Rebirth of the Capital Legend

“The investor structure issue should only be one of the factors affecting the market ecosystem, right?” Lao Wu said. “The reason why the US stock market has been able to have such a long bull market for so many years and form a market ecosystem with long bull markets and short bear markets is mainly due to sufficient market liquidity and the absorption of many of the best listed companies in the country. As for the factor that institutional investors dominate the market, I don’t think it is the decisive factor in determining its ecosystem.”

Without sufficient liquidity and without a large number of consistently excellent companies listing on the US stock market.

So even if institutional investors guide the market.

It's also impossible to drive stock prices sky-high by relying on scarce liquidity.

In fact, although the US stock market has been in a bull market for more than a decade, compared with the average valuation of major global markets, the US stock market is still not overvalued, and is within a reasonable valuation range.

In contrast, our A-shares...

After experiencing several stock market crashes and a bull-bear cycle, the overall valuation is still not cheap. In fact, many small-cap concept stocks in the market are still valued at over 100 times earnings, and there is no sign of fundamental change or hope for future performance growth.

Moreover, unlike the abundant liquidity in the US stock market.

Our A-shares market cannot attract global investors to participate, and cannot absorb hot money from the global financial market.

Valuations are not cheaper than US stocks, and there is no sufficient liquidity to support them.

Furthermore, in terms of market investor structure, it is still dominated by retail investors who are highly susceptible to market sentiment.

Under these circumstances, how can the market transition from a bear to a bull market?

“That’s true.” Old Zhang nodded slightly and said, “So, based on the underlying logic, the market as a whole will most likely remain in a state of fluctuation for a long time, and there is no opportunity for a shift from a bear to a bull market for the time being.”

"Right now, there probably aren't many investors who think the market will resume its bull run in the short term," Xu Qiao said. "It seems that the market's expectations for the overall trend are still quite rational."

"Before today's sharp drop at the end of the trading day, there were quite a few retail investors in the market shouting bullish slogans!" Old Zhang said. "Of course, now it seems that there are definitely more rational investors than rational ones."

"No matter what slogans the vast retail investor group in the market shouts, we just need to stay rational," Lao Wu said. "Didn't Brother Chen just say that the difference between expectations and emotions is what can generate unexpected profits worth betting on? I think as long as we are familiar with the overall ecological structure of A-shares and understand this difference between expectations and emotions, making money is relatively easy. At least compared with foreign financial markets, A-shares are much gentler."

“That’s true,” Old Zhang said. “The more people chase the highs and sell the lows, the more trading opportunities they can seize based on the difference between their expectations and the market sentiment.”

The discussion continued among several core members of the "Shanghai Short-Term Trading Group" group.

The market is still in progress.

Discussions among numerous retail investors on major online stock investment platforms remain intense.

On the news front, there is a mix of positive and negative news, which continues to influence the evolution of overall market sentiment.

Amidst this heated discussion, when US stocks reopened in the evening, and with countless people watching, the overseas markets once again exceeded expectations, opening higher and continuing to rise, setting new historical highs.

Seeing the unexpected upward trend of the external markets continuing to surge.

The next day, September 2nd, Friday, pre-market session.

The expectations of investors across the internet have been raised again by the performance of overseas markets, and many retail investors are even preparing to snap up shares at the opening bell.

"The overseas markets are performing rapidly, reaching new historical highs. If our A-shares don't follow suit this time, it would be unreasonable, wouldn't it?"

Amidst the intense pre-market discussions, among the countless retail investors gathered on various online stock investment exchange platforms, one person remarked with emotion.

"Yes, that's right. With overseas markets continuing to hit record highs, our A-shares should at least reach 3300 points, if not 5000 or 6000 points. It can't be that all the global financial markets are in a bull market while we're stuck in a long bear market, can it?"

"The correlation between A-shares and overseas markets is not very strong. I think whether the market can perform well today and whether it will follow the trend of overseas markets last night depends on how the Hong Kong stock market performs today. Currently, the correlation between A-shares and Hong Kong stocks is obviously closer. Moreover, it seems that the initial surge in the core theme of 'major infrastructure' was initiated by 'mainland property stocks' in the Hong Kong stock market."

"The performance of Hong Kong stocks is indeed closely linked to that of the US stock market."

"I remember the rally in the 'major infrastructure' sector was started by Huayi Capital, an institution headed by Mr. Su. How did it become the Hong Kong-listed 'mainland property stocks' that ignited it?"

"Is Mr. Su's 'Huayi Capital' simply following the trend?"

"Regardless of whether the index rises or falls today, I feel that the 'major infrastructure' sector will definitely rise, and 'Huaxin Cement' will most likely open at the daily limit."

"Not necessarily. If the index performs poorly, the 'major infrastructure' sector may not be able to continue its independent upward trend."

"With the overseas markets performing so well last night, how could the index possibly perform badly today?"

"That's possible. After all, there aren't many expectations for the 'emerging industrial chain' sector right now, and everyone thinks that this sector will likely drag down the index's performance."

"I don't think so. How big is the 'emerging industrial chain' sector?"

"The key is not the size, but the sentiment. If the 'emerging industrial chain' sector doesn't perform well, market sentiment will not be good. And if the overall market sentiment is bad, then naturally the funds in the market will not be very enthusiastic about going long, and it will be difficult for the market to rise."

"In terms of sentiment, shouldn't we look at the 'major infrastructure' sector?" "If the 'emerging industrial chain' sector opens sharply lower, continuing to suppress the large amount of buying funds that took over yesterday, I think it will still have some impact on the market, and it will indeed affect many short-term active funds that are bullish on the 'major infrastructure' sector, thereby affecting the overall market trend."

"Is it a foregone conclusion that the 'Film and Television Media,' 'Internet Software,' and 'Internet Applications' sectors will open sharply lower?"

"It still depends on how the 'Chinese Online' check goes."

"Yes, although it's said that 'outdated leading stocks are no better than dogs,' in terms of current market attention, 'Huawen Online' still receives a lot of attention. Moreover, according to yesterday's trading data, there are still big players in short-term investing. So, I think 'Huawen Online' does have a real influence on market trends. If this stock opens at the daily limit down today, the funds inside won't be able to escape, and the short-term market environment will inevitably plummet to rock bottom the moment the market opens. And if large orders lock the daily limit down and no one tries to buy it back up, then there's no point in doing any short-term trading today."

"It's not that exaggerated, is it?"

"That's how exaggerated it is. After all, it's a core leading stock in the market in the early stages, and its influence on short-term market sentiment is quite significant."

"Hasn't the 'emerging industrial chain' sector been completely abandoned by a large amount of capital?"

"Stocks like 'Huawen Online,' 'Huawen Media,' and 'Yue Media,' which had previously seen excessive short-term gains in the 'emerging industry chain,' have been temporarily abandoned by a large amount of short-term speculative capital in the market. However, the main theme of the 'emerging industry chain' has not been completely abandoned by the market. At least the two sub-sectors, 'new energy industry chain' and 'smartphone industry chain,' did not follow the sharp drop at the end of yesterday's trading session. Furthermore, in the overseas market last night, technology stocks were the main drivers of the rise. I think the 'emerging industry chain' sector may still have a chance to reverse its trend today."

"Still clinging to illusions? That can't be right, can it?"

"For very short-term trading, you should cut your losses decisively. As for the 'emerging industrial chain' line, I'm not optimistic about it."

"With the market's main bullish sentiment shifting to the 'major infrastructure' sector, a once-dominant stock that nearly hit its daily limit down yesterday, with massive trading volume and trapped countless short-term speculative funds, has absolutely no chance of turning things around. In this market, not every stock is like 'Oriental Yuhong,' nor is every speculative trading account like Mr. Su's 'Revival Road,' capable of turning the tide and forcing a trend."

"That makes sense. Based on my past experience, if you can't bring yourself to cut your losses on stocks that have been heavily speculated on in the short term, you'll only get trapped deeper and deeper."

"The stock 'Huawen Online' has long been outmaneuvered by 'Huaxin Cement'. To harbor any illusions about a once-dominant stock that has lost its ecological position and whose bullish sentiment and market attention are continuously declining is simply unwise. Look at the trading strategies of other top-tier speculative funds in the market; basically, after making a wrong judgment, no matter how much they lose, they are able to grit their teeth and cut their losses. As the saying goes, you have to give up something to gain something. Rather than holding onto 'Huawen Online,' a once-dominant stock, and waiting to continue losing money, it's better to decisively shift to new market hotspots and new stock targets. After all, waiting for a reversal opportunity like 'Huawen Online' has less than a 10% probability; it's better to continuously chase new core leading stocks. As long as you correct your mistakes in time and keep pace with the market, the previous losses can easily be recovered."

"But how can you be so sure that 'Huaxin Cement,' after opening so high today, and even with a high probability of opening at the daily limit, will continue to rise and still have enough profit margin?"

"Isn't that obvious?"

"Indeed, decisive stop-loss is a must for short-term trading. Anyway, I will definitely stop-loss on 'Huawen Online' as soon as the market opens. I just hope that it won't open at the limit down with low volume, giving me a chance to exit. At the same time, I hope that 'Huaxin Cement,' the newly emerging market leader, won't open too high, giving me a chance to adjust my portfolio."

"Huawen Online" opened at the daily limit down with low trading volume? That can't be true, right?

I don't think it's that bad either.

"That depends on the overall market sentiment at the opening, especially everyone's expectations during the pre-market auction. I think it's still possible for it to open at the daily limit down."

"The two stocks most likely to open at the daily limit down are Guangdong Media and Huawen Media."

"In any case, the sectors of 'film and television media,' 'internet software,' and 'internet applications' are absolutely not going to see much growth today."

"What about the check for 'Huaxin Cement'? How do you expect it to be issued?"

"Without a doubt, it definitely opened high."

"A gap up is a given. Even a fool would know that with such strong market sentiment and such a sudden surge in attention, this stock is bound to open higher. It's just that with such a sudden event, the exact gap up is still uncertain."

"For Huaxin Cement to open at least 5% higher, it should meet expectations, right?"

"Let alone a 5% gap up, a gap up of less than 7% is below expectations and a sign that the market trend is difficult to sustain. However, I think that 'Huaxin Cement' performed so strongly yesterday and has such high pre-market activity today, it is unlikely that the gap up will be less than 7%. I think it is very likely that it will open at the limit up. As for whether it will open at the limit up during the day, or whether the limit up trend in the opening auction will be accompanied by high volume, it is still uncertain."

"If Huaxin Cement opens at its daily limit, it should drive up a large number of stocks, especially the 'major infrastructure' sector, which will continue to be the subject of speculation."

What do you all think of the check from 'Oriental Yuhong'?

"How else can we interpret this stock? It's highly likely that its performance will be stronger than other ordinary stocks in the 'major infrastructure' theme, but weaker than the newly emerging leading stocks like 'Huaxin Cement,' 'Tianshan Cement,' and 'Beijiang Jiaojian.' Of course, we also need to observe its opening auction performance, or whether the trading volume increases during the day."

"So, do you all think it's better to increase the issuance of this check or not?"

"It's definitely better if the trading volume isn't high. If the volume is high... then Mr. Su's 'Fuxing Road' will most likely exit the market. In my opinion, only if Mr. Su's 'Fuxing Road' continues to hold his position can the stock maintain its current trend and continue to expand upwards. Once Mr. Su exits the 'Fuxing Road' and takes profits, the stock will most likely peak very quickly. In any case, I think the cost-effectiveness of betting on this stock is not as good as betting on 'Huaxin Cement', 'Tianshan Cement', and 'Beijiang Jiaojian'."

“Agreed. I always felt that the stock price of ‘Oriental Yuhong’ was starting to stagnate.”

"It's been rising but not moving much, but it's also not falling much either. It feels like it's just stuck there, and you can't push it down or push it up."

This has sparked heated discussions among countless retail investors on major online stock investment platforms.

Soon, amidst everyone's anticipation, 9:15 AM arrived, and the two stock exchanges ushered in the initial call auction.

As the stagnant stock market screens began to move again, countless investors' hearts pounded faster, and they grew increasingly tense. (End of Chapter)