led many investors to have the illusion that the economy is in recession.

In fact, this is because many people have become accustomed to the era of rapid economic growth and numerous opportunities to get rich. Now that the economic growth rate has slowed down, the quality requirements for economic growth have become higher, which has led to the illusion that it is difficult to make money and find a job.

If we think more deeply, we will find that the number of jobs created by high-end manufacturing industries such as automobiles, photovoltaics, wind power, machinery, and chips is far less than that of the real estate industry.

This has led to the improvement in the quality of our country's economy not being able to benefit the general public.

In this regard, it is very necessary to build an "inclusive" stock market so that economic development can benefit everyone more and wealth can be accumulated in the stock market and then distributed to everyone.

This requires a test of the above-mentioned trading skills.

Second: Zijin Mining's copper-cobalt mine in the Democratic Republic of the Congo has stopped production due to excessive radiation.

There is a very interesting pattern for strong cyclical stocks, especially non-ferrous metal stocks.

That is, the higher the price of metal futures goes, the more likely the mines are to have problems, such as fires, explosions, community disputes, water sources, and so on.

The bottom line is that mineral prices have risen, and all stakeholders are jealous and want to get a piece of the pie.

Previously there was Luoyang Molybdenum’s equity interest, and now there is Zijin Mining’s radiation exceeding the standard. I believe similar incidents will occur in the future.

Therefore, as I have said in previous articles, try to avoid companies whose business scope is in unfriendly countries, especially those in the United States and Europe. There are too many unpredictable factors (if sanctions are imposed, it will be over).

Now, let me add one more thing. When choosing a non-ferrous metal company, try to choose central enterprises and state-owned enterprises, and stay away from private enterprises. This is because mineral mining and mineral reserves are a black hole with a lot of room for operation.

Third: The Governor of the Bank of France said: Uncertainty in oil prices will not prevent the European Central Bank from deciding to cut interest rates in June.

The Federal Reserve released a financial stability report: persistent inflation is seen as the number one risk to financial stability.

The trend of divergence between European and American financial policies is becoming increasingly obvious.

The EU's interest rate cut will release the consumer demand of more than 400 million people (combined with the inventory replenishment cycle in Europe and the United States), which will directly drive the increase in international trade volume and directly lead to the recent surge in container shipping prices.

But, Comrade Eagle Sauce, what on earth are you doing?

Do we really want to isolate ourselves from the world, stay put on the North American continent, and never lower interest rates?

It’s just that you can hold on with your words, but can you hold on in the stock market?

Just last week, the S&P and Nasdaq recorded six consecutive declines, Nvidia plummeted 10%, AMD plummeted 23%, and the chip index fell 4%. It seemed that the AI ​​bubble was about to burst.

I hope you will think twice and not act on your own.

Fourth: The China Securities Regulatory Commission announced that it would accelerate the formulation and revision of the Securities Investment Fund Law, and impose fines and confiscations totaling 235 million yuan on the actual controller of China National Titanium Dioxide, CITIC Securities, and Haitong Securities.

Financial supervision is becoming increasingly strict, perhaps this is one of the reasons why the ChiNext has not been able to outperform the Shanghai Composite Index in recent times.

Li Feng looked at the financial news for a while when he heard a familiar voice calling out from the door of the VIP room: "Li Feng, why are you so early today?"

Li Feng looked up and saw Xiao Bo walking in with a middle-aged man who looked familiar.

"This is Old Chen, have you forgotten him? Hehe, it's true that rich people tend to forget things," Xiao Bo said as he pulled Old Chen to sit next to Li Feng.

However, Old Chen's short-term trading these days was a mess, and he was so angry that he almost broke his thigh. He had no choice but to rely on Xiao Bo and let him take him into the VIP room to listen to the teachings of the "God of Stocks".

Li Feng was about to say something.

Old Chen raised his eyebrows and whispered, "It's open, it's open!"

The three of them then looked at the screen that had already been opened in front of Li Feng, and saw that today's market trend was lukewarm, opening low at 3059 points, but strong cyclical stocks, especially the non-ferrous metals sector, were moving abnormally.

Huaxi Nonferrous Metals and Northern Copper Co., Ltd. hit their daily limit-up at the opening, followed by Jiaozuo Wanfang, Aluminum Corporation of China, Luoyang Molybdenum Co., Ltd., Zijin Mining Group, Yunnan Aluminum Co., Ltd. and other stocks.

"Huaxi Nonferrous Metals has been on the board for two consecutive days, and Northern Copper has doubled!" Old Chen swallowed his saliva and said greedily, counting all the treasures.

However, just a few minutes after he spoke, a huge wave of selling orders suddenly emerged, and Huaxi Nonferrous Metals and Northern Copper broke through the board directly, falling more than five points in one go. Other stocks also fell, and even Zijin Mining fell into the red.

This was like a bucket of cold water poured on Lao Chen's head. He instantly felt uncomfortable on his face and his heart was cold. He didn't expect the market to change so quickly.

It only took a few minutes to slap myself in the face.

He chuckled, sat aside and said nothing more.

Xiao Bo made two cups of tea, handed one to Lao Chen, and they both drank slowly.

After just a few minutes of drinking, Lao Chen's hand shook and he almost spilled the tea in his cup. He stared at the screen excitedly and said, "It's reached the limit again! Why did Huaxi Nonferrous Metals reach the limit again?"

Xiao Bo looked up and saw that the non-ferrous metals sector was going crazy again. Huaxi Nonferrous Metals took the lead in hitting the daily limit, and other stocks also rose.

"Don't be so alarmed. Non-ferrous metal stocks are like this. They fluctuate greatly, either going up or down all day long. Old Chen, if you keep making such a fuss every day, I estimate that you will be able to see Marx in a few months." Xiao Bo advised.

"Oh..." Old Chen forced himself to lower his head and not let his eyes look at the market. He was afraid that he would not be able to control himself and make a fool of himself again.

The market moved slowly and before we knew it, the lunch break was over.

Old Chen sighed softly and slapped his thigh again, because he found that Huaxi Nonferrous Metals had broken the board again...

Q&A with stockholders:

1. "Old Man Zha Tian Helps Sweeper": Hello author, I'm still unclear on some concepts and have some questions I'd like to ask. Regarding strong cyclical stocks, how do you calculate their elasticity? If a detailed explanation isn't feasible, you could provide a general description. I can't find the chapter on the criteria and conditions for buying strong cyclical stocks. Could you help me find it? You said there would be a major bull market in the next 25 years, but I've read your analysis on your WeChat account and still can't find the basis for your conclusion.

Generally speaking, speculation on strong cyclical stocks is based on three steps: expectations, performance, and growth. Refer to Chapter 130. To calculate its elasticity space, we need to combine the market, historical performance, and market sentiment to make a comprehensive calculation.

The standards and conditions for buying a strong cycle are actually the logic for judging a large inflation cycle. You can refer to the contents of Chapters 176-180, 186-188, and 199-205.

Regarding the judgment of the 25-year bull market, you can refer to Chapter 242 and Chapters 199-205. Due to space limitations, the official account only wrote some of the most core viewpoints, mainly the logic of the big inflation cycle.

2. "The Ancient Emperor Who Loves Fried Rice in Chicken Soup":

Hello, author. Based on your discussion of strong cyclical logic, is it time for a nonferrous metals sector explosion? I took a look at nonferrous metal futures and found that they have generally been surging recently, with one exception: industrial silicon. Why has this sector been falling so relentlessly?

I don't know much about this variety, but I guess it has something to do with supply and demand.

3. "Xiao Mi who likes sea snails":

Author, how do you search for negative information about listed companies? I feel that since the introduction of the new delisting regulations, many companies are at risk of delisting. It feels like the ecosystem has completely changed.

There are many commonly used financial media, such as Eastmoney.com and Wall Street Journal.

With the new regulations, the rules of the game have changed a lot. The specific impact needs further observation. Try to stay away from unreliable companies as much as possible because you are not sure if there will be any unexpected problems.

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