Chapter 45 The Stock Market is a Colosseum
Hearing this, Lin Menghan opened her mouth, wanting to speak, but didn't know what to say.
Li Feng continued:
"I've emphasized to you several times that selling comes before buying. You have to think about when to sell before you buy. This is like looking for a buyer."
"Specifically, I sold Minsheng Bank during a bull market, when the market was buoyant. As for Qinling Cement, it was more complicated. I developed two plans: one was to take advantage of the market maker's momentum and sell to retail investors, and the other was to sell to other buyers during a bull market, even if the market maker didn't."
Li Feng said a lot more.
Zhao Xinyue seemed to understand what he said, but when she thought about it carefully, she couldn't figure it out, and even felt a little dizzy.
Li Feng sighed, knowing that the two would not be able to accept it for a while.
Once upon a time, when I woke up, I couldn't accept it for a long time.
After all, in everyone's description, the stock market is a place where almost everyone has the opportunity to get rich.
But in reality, the stock market is a place similar to a casino.
What is inside is not flowers and honey, but all kinds of traps.
Once inexperienced retail investors get involved, at best they will lose their hands and feet, and at worst they will be uprooted by the market makers, leaving nothing behind.
Extremely bloody and cruel.
After sorting out his thoughts a bit, Li Feng continued earnestly:
"Let me put it simply. We trade stocks to make money, but where does that money come from? Does it fall from the sky? Or does it blow in from the wind?"
Lin Menghan and Zhao Xinyue both looked at each other in confusion.
Like many stock investors, both of them knew that they could make money by trading stocks, but they had never seriously thought about this issue.
Li Feng explained patiently:
"In fact, when it comes down to it, technology speculation is a chip game, a game of picking each other's pockets. The money you earn comes from other people's pockets, and the money you lose is taken away by others."
"So, if you use technical analysis purely to speculate in the stock market, and if you use it, and he uses it, and millions of people use it, it's like a group of people entering the Colosseum. In this Colosseum, the retail investors are naked and unarmed, while their opponents are the dealers who are armed with knives, guns, clubs, swords, spears, and even pistols, machine guns, and mortars."
"There is a serious asymmetry of power and a serious asymmetry of information."
"Can you defeat the dealer in this fight?"
"Not to mention, there are now quantitative robots involved. They can trade hundreds or even thousands of orders per second!"
"No matter how fast a person is, he can't be faster than a machine! No matter how ruthless a person is, he can't be more cruel than the dealer behind the scenes!"
"Once you enter this arena of gambling based on technical indicators, your future is doomed. So you have to use a gambling mindset and look at technical indicators, rather than just looking at charts for the sake of looking at charts."
Li Feng's words completely shattered Lin Menghan and Zhao Xinyue's three views.
However, no one expected that the living conditions of retail investors in the stock market are so poor. No wonder people often say: one profit, two break-evens, and seven losses.
Among them, the money lost by retail investors was harvested by the market makers in a bloody manner.
I don’t know how many retail investors’ families have been broken and how many retail investors’ dreams have been shattered.
However, in pursuit of financial freedom, countless retail investors have continued to rush into this arena, fighting with the dealers and competing with the main players, all for a future.
After a pause, Li Feng continued:
"As for value investing, a large portion of the profits come from the company's growth, such as dividends, PE, etc., which are all standards for measuring the quality of a company. Even if there is no gambling or chip game, as long as the dividend rate is high and stable enough, as the company grows, you can rely on dividends to recover your investment."
“That’s why I said that in a bear market, we should focus on value investing.”
Zhao Xinyue felt even more dizzy and asked, "What is PE and what is dividend yield?"
"PE, which stands for price-to-earnings ratio, is the ratio of a company's market value to its net profit," Li Feng explained while opening Kweichow Moutai's information from the brokerage software.
"For example, the current PE ratio of Kweichow Moutai is 14 times. Simply put, the profits earned by Kweichow Moutai can earn back the entire company in 14 years. For another example, the current PE ratio of a bank is 6, which means that the profits earned in 6 years can rebuild another bank."
"For example, if your company has a market capitalization of 1 million and earns 200,000 yuan a year, then your company's PE ratio is 5. If all profits are distributed, the dividend yield will be 20%. However, you can't use all your profits for dividends. You have to keep some to continue developing your business, so the dividend yield will decrease. Currently, the dividend yield of the banking sector is generally around 5%, and Kweichow Moutai's is 2.2%."
"The PE ratio of bank stocks is so low, why not just buy all bank stocks? Why are you waiting for Kweichow Moutai?" Zhao Xinyue thought about it and found a bargain.
Li Feng smiled bitterly and said:
"Xinyue, you don't know this. People are different, and so are stocks. Banks are in a highly leveraged industry, with high risks and strong uncertainty, so naturally they enjoy lower benefits. Generally, in a bull market, the PE ratio is 15 times, and in a bear market it's 50% off, and can't be higher than 7 times. Kweichow Moutai is in the fast-moving consumer goods industry. Drinking one bottle less and you become addicted. The key is that it is a luxury among liquors, with a gross profit margin of over 90%. It can be said that any wine turns to gold, so naturally it enjoys a higher price-to-earnings ratio. Generally speaking, in a bull market, the PE ratio should be above 30 times, and in a bear market it's 50% off. It is safe only if the PE ratio is below 15 times."
Zhao Xinyue laughed when she heard this and said, "You're buying something? And it's on sale, 50% off."
Li Feng's face turned serious and he said:
"Yes, stock trading is like buying and selling things. You should stock up when things are cheap and sell when they are expensive. Otherwise, how can you have ginger and garlic?"
Lin Menghan bit her red lips tightly and said nothing.
She found that her understanding of the stock market was still too superficial. She found that the more she interacted with Li Feng, the deeper her understanding of the stock market became.
It's really worth it to learn about stocks from him.
Li Feng glanced at Lin Menghan, who looked thoughtful, and then looked at Zhao Xinyue and said:
"Well, Xinyue, you can buy a few books online on value investing later to refresh your basic knowledge. We will focus on value investing during this period."
Then, Li Feng looked at Lin Menghan again, hesitated, and said:
"Reporter Lin, I wonder if you had a trading strategy in place when you planned to buy Kweichow Moutai."
Lin Menghan was shocked when she heard this and said to herself, "This...this...doesn't seem to exist."
Li Feng shook his head and said, "Your investment attitude is unacceptable."
"You have a million yuan in your hands now, and you could be making tens of thousands of yuan in profit or loss every minute. How can you not make a good trading plan? I remember that when you girls buy clothes, you always compare prices from different stores and make a careful selection, looking at styles, colors, brands, sizes, and so on. You can spend three to five hours shopping. If you can't find the clothes you like, you will go shopping in other stores for several days or even months before placing an order. Why is it that when it comes to stock investment, you treat it like a joke?"
"Isn't it true that the money I spend on clothes is money, but the money in the stock market is not money?"
Lin Menghan lowered her head and thought, "That's indeed the case."
This is also a very strange phenomenon in modern society.
In the past, when people used paper money to make transactions, they would think about how to spend the money, how much to spend, and how much to save for future use. But now, all transactions are electronic. You can buy anything with just a click of your finger, and the money will fly into the other party's account. As a result, people's thinking has changed, and they spend money lavishly and without planning, as if the money in their mobile phones is not really money.
It's almost the same in the stock market. Once the money enters the securities account, it becomes a series of numbers. Watching it all day long, ups and downs, affects people's mood all day long, ups and downs, as if the money is no longer money, but has become a stock electronic game, which is very addictive.
As the saying goes, once you enter the stock market, it is like entering a deep sea, and after ten years of stock trading, you will feel lost.
Stock investors often come with high hopes, invest a lot of energy but still gain nothing, leaving them with nothing but empty eyes.
Zhao Xinyue's thoughts gave her a headache, so she simply stopped thinking and asked, "What should we do now?"
Li Feng said:
"We're in the final stages of a bear market rebound, so keep your positions short and observe. Menghan, talk to your dad more often about the liquor market and the industry dynamics. He's also checking in on any operational issues at Kweichow Moutai."
"What do you mean?" Lin Menghan was a little confused.
Li Feng explained:
"Kweichow Moutai's core competitiveness lies in its four golden brands, positioning it as a high-end luxury brand among baijiu. We must see whether Kweichow Moutai has lowered prices and quality during this round of adjustments in the baijiu industry, or whether it has expanded its own brands..."
"You have to know that in the 1980s, the leading brand in the liquor industry was not Kweichow Moutai, but Fenjiu. In the 1990s, it was Wuliangye, not Kweichow Moutai. Kweichow Moutai has only become the leading brand in the last decade or so."
————
Move your lucky hands and send a wow for free for love.
Your support is my motivation to update
Continue read on readnovelmtl.com
