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

Chapter 91 Before the Storm
After Peng Ge finished his lecture on "Financial Mathematics," Deans Shu Tianyi and Zhao Yanfeng took to the stage one after another to share their unique insights on investment.

As evening approached, the first day of the finance deans' "discussion" came to an end, and the students who had received the essential teachings all felt that they had benefited greatly.

Zhang Yang became the first student to share his investment insights and propose the concept of "market cognition," which made him an instant sensation. His name is frequently seen in QQ groups of students from Tsinghua, Peking, Fudan, Shanghai Jiao Tong, Southwestern University of Finance and Economics, and Central University of Finance and Economics.

As night fell, Bao Xingwei looked through Zhang Yang's personal file and had to admit that this student had indeed exceeded his expectations.

If his skill lies in strategic matching, and Peng Ge's in mathematical modeling, then Zhang Yang's skill lies in high-dimensional cognition.

What is higher-dimensional cognition?

Simply put, it means that a person has a higher level of cognitive ability and uses this difference in ability to earn wealth.

Like the newly emerging "two Mas" (Jack Ma and Pony Ma), who bet on the internet in the 90s, how many people could have seen so far ahead back then?
It's hard to even see results in two years, let alone ten.

However, a longer-term perspective is not always better, as exemplified by Wang Fu, the CEO of BYD.

In 2004, he launched the all-electric taxi EF3, the electric concept car ET, and the hybrid sedan Hybrid-S, a few years earlier than Musk's Roadster electric sports car. However, the final result was that the supporting facilities were not perfect, and BYD abandoned the electric car project.

Perhaps Wang Fu could not have imagined that electric vehicles would, ten years later, force traditional gasoline-powered car manufacturers into a difficult situation.

People who achieve great things in their careers have a level of understanding that surpasses the imagination of ordinary people.

……

And on the other side.

Teachers' apartments.

Academician Peng Ge, a financial expert, sat on the living room sofa, a lit cigarette between his fingers, his black hair swirling and drifting in the air.

"I don't think there's any need to hold a market intuition competition. First, it's too random, and second, Zhang Yang is indeed quite skilled. Plus He Jing and the other students from Shanghai University of Finance and Economics, our class is definitely not as good as those from Shanghai University of Finance and Economics."

At this point, he took a deep drag on his cigarette and then exhaled heavily.

"That's what I meant."

Xiong Xinghuai was the first to agree.

They originally planned to hold a time-sharing market intuition competition to test whether students from Shanghai University of Finance and Economics had the ability to judge ultra-short-term fluctuations.

However, since Zhang Yang cracked Peng Ge's financial game in just one or two minutes, further testing was completely unnecessary.

As for the "intuition" in intraday trading, it's a very mysterious concept. To put it nicely, it's called "market intuition," but to put it bluntly, it's making trades based on a sixth sense.

Of course.

Existence is reasonable.

Some newbies who are new to the market buy and sell based on intuition, and strangely enough, most of them are able to make a profit.

However, as the number of transactions increases, the losses will gradually be recovered.

Experienced stock market investors and the market refer to this period as the "newbie bonus period".

However, not everyone gets a beginner's bonus period; there are countless stock market investors who lose money as soon as they enter the market.

Stock investors who don't have a "newbie bonus period" can be considered lucky, because if they lose money from the start, they're more likely to stay away. On the other hand, many retail investors who get trapped are those who benefited from the "newbie bonus period," thought they were genius traders, then gave back their profits, added to their positions, and ended up deeply trapped again.

The other deans of finance didn't say anything more, tacitly acknowledging that Zhang Yang was capable of completing that market research report on his own.

Although they are older, their thinking is not rigid.

As long as it's confirmed that it wasn't Bao Xingwei leaking the questions, they will accept the professional rating from Shanghai University of Finance and Economics Investment Studies, whether it's A or A+.

……

The following day was Sunday.

The second day's "Discussion" attracted even more students' attention.

The 1-101 lecture hall was packed with people, surrounded by layers of people eager to witness the "discussion".

If the first day was a performance by the deans, then the second day was a chance for the students to shine. Students from Tsinghua, Peking, Fudan, Shanghai Jiao Tong, Southwestern University of Finance and Economics, and Central University of Finance and Economics, who were not particularly outstanding before, all shared their insights when they stood on the stage to give lectures.

For example, Li Xueyan from Peking University learned from the legendary manager of the "Lancer Voyager Fund," McRae, and summarized a theory on heavily investing in individual stocks.

Many people may not know McRae, but he is a star fund manager on Wall Street who prefers concentrated investment.

He will allocate 75% of his funds to 15 stocks.

His stock selection method is…

1. The stock price has fallen by 50% more than the market average, indicating an oversold condition.

2. The company has a healthy cash flow and is able to cope with debt repayment pressure.

3. The price-to-sales ratio and price-to-book ratio are relatively low. Since the company may be losing money, the price-to-earnings ratio is not considered.

In addition to these three basic data points, he also looks at the company's shareholding increase plan and repurchase plan. If they exist, it means that the downside is limited, providing a strong safety margin.

Li Xueyan's discussion on investment also drew frequent nods from Xiong Xinghuai.

Students may not be as experienced as professors and academicians at this stage, but youth means unlimited possibilities.

In the afternoon.

He Jing also stepped onto the podium.

She shared a risk hedging strategy that utilizes the correlation between futures, options, and the stock market to reduce the risk of a stock market downturn.

However, since China's futures market had not yet launched stock index futures in 2009, her examples were mostly from overseas.

However, it cannot be denied that risk hedging strategies are one of the few ways to achieve stable arbitrage in the stock market.

Bao Xingwei was the one who focused on strategy, and he greatly appreciated He Jing's explanation.

Compared to other arbitrage models, risk hedging is his favorite and most frequently used investment strategy.

The larger the fund size, the more important it is to pursue stability. He gradually understood why He Jing insisted on becoming a fund manager, or rather, the direction she had always strived for was stable profitability.

"Once the A-share stock index futures are approved, He Jing's future achievements may not be much lower than Zhang Yang's, and may even surpass him," Bao Xingwei murmured to himself.

"This is my understanding of risk hedging, an arbitrage model for earning stable profits. Thank you for listening."

He Jing bowed deeply to express her gratitude to the teachers and students.

"Clap clap-"

Applause echoed through the classroom once again.

"It's interesting that a finance dean who specializes in strategy teaches students who play with strategy."

"This is the inheritance of the teacher's way."

"If He Jing joins the national operations team, she should be a master at making profits."

The dean and professors of finance sitting in the front row looked at He Jing on the stage, nodding frequently, their eyes sparkling with admiration.

As He Jing stepped down from the podium, Zhang Yang stood up from his seat.

He had no intention of going on stage, but he couldn't resist the persistent pleading of his counselor, Zhong Bohan. After all, the counselor had said, "It's up to you to protect the honor of Shanghai University of Finance and Economics." As a member of Shanghai University of Finance and Economics, Zhang Yang had no choice but to agree.

As Zhang Yang stood up, all eyes instantly locked onto his face. The younger students who had witnessed Zhang Yang's terrifying calculation abilities the day before immediately erupted in excitement and exclaimed in astonishment.

"Record it, record it quickly!" "Zhang Yang, the academic genius, is still debating the Dao. I feel he might be the next Chan Zhongshuochan. This man is too amazing!"

"There can only be one Zen master, and the same goes for Zhang Yang. I believe that Zhang Yang's achievements will far surpass those of the Zen master!"

"Shh, stop making noise!"

When Zhang Yang stepped onto the stage, he saw pairs of expectant eyes. If someone had trypophobia or wasn't mentally strong enough, their legs might have gone weak at that moment.

However, he can still keep his composure in such minor situations.

Zhang Yang picked up the chalk and wrote down the topic he was going to talk about on the blackboard: "Market Awareness".

He then put the chalk back into the storage box, looked ahead, and said, "As written on the blackboard, what I'm going to talk about is still market perception."

"I believe that before making an investment, you need to improve your cognitive level and understand your own profit needs."

What is the profit requirement?

"To put it simply, it's about how much money you hope to make through investing."

"Assuming my profit requirement is to outpace inflation, then I could consider allocating 40% to stocks, 30% to bonds, 20% to gold, and 10% to money market funds."

"Stocks offer the potential for higher returns, bonds provide stable returns, gold can hedge against risks, and money market funds ensure liquidity."

At this point, Zhang Yang paused for a moment, then changed the subject, saying, "If your profit requirement is to double, or even dozens or hundreds of times, then the above investment allocation is obviously not appropriate."

"When making investments, you must first clarify your profit needs, then find a suitable investment strategy, and then you need to understand various economic indicators, such as the CPI (Consumer Price Index), PPI (Producer Price Index), and the manufacturing PMI (Production Price Index).

"We can also judge from a more macro level, such as the Kondratiev wave cycle that Dean Xiong Xinghuai mentioned yesterday, whether the economies we invest in are in a stage of prosperity, recession, depression or growth."

“During a boom period, trading strategies can be more aggressive.”

"If we are in a recession, the best strategy is to stay out of the market or invest in sectors or futures that may rise during a downturn."

……

When Zhang Yang shared his investment experience, Xiong Xinghuai in the audience nodded repeatedly. Finally, he stopped pretending and looked at Bao Xingwei, saying, "Brother Xingwei, I think Zhang Yang can continue his studies. Why don't you consider letting him study for a master's degree at Peking University?"

"Huaqing is also quite short of financial talent."

Zhao Yanfeng quickly spoke up.

Academician Peng Ge remained silent, glancing at Bao Xingwei. If he were to suggest releasing the person, he would certainly try to persuade him.

"Forget about it. If this kid wants to be a speculator, do you think I don't want him to go to graduate school?"

"???"

"hot money?"

"Go become a small-time investor?"

As soon as Bao Xingwei finished speaking, several deans of finance were moved, their eyes flashing with disbelief.

They originally thought Zhang Yang would pursue further studies at Shanghai University of Finance and Economics, and then go to a national financial institution or at least work for a financial institution. But they never expected that Zhang Yang would become a retail investor with an unstable income.

"You didn't lie to us, did you?"

Shu Tianyi, the dean of finance at Southwestern University of Finance and Economics, was clearly somewhat skeptical.

Bao Xingwei glanced at him and sighed, "I'm already so old. In a few years, I might just pass away. Why would I lie to you old folks?"

"..."

silence.

The deans fell silent.

After remaining silent for several seconds, Xiong Xinghuai forced out a sentence through gritted teeth: "Perhaps this is the difference between geniuses and ordinary people."

Zhang Yang's ambitions were completely baffling to the deans of finance, but that might be what makes him a genius, as his choices are often unconventional.

ten minutes later.

Zhang Yang bowed in thanks and said in a deep voice, "This is the market insight I wanted to share, and I hope it will be helpful to everyone."

"Clap clap-"

"Easy to understand, Zhang Yang is awesome!"

"No wonder Shanghai University of Finance and Economics crushed other finance and economics universities in this year's 'Huaxin Simulated Trading Competition'; it turns out they have some real experts."

"I worship the great Zhang Yang!"

Amidst thunderous applause, he returned to his seat.

After Zhang Yang stepped down from the stage, no other students came up for a long time. Everyone looked at each other, glancing left and right.

At this moment, Zhang Yang was putting a lot of pressure on them, and no one dared to guarantee that they could speak better than him.

I'm saying I'm making a fool of myself, but I can't actually make a fool of myself!
Seeing that no students were going up to the stage for a long time, the deans of finance only needed to give a look, and someone would obediently go up and share their thoughts, even if they were reluctant.

Perhaps the previous speakers were too good, or perhaps the theories they presented were too strong, because the later students stumbled a bit.

After two hours of grueling study, the student debate between multiple universities came to a close.

……

As night fell, the stars and moon hung high in the sky.

After having dinner in the cafeteria, Zhang Yang quickly packed a few changes of clothes, said a brief goodbye to his roommates, and took a taxi from Shanghai University of Finance and Economics to Hangzhou.

The discussions over the past two days have greatly benefited Zhang Yang, and his phone's address book now includes the contact information of several finance deans—connections that are priceless.

Xiong Xinghuai even said privately that as long as Zhang Yang applied to Peking University for a master's degree, he could choose any supervisor, get any scholarship, and even obtain a Beijing residency permit.

But these things are of little significance to Zhang Yang, who now has a very clear life plan.

It's worth mentioning that the capital markets have been completely dominated by news about the H1N1 flu over the past two days.

On May 10, near noon, the Japanese health authorities issued a statement saying that on May 8, three teachers and students who had returned from Canada tested positive for the H1N1 virus at Narita Airport, and hundreds of close contacts on the same flight had already entered Japan.

Prior to this, on May 1st and May 2nd, Hong Kong Island and South Korea respectively intercepted travelers infected with H1N1 influenza, indicating that this influenza virus, which originated in the United States and Mexico, is rapidly spreading globally.

In addition to the globally significant news of the H1N1 flu, another major piece of news has emerged from the domestic financial sector.

On Saturday, May 9, the Ministry of Commerce and Hong Kong signed Supplementary Agreement VI. This is the sixth supplementary agreement under the CEPA framework since 2003, covering 29 opening-up measures in the service trade sector, including 18 areas such as law, construction, medical care, and finance, relaxing market access conditions.

In the financial sector, the restriction that "Hong Kong Island banks must have established a representative office in the proposed location for more than two years" will be removed when they set up branches in eastern Guangdong Province, thus lowering the threshold for Hong Kong Island financial institutions to enter the mainland market.

In addition, the European Central Bank announced that it would maintain its benchmark interest rate at 2% and hinted that it might further stimulate a rapid economic recovery through quantitative easing.

In addition, international commodity prices continued to rebound, with New York crude oil futures prices breaking through $58 per barrel, an increase of more than 60% since the beginning of the year, which sent a positive signal to the energy sector.

Judging from international positive factors and relevant data, although the H1N1 flu is spreading rapidly, the global economy has not been affected and is still recovering rapidly.

Xu Xiang, Ma Xinqi, Sun Guodong, and other well-known speculative investors, who are far away in Ningbo, Hangzhou, are full of confidence in their trading tomorrow as they see the continuous positive news from the capital market.

Of course, in addition to the positive news, there was another key factor: on Saturday, May 9, Liao Guopei called Ma Xinqi and agreed to sell all of his shares in Jianfeng Group at the previous trading day's limit-up price, which was 5.86 yuan.

Since the Peak Group was in a "legitimate" position, and to prevent anyone from causing further trouble, Xu Xiang and Sun Guodong unanimously agreed to take the chips from Liao Guopei's hands.

(End of this chapter)