Chapter 187 Expand your vision and be confident
Monday, January 22, 2024.
As a heavy blow, the Shanghai Composite Index plummeted 2.68% and closed at 2756.34 points, directly setting a new low in three years. The ChiNext Index also plummeted 2.83% and closed at 1666.88 points, setting a new low since 2019.
Only more than 100 stocks in the two markets rose, while more than 5,000 stocks fell.
Since entering 2024, the Shanghai Composite Index has fallen by 7.35%, and judging by the pattern, it is still in an accelerating decline...
Investors were howling everywhere.
"It's falling every day, falling every day. I really can't take it anymore. I heard that several large institutions have collapsed again, such as the Snowball structured investment product, and the three-year closed-end funds issued in 2021 are about to be reclosed. A large number of investors are queuing up to liquidate their positions. I also liquidated my positions, once and for all..."
"Stocks are rising overseas. South Korea, Japan, the US, and even India's stock markets are hitting new highs every day. Why is the domestic stock market so disappointing? This market is simply unplayable..."
"I've been losing money for three years in a row. Am I going to lose money again this year? I can't take it anymore!!!"
Some investors speculated that this decline was caused by margin trading, others by pledged shares, and still others attributed it to massive redemptions by fund companies.
Some called for a halt to IPOs, some called for a halt to transfers and financing, some called for an end to short selling, and some even called for stabilization funds to enter the market...
The extremely divided domestic and international market, whether intentionally or not, has driven a large number of investors to buy Nikkei ETFs, US 50 ETFs, and Indian LOF funds...
This has led to the premium of these foreign funds being widened again and again, and the rush of funds has been shouting the slogan "A-shares are surrounded by a bull market"...
Even many big Vs have introduced various arbitrage models...
When one hears it, one can't help laughing, but at the same time feels boundless sadness.
2021-2023, it has been three years of bear market, why is 2024 still starting off like a nightmare?
Is there a road ahead?
Is there any hope for the future?
Looking at the Shanghai Composite Index which hit a new low, countless investors are unsure.
Zhao Xinyue looked at the various weird talks and speculations in the financial forum and walked into the study.
In the study, Li Feng was drinking tea leisurely, looking calm and composed, as if today's stock market crash had not affected him at all.
She couldn't help but ask, "Aren't you afraid of the market falling like this?"
Li Feng took a sip of tea and said, "To be honest, I'm a little scared too. The market keeps falling, who wouldn't be afraid? Fear is a physiological phenomenon that people instinctively experience when faced with danger. It's normal..."
"But, I'm afraid it's useless to survive in our market. It won't bring any profit at all."
"What we need to do is to overcome our fear and look for potential investment opportunities. This is what it means to be a qualified stock investor."
"We need to take a long-term view and broaden our horizons. We shouldn't be limited to the gains and losses of each day, each hour, or each moment. We should expand the dimension of investment to one, two, or even three years. If we use this perspective and this logic to examine the current market, the fear in your heart will subside unknowingly."
"Because when your vision broadens, you realize that the current stock market crash is just a temporary ripple. The future market conditions are the key and the foundation of your profit."
“We must transcend the market and yet delve into it.”
Zhao Xinyue thought for a moment after hearing this, then asked, "You mean, long-term investment? Are there any good investment opportunities right now?"
"That's right. I've always emphasized that short-term trading is a game of capital and technology. Retail investors have a slim chance of winning, and it's very easy for individuals to become emotionally immersed in market fluctuations. Not only will their emotions become volatile, but their operations will also often become distorted. When we invest in stocks, we must take a long-term approach, using long-term logic and large-scale trading..."
Li Feng said slowly, "When you expand your investment perspective, your vision changes, and naturally your chances of winning also change... The index has now hit a new low of 2756 points... But investment opportunities are increasing, not decreasing..."
"What stocks to buy?" Zhao Xinyue asked.
Li Feng didn't respond directly, but said, "Stock trading is essentially a chip game. As many technical analysis masters have said, stock prices will move along the line of least resistance."
"So, in this chip game, as a stock, its line of least resistance must be performance! Because this is the common aesthetic of everyone. If performance soars, the stock price will definitely soar. If performance plummets, the stock price will definitely plummet..."
“So, now, we have to choose stocks whose performance will soar in the future.”
After a pause, Li Feng continued, "I personally believe that the hyperinflation cycle is far from over, because once this cycle starts, it will last at least five or six years. We have only been going on for two or three years, which is not enough time."
"Because inflation is a statistical concept, but the transmission of inflation has a spiral effect, which will be transmitted layer by layer to the terminal, and then fed back to the starting point, causing another round of inflation..."
"Generally speaking, to suppress inflation, one must either adapt the economy to a high-inflationary environment and all aspects of society to a post-inflationary world, or expand the production of basic materials, such as copper, iron, tin, grain, and oil, as well as the prices of various consumer goods (by introducing new industrial countries to produce daily necessities cheaply)..."
"Whether it's adapting the economy to a high-inflation environment, mass-producing commodities, rebuilding supply chains, mass-producing various consumer goods... and thus bringing down inflation... this will take time... It won't be accomplished in one or two years, but at least four or five, or even five or six years..."
"To sum up, 2024 should be the year when hyperinflation returns."
"Then, shall we buy bulk commodities?" Zhao Xinyue's eyes lit up and she asked.
Li Feng shook his head and said, "You can choose to bet on commodities, but the chances of winning are not particularly high. I suggest choosing the shipbuilding sector... because it belongs to the late stage of the hyperinflation cycle and is still in the industry's upward cycle..."
"The shipbuilding index has now reached 180 points, approaching a record high... However, due to the stock market crash of the past two years and the delayed profit nature of the shipbuilding industry (similar to real estate), the stock price has not fully reflected this..."
"Shipbuilding is an industry with a cycle lasting over ten years... It's also an industry with a high inflation cycle... Even if the high inflation cycle doesn't come in 2024, relying solely on a turnaround in the shipbuilding industry can still lead to a surge in performance!"
"Performance guarantees will inevitably be accompanied by an influx of countless funds! When that happens, we can sell our chips to these performance-chasing funds."
“This is also the underlying logic I relied on when I wrote Chapter 97 last year.”
"So, fear comes from uncertainty. When you are confident and have a sure win, will you still be afraid?"
(Discuss with fellow investors and make progress together. If you have good investment suggestions, you can leave a message to exchange ideas.)
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