Chapter 40: The hidden rule of the stock market: Inflation and no bull market
As the Spring Festival approaches, there are a lot of cars on the road, moving and stopping, stopping and moving again, just like the stock market situation in recent days.
In the past few days, the Shanghai Composite Index has been fluctuating around 2,400 points, with trading volume gradually shrinking.
"Things are about to change..."
Li Feng sighed lightly, and with a click of his fingers, he made a reverse repurchase of all the funds in his account.
Beside him, Lin Menghan glanced at him and asked:
"How do you know the market has changed recently? Is it because of the Chinese New Year?"
"good,"
Li Feng analyzed, "The Shanghai Composite Index has climbed to its previous high of 2,400 points and is starting to consolidate here. It no longer has the momentum to support further growth. As the saying goes, a long-term trend will inevitably lead to a fall. It won't be long before the market crashes."
"What if the situation changes and we rush forward? It's not impossible." Lin Menghan pouted and said unconvincedly.
"Absolutely impossible,"
Li Feng said, "If you want the index to continue to rise, you need to invest real money. Where can we get that much money in the market right now? Look, the reverse repurchase rate has reached 4%."
"A few days ago, a friend of mine opened a small loan company. I heard that private interest rates have soared to around 15%, and the entire money market is extremely short of money.
"The reason for the lack of money is precisely because the central bank is preventing inflation and tightening the money supply..."
“There is no bull market in inflation!”
"What do you mean by inflation without a bull market?" Lin Menghan frowned.
She found that Li Feng said a name she had never heard of before.
This made her curious and surprised.
Li Feng had nothing to do, so he took out a handful of melon seeds and started chatting while eating them.
"Do you remember I once told you that our country's stock market has a bull-bear law?"
"How could I not remember this?" Lin Menghan recalled, "That day, you were talking in a rather strange way, talking about the right time, the right place, and the right people, and that the stock market goes through a bull-bear cycle every five years."
Li Feng nodded and continued, "This bull-bear law of the stock market is related to this inflation-free bull market."
"Because every five years or so, our country's monetary policy will change direction. Whenever the monetary policy turns to easing, a bull market will be brewing. Whenever the monetary policy turns to tightening, the bull market will turn to a bear market."
"For example, after the Asian financial crisis in 1997, monetary policy around the world, including in our country, shifted to easing. Countless amounts of money rushed into the market, driving up the prices of all assets, including stocks, which led to the 2001 internet finance bubble."
"Similarly, after the global dot-com bubble burst in 2001, the world, including our country, once again started printing money, once again pushing global assets to high levels, which led to the super bull market from 2005 to 2007..."
"And now, monetary policy remains very tight, and there's very little money in the market. As the saying goes, when the big river is full, the small rivers are full; when the big river is empty, the small rivers dry up. The entire market, the entire system, is short of funds. How can we support a bull market?"
"A bull market now only exists in the dreams and fantasies of stock investors."
"There's nothing new under the sun. The so-called bull and bear markets are just another cycle..."
"So, when we trade stocks, we must be clear about the market's position and have a positive attitude. We shouldn't be too ambitious, nor too modest."
"When the opportunity comes, we must pounce on it fiercely and feast on it. When the opportunity disappears, we must escape in time and wait patiently for the next opportunity to come. We must be as quiet as a virgin and as agile as a rabbit..."
The stock market is not that mysterious. Objectively speaking, it is similar to houses, stamps, antiques, and jewelry on the market. It is a way of carrying assets.
Purely speaking, a bull market in stocks is a surge in assets and a purely monetary phenomenon. When policies are flooding the market with money, a bull market will come. When inflation comes and monetary tightening occurs, a bear market will come.
Li Feng talked freely, and Lin Menghan listened quietly, occasionally secretly observing Li Feng out of the corner of her eye.
At this time, Li Feng was eating melon seeds and talking about the stock market. He looked calm and his eyes were full of wisdom.
This scene completely attracted Lin Menghan.
She was addicted to it and couldn't extricate herself.
I, Lin Menghan, must get him!
No one can stop it!
An idea emerged in Lin Menghan's mind and grew wildly.
Now that the plan was set, the journey seemed even more delayed.
After going around in circles, driving and stopping, it was already past four o'clock in the afternoon when we arrived at Li Feng's hometown, WR Village, WR Town, City B.
"Turn right and you'll be there..."
Li Feng commanded.
Lin Menghan turned the steering wheel to the right, and three green-tiled houses appeared in front of the two of them.
In front of the tile-roofed house, there is a small courtyard. The courtyard is cleaned tidyly and there is a fence outside the courtyard. It is particularly eye-catching among the new houses around it.
"This is my family's old house." Li Feng explained.
"This... is quite old." Lin Menghan parked the car in front of the house and said while looking at the mottled wall.
"My grandfather built it when he was young. It's probably about fifty years old. In that era, people believed in one house for each household, which would last a lifetime." Li Feng said as he knocked on the door.
"Mom..." Li Feng shouted.
A moment later, Wang Xiurong walked out of the house with a look of surprise on her face.
"Xiaofeng, why are you back? You didn't even call... Hey, who is this? Come in and sit down..." Wang Xiurong looked at Lin Menghan, his face becoming more kind and amiable. He took Lin Menghan's hand and was about to walk into the house.
"Auntie..." Lin Menghan's usually cold face also turned a little red.
Li Feng quickly explained, "Mom, this is reporter Lin, a friend, please don't misunderstand."
Wang Xiurong glared at Li Feng and said, "How could I have misunderstood? My friend is here, so why shouldn't I go sit inside?"
"this……"
Li Feng was speechless for a while, realizing that he was making things worse, so he quickly warned Lin Menghan.
Unexpectedly, Lin Menghan turned a blind eye and went straight into the house.
Li Feng had no choice but to unload the car first.
The house was very clean. There was a wooden table in the middle of the main room, with an array of old-fashioned floor-standing cabinets next to it, and an earthen stove in the corner.
"Is Xiaofeng back?" A friendly voice came from the inner room.
A few people walked in and saw an old man in his sixties sitting cross-legged on a brick bed. In the corner of the bed were several quilts stacked up, and a paper box filled with needles and thread was placed beside it.
"Xiaofeng is back with his colleagues."
As Wang Xiurong said this, she let Lin Menghan sit on the edge of the earthen kang, and took a plate of peanuts and melon seeds to entertain her.
"Let me see, oh, it's really good, really good..." The old man squinted his eyes, looked and praised.
Lin Menghan sat on the edge of the bed with her head lowered, looking very ladylike.
Li Feng moved seven boxes of wine to the main room. When he lifted the curtain, he happened to see the three people in this scene.
He secretly said badly in his heart, and hurried to Lin Menghan's side, whispering: "It's getting late, we should go..."
Wang Xiurong listened, but pointed out the window and said, "It's almost dark. Xiaofeng, where are you asking me to go? And I haven't even eaten yet, and you're kicking me out?"
"Well, auntie, I'm a little hungry too." Lin Menghan actually took advantage of the situation.
Li Feng was anxious and pulled her, warning her, "Lin Menghan, what are you doing?"
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