Chapter 90 Investment Opportunities in Hell Mode

Wednesday, July 8, 2015.

The bears are back.

The Shanghai Composite Index opened at 3467 points, -7%, plummeting 260 points, directly breaking through the three integers of 3700 points, 3600 points, and 3500 points.

Thousands of stocks hit the limit down at the opening!

In the market, apart from more than a thousand suspended stocks, only 5 stocks rose in the green.

In other words, it is equivalent to that almost all stocks in the entire market have hit the limit down!

The cruel reality has dealt a heavy blow to stock investors. Countless stock investors can't stop groaning in their hearts - when will this continuous limit-down period end?

A few minutes later, the Shanghai Composite Index fell directly to 3421 points, -8.2%!

Looking at this number, the eyes of investors are filled with nothing but despair.

I thought that the experience of thousands of stocks closing at the limit down in the past few weeks was despair enough, but I didn't expect that on this day, thousands of stocks would hit the limit down as soon as the market opened.

If last week was a hell-mode market, then this week was the cruel torture happening in the eighteenth level of hell.

Ping An of China opened at -8%. After several rounds of fighting, it was blocked at the lower limit by hundreds of millions of sell orders at 1:05 pm, and remained at this limit until the closing.

The fight over China's oil industry is even more brutal.

It opened at 9.52 yuan, -9.88%, and in just two minutes, it was hit the lower limit.

One minute later, hundreds of millions of yuan in buy orders poured in, pushing PetroChina's price up to -5%. One minute after that, hundreds of millions of yuan in sell orders pushed it down to -9%, then up to -4%, and then down again...

The fight lasted until 14:54. Just when everyone breathed a sigh of relief, hundreds of thousands of sell orders flooded in, driving China Petroleum's share price down to -9.29% and closing at 9.07%!

The same is true for the fight over other blue-chip stocks, which are all losing ground.

In the stock index futures market, the short sellers were extremely rampant. The CSI 500 contract, the CSI 300 contract, and the SSE 50 contract all hit the limit down, without exception!

There is no bottom to the bear market. There are eighteen more levels of hell below the eighteen levels of hell.

In a market where thousands of stocks were suspended and thousands of stocks hit the daily limit, liquidity quickly dried up. In order to cope with the huge redemptions from fund investors, countless fund company managers were forced to sell large-cap blue-chip stocks with good liquidity. In response to redemptions, they sold them at any cost. Panic had spread to every corner of the market, and everyone was selling and selling again, either actively or forced to.

Liu Ying managed several landline phones by herself, constantly communicating with financing clients...

Investors who still hold shares shed tears and began to calculate how many limit-downs they would have to suffer before they could escape; some investors even took out their mobile phones and called the secretary of the board, requesting that the suspension continue.

Rumors are spreading again in major stock forums and various stock groups...

"I heard that seven or eight listed companies have pledged their shares in the market, and the shares have already fallen below the pledge limit!"

"Really? False?"

"Absolutely true!"

"Oh my god, if the market keeps falling like this, not only will the controlling stake in the listed company change hands, but the brokerage firm that takes over will also suffer losses, and the banks will inevitably be implicated!"

"This isn't just a stock market crash anymore; it's a small financial crisis. If we don't rescue the market, it'll soon become a major financial crisis, just like in 2008... The entire economy might even be dragged down..."

"This is just the tip of the iceberg! There are even more powerful things that haven't been announced yet! Take my advice and run!"

When people encounter situations that they cannot explain or understand, all kinds of rumors begin to spread, just like in ancient times, when humans did not understand the formation of thunder and lightning and fabricated Lei Gong and Dian Mu out of thin air.

Various rumors spread in different ways, and the turmoil in the stock market was also transmitted to other markets layer by layer.

Li Feng suddenly discovered that on this day, all the Class A stocks had miraculously hit the limit down, and all the Class B stocks had either already folded or were on the way to fold.

Grade B must not be bought. At this moment, Grade B is like a burning grenade in your hand. Once the price drops, you will lose about 45% of your principal.

However, Grade A is a bond-like entity. When Grade B is discounted, its price should rise because A+B=parent fund, and the investment can be recovered by redeeming the parent fund.

But now, the price of Grade A has gone against common sense and strangely hit the limit down!

Isn't this just giving money away? What's going on?

Li Feng frowned and analyzed intently.

Seeing his serious expression, Lin Menghan also came over and looked over. She couldn't help but exclaimed, "Grade A also hit the limit down? What's going on?"

"Panic is rampant. Cash is as precious as oxygen in a bear market," Li Feng analyzed. "This rare dementia phenomenon indicates that investors have completely lost their minds and are desperately selling off all possible assets to cash in."

"Even if I lose 20 points in theory, I won't hesitate."

"They believe they should have accounted for at least three or four limit-down periods for the mother fund. Take this Belt and Road Tier A fund, for example. Its current limit-down price is 0.767. In the worst-case scenario, even if the mother fund hits two consecutive limit-down periods, it still has an annualized return of 4.6%. If it doesn't rise or fall, that's a 24% return. And if it does rise, it's at least 30% annualized return!"

"What do you think is the probability that a stock will hit the limit down for two consecutive days?" Li Feng asked.

"This..." Zhao Xinyue couldn't answer.

Lin Menghan pondered for a moment and said, "If individual stocks hit the limit down for two more consecutive days, the market will definitely break 3,000 points. The possibility is relatively low."

Li Feng pointed at the WeChat group and the various messages in the stock forum and analyzed:

"There's no smoke without fire. If we allow this stock market crash to continue, it will definitely lead to a financial crisis. But you must understand that in the capital market, whoever has more money has the final say. Unlimited liquidity support is not just talk. When the time comes, it will be like turning on the printing press and flicking the keyboard, and tens of thousands of yuan will pour out, just like flying a helicopter to drop money."

"What's more, the national team has the power to make policies and can change the rules at any time to benefit itself. It's like playing a football game. Not only is the referee one of ours, but we also make the rules ourselves. If we really want to win a game, isn't that like playing for fun?"

"The current situation is much better than in 2008. 2008 was a global financial crisis. Lehman Brothers, the fourth largest investment bank in the United States, collapsed. Not only did our stock market plummet, but our economy also froze. I still remember that overnight, countless companies lost all their orders, and countless workers were laid off. That autumn, countless agricultural products were piled up in the fields, with no one to buy them, and they rotted all winter."

"This round of stock market crash simply happened too suddenly, catching the national team off guard. As long as we react, we can still put an end to it."

"The biggest market maker in the stock market will not allow the stock market to disappear. It is still worth saving."

"The more panic there is, the rarer investment opportunities become. We need to stay calm, keep our eyes open, and look for them. We need to trust common sense. The sun will rise again tomorrow, and the earth will continue to rotate regardless of who is around. The same goes for the stock market. After a few months, when the panic subsides, things will return to normal."