Rebirth of the Capital Legend

Many people initially believed that sectors leaning towards the 'technology' theme, such as film and television media, internet software, and internet applications, which had consistently underperformed the broader market this year and led the decline, were now in a phase where valuations were relatively low and further downside was limited after a prolonged period of decline.

However, LeEco's announcement of a massive reduction in shareholding instantly shattered everyone's expectations.

"Damn, even after such a huge drop, they're still massively reducing their holdings. This means that the major shareholders still think the current stock price is severely overvalued!"

Amidst the heated market discussions, someone remarked...

"It's definitely heavily overvalued. If you ask me, LeTV's stock, let alone its market value of 500 billion, even if it were to be halved again, I don't think it would be worth 250 billion. Similarly, it's not just LeTV; the vast majority of stocks in the entire film and television media sector, as well as the internet software sector, currently have no investment value whatsoever. Their valuations are still heavily overvalued, even after their stock prices have fallen by 60% from last year's bull market peak."

"Sigh, LeEco's large-scale share reduction plan seems like it will have a significant impact on the entire market. I estimate that tomorrow's market trend will likely be quite ugly again."

"LeEco's stock shouldn't have much impact on the overall market sentiment, right?"

"I think the impact will be limited to sectors like film and television media, internet software, and internet applications. The main themes of infrastructure and consumer goods, as well as heavyweight sectors like power and banking, are still quite stable. To be honest, the market has long since stopped speculating on small-cap and micro-cap stocks, and it's not particularly interested in internet stocks or the entire technology sector. Most institutional investors are reducing their holdings in technology stocks, so there's really no need to stubbornly hold onto these weak stocks. Cut your losses early and get out of trouble. Holding on will only lead to more and more losses."

"Yes, you must cut your losses decisively. I lost 30% on LeTV stock before, but I decisively cut my losses and bought Wuliangye stock, which was heavily invested in by Mr. Su's 'Huayi Capital'. Now I have made back all my losses."

"Wow, that's impressive. They were able to cut their losses decisively even with a loss of over 30%. That's amazing."

"Indeed, I'm stuck in a deep loss, already down 50%. At this rate, it's too difficult to cut my losses. And at this point... if I chase after the leading stocks in the infrastructure and consumer sectors, I'm afraid I'll buy at the peak and get hurt from both sides."

"If you're down 50%, it's really hard to cut your losses and leave the market."

"Actually, you can buy more shares and then wait for the film and television media, internet software, internet applications and other technology-related sectors to have a rebound after a sharp drop. Then, you can set a stop loss at the rebound high point. This should recover some of the losses and prevent you from losing too much."

"Isn't that oversimplifying things? Buying at this level doesn't necessarily guarantee a rebound after a sharp drop."

"That's true. Damn it, last time I thought that the stocks in the infrastructure sector had already risen quite a bit and should be adjusting for a while. And if the funds in the market were to switch between high and low, they would most likely speculate on the oversold technology sectors such as film and television media, internet software, and internet applications. So I decisively bought some stocks in this direction at a low price. But the result... good heavens, the infrastructure sector continued to rise, while the film and television media, internet software, and internet applications sectors continued to fall. There was no sign of the decline stopping at all, and there was no oversold rebound."

"Sigh, same here. I also wanted to buy at the bottom, but I ended up getting trapped."

"If it were going to rebound, it would have rebounded long ago. Looking at it now... the entire technology sector still hasn't bottomed out."

"It's still safest to focus on the main themes of major infrastructure and major consumption. The places with the strongest profit-making effect are often the easiest to make money in. On the contrary, no matter how low the price is or how cost-effective it seems, you should not participate in places where you lose money, unless they have developed a sustained profit-making effect."

"LeTV's stock is actually not too bad. Look at Baofeng Technology and Quanta Education, two super bull stocks in last year's bull market. Those are really bad. Their stock prices have fallen by almost 80% from their highs, and there seems to be no sign of them bottoming out."

"I've said it before: stocks that were heavily speculated on in the last bull market should not be touched for at least three to five years."

"That's right. Overall, the expectation is for a straight reversal. There are very few stocks that can actually achieve a V-shaped reversal, so there's no need to gamble on them."

"I don't understand. They've already fallen so much, and fallen so deeply, why are these stocks still falling so much?"

"Because its stock price itself cannot reflect the company's fundamentals, when the stock price is seriously overvalued, it will naturally keep falling."

"However, in sectors like film and television media, internet software, and internet applications, which are more technology-oriented, there are also many stocks whose valuations have already fallen to very low levels and whose fundamentals are not that bad, yet they are still continuing to decline. I think that in addition to the serious overvaluation of stock prices, the main reason is... the continuous loss effect, which causes a large amount of trapped funds to continuously cut their losses, leading to a stampede caused by repeated losses. This is why the stock prices of these companies continue to decline even after a significant drop."

"The chaotic shareholding structure and the massive amount of trapped shares are definitely huge factors restricting its stock price from rising."

"If you ask me, value investing and fundamental analysis are all fake. There should only be one way to make money in the market, and that is trend investing. Wherever the major institutional groups in the market are concentrated, we should rush in and buy up the stock prices there."

"Isn't so-called trend investing just a stupid exercise?"

"What's wrong with trading with a 'clamped' strategy? As long as you can make money and profit from the market, any trading method is correct."

"So now... is it still possible to continue chasing the popular stocks related to the major infrastructure construction theme?"

"I think it's still worth chasing. At least in the major infrastructure sector, it hasn't yet reached the stage of a major upward trend with a large and sustained increase in trading volume and a continuous surge in stock prices. Before the major upward trend arrives, I think the market trend in this sector should be quite safe for the time being. Continuing to buy should still be able to make some market profits."

"Judging from the trend of the infrastructure sector today, it seems like a pullback is coming, right?"

"How can you tell? I think it's still in the main upward trend."

"It depends on the strength of the funds following the trend in the market. Today, the strength of the main funds supporting the 'major infrastructure' theme at high levels has clearly decreased compared to the previous few days. It's just that these main funds flowing out of the major consumption and major infrastructure themes ultimately chose the steel, coal, and non-ferrous metals sectors, rather than the film and television media, internet software, and internet application sectors which are at relatively low market levels."

"For a core market theme like 'major infrastructure,' which involves so many concept sectors, industry sectors, and corresponding stocks, it's normal for some stocks to experience a temporary net outflow of funds from major investors. As long as the overall upward trend of the main theme continues, some stocks that have undergone a short-term adjustment will still be able to continue to rise as sentiment further develops."

"Relatively speaking, the steel, coal, and non-ferrous metals sectors were stronger in the market today, right?"

"That's for sure. Today, more than 15 stocks in the steel, non-ferrous metals, and coal sectors hit their daily limit. This level of activity is quite impressive compared to the current market sentiment."

"The across-the-board surge in the steel, coal, and non-ferrous metals sectors is also siphoning liquidity from weaker sectors like film and television media, internet software, and internet applications, right?"

"That's not entirely true; it still has an impact on the major infrastructure sector."

"Overall, the market performance today was actually not bad, and quite a few people should have made money."

"Making money today and losing money tomorrow is useless. You still need to buy stocks with a good long-term trend. Short-term trading in the current market is really too difficult for humans."

"The short-term market is extremely chaotic right now. It feels like things will only stabilize once a new market leader emerges." "What do you mean by a new market leader? Do you think the rally in Beijiang Jiaojian stock is over?"

"I felt it was over. The stock of Beijiang Jiaojian has already fulfilled its mission, right? And this stock has indeed seen a significant increase in this wave."

"Whether the market trend has ended or not depends not on the extent of the gains in a particular phase, but on the absorption of funds both inside and outside the market, as well as the subsequent expected development of the entire related main theme. Judging from the current situation, I think that although the slope of the continuous rise in the major infrastructure sector is gradually decreasing, the upward trend is clearly present. Moreover, although today the stock of Beijiang Jiaojian failed to continue to hit the daily limit, there are quite a few other similar concept stocks that hit the daily limit, which shows that the absorption of funds in this sector is still relatively strong."

"Although Beijiang Jiaojian didn't hit the daily limit today, the strength and weakness of the buying support during the trading session were quite obvious, right? This chart pattern clearly indicates that it can still rise further. Anyway, I followed the trend and bought this stock today. If it opens lower again tomorrow, I will continue to buy on the dip."

"This stock is unlikely to open lower tomorrow, right?"

"That depends on the overall trend of the major infrastructure construction project."

"I think the major infrastructure sector will perform well tomorrow. Today, LeEco had a huge negative announcement, so the performance of related sectors such as film and television media, internet software, and internet applications will definitely be under pressure due to this negative news and the performance of LeEco tomorrow. In other words, the main funds in these sectors will likely continue to flow out tomorrow. And where will these funds go? They will definitely go to the major infrastructure sector, which currently has the highest certainty in the market. Therefore, the performance of the major infrastructure sector tomorrow will definitely not be bad."

What about the steel, coal, and non-ferrous metals sectors? How will their performance continue tomorrow?

"I think it's hard to say whether these sectors will continue tomorrow. It depends on the level of discussion in the market and the trend of institutional funds. It seems that there are still not many funds that are optimistic about these sectors, and the discussion is not very heated."

"It will at least outperform the film and television media, internet software, and internet applications sectors, right?"

"That's for sure!"

"Is LeEco's stock likely to hit its daily limit down tomorrow?"

"I think it will definitely open at the daily limit down. What's uncertain right now is the extent of the impact on other stocks in the internet software, internet application, film and television media sectors."

"If LeTV opens at the daily limit down, I estimate that stocks like Quantong Education, Baofeng Technology, and Wanda Film & Television will also likely open sharply lower. Sigh... This sector is really in a bad way. After falling so much, we didn't get the oversold rebound we expected, and now we've been hit with another huge negative factor."

"I told you long ago, these stocks are absolutely untouchable."

"Sigh, I have to cut my losses on LeTV stock tomorrow no matter what. Mr. Jia is such a disappointment. His promise not to reduce his holdings is a complete joke now."

"I wonder if I can sell LeEco stock tomorrow?"

"It should still be okay, right? If it opens at the daily limit down, there will still be a lot of bargain hunters at this level, after all, the market enthusiasm for this stock is still quite good."

"I think it's difficult. With such a big negative factor, a limit-down is most likely inevitable."

"Oriental Yuhong is still the most stable stock. No matter whether the market goes up or down, this stock has its own rhythm and is not affected by the market at all."

"Stocks controlled by Mr. Su's 'Huayi Capital' are naturally different."

"There's nothing wrong with the stock trend of Oriental Yuhong. It's just that it has risen so much, and it's not good to chase the price at this high level."

"Don't look at the price, just buy it blindly, and lock it in after you buy it, otherwise... you definitely won't be able to bring yourself to do it."

"I've watched this stock rise for quite a while now, sigh... I should have just blindly bought it."

"A true market winner is one that won't trap you no matter what price you buy at. Clearly... Oriental Yuhong is still one of the best-performing stocks in the market right now."

Amidst ongoing and heated discussions among numerous investors both inside and outside the market…

The market is still moving forward.

At 9:30 p.m., the US stock market reopened for trading.

With significant divergence of opinions between bulls and bears in the domestic market and differing views on tomorrow's market trend, US stocks, almost unsurprisingly, continued their upward trend, opening higher and rising further to a new all-time high.

Stimulated by the performance of US stocks, and after two days of emotional build-up over the weekend.

When Monday, September 12th, arrived, the overall investment sentiment in the market improved slightly, and people's expectations for the market trend before the market opened were also somewhat more positive.

However, regarding the stock 'LeTV'.

It had already surged to the top of the list of hot stocks in both Shanghai and Shenzhen stock exchanges before the market opened, and its popularity in market discussions also ranked first in both markets.

Although market sentiment has generally improved somewhat, investors remain pessimistic about the performance of sectors such as film and television media, internet software, and internet applications, as well as related concept stocks.

It is precisely in this contradictory and highly divergent emotional expression that...

At 9:15 AM, the two stock exchanges began their initial call auction. As expected, LeEco was immediately locked at the daily limit down by large sell orders. Because LeEco opened at the daily limit down, a number of related concept stocks in the same sector, such as All-China Education, Baofeng Technology, Wanda Film & Television, Huawen Media, Huawen Online, Huace Film & Television, etc., all opened significantly lower in an instant.

Meanwhile, the indices for several major industry sectors, including film and television media, internet software, and internet applications, were also updated.

All of them opened more than 2% lower, leading the decline among all industry sectors in both Shanghai and Shenzhen stock exchanges. (End of Chapter)