Starting with a fully invested A-share portfolio to become a capital...

Chapter 34 New Speculative Capital Involvement?

Huaguo Chancheng.

Chancheng is the third largest city in eastern Guangdong, adjacent to the provincial capital Guangzhou. As a major birthplace of Southern martial arts, it still retains a large number of martial arts schools and is known as the "City of Martial Arts".

Like Wing Chun, and the well-known grandmaster Ip Man, both originated from Chancheng.

At this moment, in a two-story duplex villa in the main urban area of ​​Chancheng, Liao Guopei, the "Chancheng Shadowless Kick" speculator, was struggling internally. He wanted to push the price up to the daily limit again, but he didn't have enough funds to support him to do so.

The departure of "Jumping Brother" Chen Sanrong was like the first domino falling, prompting other speculative funds to withdraw and cash out. At this time, the funds available for buying Changan Automobile were very limited.

Seeing the "bull trap" market during the pre-market auction, Liao Guopei had no choice but to follow suit.

Because in the three minutes from 9:22 to 9:25, at least tens of thousands of retail investors came in with funds to chase the price up, absorbing a lot of selling pressure.

With the market about to open, Liao Guopei gave up. Since other speculative funds were withdrawing, he had no choice but to follow suit.

When the market opened at 9:30, driven by expectations surrounding the "First Quarter Meeting of the People's Bank of China's Monetary Policy," the banking, insurance, and infrastructure sectors collectively rallied, pushing the overall market up by 1.2% and boosting other stocks as well.

When the overall market is stable, it is the best time to slowly sell off your holdings.

Speculative investors such as Chen Sanrong and Liao Guopei have been gradually liquidating their positions. The sell orders for Changan Automobile have dropped from 130 million lots a few days ago to 40 lots, and the selling pressure has increased visibly.

After shipping nearly half of the goods and making a net profit of 210 million yuan, Liao Guopei noticed something was wrong. The order book for Changan Automobile was still 40 lots, and the number of orders was still increasing.

"Is there some potential benefit?"

Liao Guopei murmured in thought.

Whether it's the A-share market or the US stock market, there will always be a group of people who know inside information in advance and make their moves accordingly.

The fact that even speculative funds couldn't shake out the "ironclad bottom" made Liao Guopei hesitate.

Not only Liao Guopei, but also Chen Sanrong, who was at the China Merchants Securities branch on Hongling Middle Road in Shenzhen, was hesitant at this moment.

The 40 lots of unmoved buy orders indicate that more funds have entered the market.

"Clearance sale?"

"Should we wait and see?"

At this point, the seven speculative investors who participated in "igniting" the market had already reduced their holdings by half, so even if the market subsequently experienced consecutive limit-down days, they would most likely be able to break even.

After struggling internally for several seconds, Chen Sanrong decided to liquidate his entire inventory.

After selling all his chips, he made a profit of 147.4 million yuan. The period of dormancy was 23 days, and he was very satisfied with this profit.

Liao Guopei, along with five other speculative investors, chose to retain half of their holdings and wait to see how Changan Automobile would perform that day.

……

Shanghai University of Finance and Economics.

library.

After clearing out his holdings in Changan Automobile, Zhang Yang did not chase after bank stocks at high prices, but instead put the funds into one-day reverse repurchase agreements of treasury bonds.

What is a reverse repurchase agreement for treasury bonds?
Simply put, you lend money to an institution, which will use government bonds of equivalent value as collateral. When the loan matures, the institution will not only repay your principal but also pay you interest, which is equivalent to a bank's current account.

Then the institution will take your money and lend it to clients in the market who have financing needs; this is also known as leveraged financing.

It's worth noting that on Thursday, you can earn three days' worth of interest with just one reverse repurchase agreement. This is because reverse repurchase agreements operate on a "T+1" settlement system, meaning the funds are available the day after the transaction but cannot be withdrawn.

To put it simply, if you buy a one-day reverse repurchase agreement for treasury bonds on Thursday, the funds will return to your securities account on Friday. You can use them to buy stocks in the market, but you cannot withdraw the cash back to your bank account.

The funds were tied up starting Friday, spanning the two non-trading days of Saturday and Sunday, and could only be withdrawn to the bank account on Monday. The total number of days the funds were tied up was three days, so interest was calculated based on three days.

Experienced stock market investors often choose to buy reverse repurchase agreements (repo) while waiting for market opportunities. However, many novice investors overlook the reverse repo function, thus losing hundreds, thousands, or even tens of thousands of yuan in interest income annually.

Having obtained "insider information" about the routine meeting, and not hearing any indication of a desire for a new round of monetary stimulus, Zhang Yang anticipated a sharp drop at the opening tomorrow. Therefore, instead of chasing the price higher, he opted for reverse repurchase agreements.

In the A-share market, there is never a shortage of opportunities. The fundamental reason why retail investors lose money is that they rush in and rush out. To put it bluntly, they lack patience.

After operating his own live trading account, Zhang Yang began operating Lai Weijie's demo trading account. Without even looking at it, he liquidated his entire position in Changan Automobile without the slightest hesitation.

If Lai Weijie hadn't asked him to control the score, Zhang Yang probably wouldn't have cleared out his entire portfolio.

Because Changan Automobile still has 40 lots of sell orders, and the trend line of gradually increasing volume indicates that someone is slowly selling off their shares, which is most likely the work of speculative capital.

Despite a large outflow of speculative capital, the stock price remained firmly locked at its daily limit, indicating a significant divergence among the funds manipulating the stock. Barring unforeseen events, the price is likely to continue rising.

Lai Weijie's account had a total investment of 104.3 million yuan in Changan Automobile. After four consecutive limit-up days, the total return was 46.32%, and the total profit was 48.32 yuan. At this point, the account balance reached 152.62 million yuan.

"Tsk!"

"It's gone up so much."

After thinking it over, Zhang Yang decisively divided his funds into four parts and invested all his money in chasing the high prices of the four major banks.

Because Lai Weijie wants to "control the points," the current rate of return is significantly higher than agreed, so he can only try to reduce it slightly.

Then, Zhang Yang opened Xu Zhiruo's demo account and praised her with a faint smile: "Not bad, you know to buy ETFs in the automotive sector."

When He Jing asked about potential sectors, he mentioned the automotive sector.

The stocks in the automotive sector were generally oversold during the economic crisis of 2007-2008.

Although there has been a five-month recovery, the market is still driven by stimulus policies such as "cars to the countryside" and "replacement subsidies." In addition, the household car ownership rate in 2009 was only 14%-18%, indicating huge market potential. Car concept stocks can be said to be the most stable sector in the next ten years.

Another commendable point about Xu Zhiruo is that she bought an auto ETF fund, which makes her investment even more secure.

Many stock investors may not know what exchange-traded funds (ETFs) are.

To put it simply, it's a basket of stocks from related sectors.

For example, an automotive ETF might have a portfolio allocation of 12% for Changan Automobile, 12% for BYD, 10% for Shanghai Automotive, 5% for Great Wall Motors, and so on.

If you buy 100 million, it's equivalent to holding 12 shares of Changan Automobile, 12 shares of BYD, 10 shares of Hudu Automobile, and several other automobile stocks.

The advantage of buying exchange-traded ETFs is that you don't need to understand the company's operations or annual reports; you only need to grasp the general trend of the sector to make a profit.

For example, when the "4 trillion yuan stimulus plan" was first implemented, you thought that infrastructure and real estate were about to take off, but you didn't know which stocks corresponded to infrastructure and real estate. At this time, you could buy infrastructure and real estate concept ETFs on the market.

Of course, ETFs aren't all good either, because they're a basket of stocks, so their gains are definitely not as good as those of the leading stocks.

Just like Changan Automobile, which hit the daily limit up for four consecutive days, the ETF fund holding it only saw a 10%-15% increase over four days, dragged down by other auto stocks.

"Da da--"

Zhang Yang quickly clicked the mouse and sold all of Xu Zhiruo's stocks and funds, freeing up a total of 123.6 million yuan, which corresponds to a return of 23.6%. It will still be a bit difficult for him to enter the top ten in his major.

"I'm holding cash and waiting for the banks to pull back tomorrow. If there's no sharp drop, I'll look for other opportunities."

Zhang Yang murmured to himself.

He then opened Baidu Tieba, logged into his Joker account, and continued to share his A-share trading strategies for the day in the stock forum.

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Also, a special thank you to Fa Ju for the monthly ticket. He's the top author on the new book chart, and his novel, a masterpiece of urban life in the legal genre, was just released today. Those who are interested can jump directly to read it!
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(End of this chapter)