Chapter 179 False Prosperity, Sunset Glow
The new coronavirus pandemic is raging around the world. Our country has fought against the epidemic with strict prevention and control, and achieved a complete victory.
On April 8, Wuhan was lifted from lockdown.
The domestic epidemic has been basically eradicated.
However, the epidemic abroad has been rising one after another, starting from Italy, spreading throughout Europe, and then to the United States. The virus continues to mutate, the death toll continues to rise, medical runs are all over the world, and anti-epidemic materials and medical staff are in short supply.
Our country has become the country with the best epidemic prevention in the world, and production and living order has quickly returned to normal.
The Shanghai Composite Index also launched a wave of market trends under the loose monetary policies at home and abroad.
On February 4, the Shanghai Composite Index hit a bottom of 2685 points. After rebounding for more than a month, it hit a second bottom of 2646 points and then fluctuated upward. It took three months to slowly fluctuate upward from more than 2600 points to more than 2700 points, and then broke through 2800 points and then broke through 2900 points!
On July 1, the Shanghai Composite Index broke through 3000 points with a small positive line of 1.38%, and closed at 3025 points.
On July 2, the Shanghai Composite Index had another 2.13% large-volume bullish candlestick, closing directly at 3090 points!
On July 3, the Shanghai Composite Index had another 2.01% large-volume bullish candlestick, directly breaking through 3100 points!
On July 6, the Shanghai Composite Index had another 5.71% large-volume bullish candlestick, directly breaking through 3200 points and 3300 points, and closing at 3332 points!
The market situation came suddenly, catching everyone off guard.
Just when everyone thought a bull market was coming, the Shanghai Composite Index seemed to be taken down by an invisible big hand.
Half a year later, it fluctuated around 3,300 points until the end of the year, closing at 3,473 points.
To prevent financial risks, we must guard against both sharp rises and sharp falls.
This round of market movement this year, if calculated from the lowest point of 2646 points, has risen by 827 points, or 31%!
During this period, many bull stocks emerged.
In February and March, Intech Medical, which was speculating on masks, meltblown fabrics, alcohol, and various epidemic prevention materials, finally speculated on gloves and came out of the situation. Its stock price rose from 16.59 yuan at the beginning of the year to 184 points on July 15, an increase of more than ten times!
Consumer stocks followed suit and started to rise in March. Haitian Flavor Industry took the lead, rising from 43.24 yuan on March 19 to 115 yuan in September, more than doubling and nearly tripling!
Fuling pickled mustard greens were no exception, rising from a low of 21 yuan on February 3 to 56 yuan in September.
There's also Golden Arowana, which originally had an issue price of 25.7 yuan, but saw its price rise by 117% on its first day of listing! Since then, from October 2010, it soared to 145.62 yuan on January 11, 2021!
Taoli Bread also rose from its lowest point of 34.5 yuan on February 3, 2020 to 67.88 yuan in one breath, nearly doubling!
In addition, the entire liquor sector is experiencing an industry-wide turmoil, with the leading Kweichow Moutai soaring from 960 yuan on March 19th to 2,627 yuan on February 10th, 2021! This is a nearly threefold increase!
Wuliangye’s price rose from 98.63 yuan on March 19 to 357.19 yuan on February 18, 2021, more than three times!
Jiugui Liquor's price saw an even more dramatic increase, rising from 25.53 yuan on March 24th to 228 yuan on January 13th, 2021. After a slight adjustment, it rose to 275 yuan in June 2021! A full tenfold increase!
The market is in a frenzy.
These stocks are called "track stocks".
Countless people plunged into it.
Zhao Xinyue was taking care of the children and watching the news. She couldn't help but say, "Li Feng, consumer stocks are doing so well. Why don't we buy some and try?"
“No.”
"Why?"
"Because these 'track stocks' lead to a road of no return, the passengers who get on this car will eventually fall off a cliff and be smashed to pieces," Li Feng said, shaking his head in disbelief.
"We are in a period of high inflation, which is bad news for consumer stocks."
"These consumer stocks are not only facing rising costs, but most are also facing fierce competition, making future performance very bleak. For example, Haitian Flavoring, a company that makes soy sauce with no technical expertise, has been hyped up to a price-to-earnings ratio of 114. Fuling Zhacai is also outrageous, with a price-to-earnings ratio of 59. I'm even more baffled by the hype surrounding Golden Dragon Fish, which reached a price-to-earnings ratio of 111.52 just five months after its IPO."
"This kind of contrarian, head-on speculation is something you can only see during the 2007 bull market, or the hype surrounding tech stocks in 2015."
"This is just a false boom, don't buy into it."
"False prosperity is still prosperity..." Zhao Xinyue flipped through it and saw the tenfold increase in Jiugui Liquor's price, and murmured a little.
"Don't be greedy. This kind of money is not something we can earn," Li Feng explained. "At such a high position, institutions are banding together to gamble with their funds. If they make money, they get bonuses and commissions. If they lose money, they also get fees. But the profits and losses are not their own money. But it's different for us. If we lose money, it's our own money."
"So, let's just watch the fun. We're not insiders, and we don't have any inside information. If we go in at this position and try to gamble, the chances of winning are really unpredictable."
"To put it another way, these stocks have only increased tenfold at best, and three to five times at worst. The strong cyclical stocks we've chosen will rise just as well as them, and may even outperform them."
"We have already taken the initiative by buying on the left side. These consumer stocks are just the product of right-side trading, just the afterglow of the setting sun and the flowers that are about to fade."
"Just hold on to it? Only Zijin Mining has increased a little, while Aluminum Corporation of China and China Tin Corporation haven't increased much?" Zhao Xinyue said disappointedly.
In her impression, Li Feng was a stock god. He would make a lot of money not long after every purchase of stocks. But this time, she only saw others making money while she did not make much, so she felt a little anxious.
"Just wait," Li Feng explained. "Money doesn't come hastily. Big money is earned through waiting. Looking back, we've known each other for eight years now. During these years, which deal that really made big money wasn't earned through waiting?"
"Some hold shares for a few months, and some hold shares for several years."
"The market is determined by capital, but the long-term market is controlled by smart capital. We should be smart capital, not foolish capital."
"Smart money?" Zhao Xinyue was a little confused.
"Yes, the funds in the stock market are also divided into different levels," Li Feng explained. "Take this year for example. Once the monetary policy was loosened, a lot of funds flowed into the stock market. Most of them were "leeks". Only about 10% were smart money. Don't underestimate this 10%. The amount of funds has been accumulated over many years and is a considerable amount. It often influences the market at critical moments." Li Feng continued.
"The US is still increasing its spending these days. In March 2020, it distributed $2.2 trillion, and in October, it distributed another $900 billion. This money will be directly deposited into the personal accounts of Americans, which will quickly cause inflation."
"Why? I heard that Japan is also implementing quantitative easing, so why is there no inflation?" Lin Menghan walked into the room and asked.
"Because Americans distribute money directly to individuals, especially the poor, who then spend it directly on food, clothing, cars, houses, and appliances...which directly triggers hyperinflation. Japan's money, on the other hand, is essentially distributed to conglomerates and the wealthy. The wealthy have no shortage of food, clothing, cars, houses, or appliances, so inflation doesn't occur."
Li Feng continued, "This is just like the real estate cycle in 2016, when the currency created through real estate was directly distributed to grassroots migrant workers, which indirectly led to de facto inflation. In those years, everyone's wages basically doubled."
"Now let's take a look at futures prices. Copper prices have risen from 30,000 to 40,000 yuan per ton to 5,000 to 6,000 yuan per ton... Aluminum prices have also risen from 11,225 yuan per ton to 16,000 to 17,000 yuan per ton..."
"This is just the beginning. 2021 will definitely be a year of great inflation."
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