Chapter 159 Finally found the missing link
I suffered in this inexplicable hesitation for more than a month.
The Shanghai Composite Index also rebounded from a low of 3129 points on February 9 to around 3300 points in early March.
March 8, 2018.
US President Trump suddenly announced that tariffs of 25% and 10% would be imposed on steel and aluminum products, respectively, causing an uproar around the world.
The United States is the world's number one superpower and the world's largest consumer. It has always advocated and promoted freedom and trade. Why did it suddenly start building trade barriers?
Why?
Just when many people are still confused.
On March 22, Trump suddenly announced plans to impose tariffs on $60 billion worth of Chinese goods.
On March 23, my country announced that it would impose tariffs on $3 billion worth of goods imported from the United States.
On April 1, my country announced that it would impose additional tariffs of 15% or 25% on 128 products imported from the United States.
On April 3, the United States officially announced that it would impose tariffs on $50 billion worth of goods imported from my country.
On April 4, my country proposed to impose tariffs on US$50 billion worth of goods imported from the United States.
On April 5, Trump announced that he was considering imposing tariffs on $100 billion worth of goods imported from my country.
On April 16, the U.S. Bureau of Commerce, Industry and Security announced sanctions against ZTE, prohibiting it from importing goods from the United States in any form.
The world's first and second largest powers have officially begun their struggle.
The Sino-US trade war has officially begun!
The world was in uproar.
The stock market, futures market, and bond market have all begun to price in this event, and undercurrents are surging.
The Shanghai Composite Index plummeted from 3,300 points to over 3,000 points, a drop of nearly 10%, and ZTE Corporation was suspended from trading.
"The US-China trade war will be bad for the steel, aluminum, manufacturing, and clothing industries, but will be good for agricultural and technology stocks..."
"Be careful with stocks that have a high proportion of foreign trade business to avoid the risks of the Sino-US trade war!"
"We need to focus on sectors such as military industry and aerospace..."
Various information began to emerge in major stock forums and various market software, and various big Vs expressed their views and opinions on this incident.
Li Feng sat upright in the trading room, concentrating on one line, shaking his head, and then looking at the next one, nervous and busy.
He has been in this state for more than a month.
Suddenly, a text message caught his eye: "Sino-US trade war, capital outflow is basically controllable."
Controllable?
Could it be that something is out of control?
The stock market is a form of currency. Capital outflow will directly put pressure on the stock market, leading to further declines in the stock market. This is an interconnected relationship.
In this way, what affects the general trend of the stock market is not only the domestic fiscal and monetary policies, but also the fiscal and monetary policies of the world's central bank, the Federal Reserve, or the United States!
This is a chain reaction process.
"I see!"
“I finally found it!”
Li Feng tapped the keyboard and his mind suddenly became clear.
The missing link in my trading system was finally found!
Zhao Xinyue, eating a strawberry, leaned over and saw the message. She said curiously, "What's so strange about this? I've seen this kind of news several times in the past few days..."
Li Feng smiled and threw down the keyboard and mouse, looking relaxed. He also picked up a strawberry and took a bite. It was so sweet!
"Xinyue, you saw it, but it's the same as not seeing it. Just like me before, I took a quick look and knew a thing or two, but I didn't integrate it with the stock market or my own trading system. I was just a spectator, a passerby, going through the motions."
Li Feng said with a smile,
"Currently, in terms of macroeconomic trends, domestic monetary policy is tightening, as evidenced by further tightening real estate policies, the expected yield on 10-year Treasury bonds, and ongoing supply-side reforms. Overseas, the Federal Reserve further raised interest rates on March 22, widening the interest rate gap between China and other countries and putting pressure on the exchange rate."
"The most crucial thing is that the sudden US-China trade war will further lead to an outflow of financial capital. This outflow process will be partly through indirect pressure on A-shares through selling the Hang Seng Index, and partly through direct selling by foreign institutions such as RQFII and QFII..."
"The Shanghai Composite Index was originally in a state of equilibrium between long and short positions. The sudden trade war has directly disrupted this balance. Therefore, what we need to do now is to directly liquidate our positions!"
Speaking of this, Li Feng felt a little scared and a chill ran down his spine.
The trading system that I have been running for several years still has such a huge loophole.
If there had not been this trade war, I probably would not have woken up. If I had not woken up, I would have faced the risk of going against the trend. In that case, my future would be unpredictable, and my life and death would be in the hands of others.
During this period, Kweichow Moutai fell from nearly 800 yuan to more than 700 yuan. The drop was not large, only five or six percentage points.
However, foreign capital has a heavy holding, especially China Ping An, which has issued H shares, and the decline is quite large. It directly fell from the highest point of 81.28 yuan in January to 63.13 yuan on April 17, a full drop of 18%!
His own funds also withdrew directly from more than 5 million to more than 4 million. Among them, China Ping An's stock retreated from the highest point of 1.14 million to 888,000 yuan, a total loss of 252,000 yuan.
This is a lesson worth more than $300,000.
However, it can complement the lessons learned from my own trading system.
It’s worth it.
In other words, special value.
After eating the strawberries, Li Feng opened his account and cleared his position with one click without any delay.
Seeing Li Feng being so cautious, Zhao Xinyue felt that he was making a fuss out of nothing, so she said:
"Haven't you seen it? Capital outflow is basically under control."
"Besides, the Shanghai Composite Index only dropped ten points. You're not that scared, are you?"
After clearing his warehouse, Li Feng felt relaxed and refreshed.
At this moment, hearing Zhao Xinyue say this again, he couldn't help but laugh and said:
"Retail investors, are you all thinking the same thing? Don't you think that this capital outflow is like a surging river, flowing into the sea overnight?"
“This is a process.”
“It’s a process of quantitative change that slowly accumulates into qualitative change.”
"Right now, the macroeconomic trend is downward, just like a building about to collapse. It's best not to stand under it. This is why my trading system places so much emphasis on the macroeconomic situation."
"The market right now is like the African savannah during the dry season. Rainfall is decreasing, food is becoming increasingly scarce, and carnivores are sharpening their knives and constantly chasing the lambs in the market."
"I don't ask to be the fastest runner, but I just want to run ahead of the others. As long as there are still lone people behind me, I can survive this hunt and make it until the rainy season.
"You're talking nonsense again—"
Seeing that he started talking nonsense again, Zhao Xinyue muttered a few words and started to eat the remaining strawberries.
Li Feng read the posts of online celebrities with great energy, and then opened the "Civilian Stock God Carnival" group, where many people were discussing this sudden incident.
It is basically divided into three factions.
The first group believes that it is just a minor incident that will be over in a few days or months.
The second group believes that this is an important, long-term event that requires special attention.
The third group believes that it is of no concern. After all, there are tall people to hold up the sky if it falls. Investors naturally don’t need to worry about such a big thing. They only need to take care of their own financial accounts.
Li Feng took a look and was about to close the account when Liu Jihua from the Vulture Fund sent him a private message: "Brother Li, what do you think of this?"
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