The middle-aged man’s pupils suddenly constricted, shocked by Han Lie’s boldness.
Whether he was right or wrong couldn’t be determined in a short ti, but such courage to make a judgnt was truly astonishing.
He seed to want to ask more questions, but the custors behind him wouldn’t have it.
"Teacher Han, could you please explain in detail the cycles in the stock market?"
"Yeah, yeah, focus on the key points!"
Heh, for most people, the allure of money right in front of them is more irresistible. The future? What do I care?
But their enthusiasm was a good thing.
At least it proved that Han Lie had already gained their trust, and most were willing to listen to him continue.
For a lecture, this was a perfect beginning.
"Alright," Han Lie smiled and began to talk about the cycles in the stock market.
"Market cycles are much simpler than economic cycles—they can be sumd up in one sentence: When it can’t fall anymore, it must rise; when it can’t rise anymore, it must fall.
"Judging minor cycles is a very difficult task. Even professionals can’t always be correct, and I, too, cannot always be error-free.
"Today, when I urged everyone to leverage up and push forward, it’s not because I’ve determined 2,000 as the absolute iron bottom. Understand?
"Will the index fall below 2,000 points? It might dip below. Will it fall below 1,900 points? Probably not. See? It’s all very vague and uncertain.
"The only thing I can be sure of is that below 2,000 points is the starting point of a major cycle, a heaven-sent opportunity for value investing. Viewed over the long term, it’s incredibly safe. So, this short-term uncertainty contains long-term certainty. It marks the end of a downward cycle and the beginning of an upward one.
"Why does this happen?
"Because in and outside the market, there are fundantally five types of people.
"One is the straightforward industrialist, another is the clever financier, another is the shrewd speculator, another type are the ’leeks,’ retail investors who are tossed about by market fluctuations, and the last one is the greedy, reckless, and mindless fool.
"Industrialists are the first to sense changes in their industry, like so of you business people here. You operate your businesses normally. However, once the market price of your own small shop deviates too far from its true value, or you sense an industry recovery is imminent, you will enter the market at a low point. Opening more branches, buying back equity, expanding the scale of operations... Easy to understand, right?
"The smart money follows closely—once industrial capital enters, financial capital quickly follows suit.
"Speculators aren’t as quick to react as the previous two. They often wait until stocks have risen for a while and seem more certain before they start buying into the rise. That’s what’s known as a right-side trade.
"The ’leeks’ are always churning in the market; they represent the underlying volu.
"Fools are not ordinarily prevalent. They generally appear en masse during a bull market when stocks are soaring. That’s when they hear about soone striking it rich, act impulsively to join in, and end up holding the bag. They keep holding their stocks, waiting and waiting, stubbornly holding on until the very end.
"By the end of a bear market, when individual stocks have been declining for a long ti and finally start a minor rebound, their hope is reignited. The stock price consolidates for a while. The rebound isn’t very high, so they can’t bear to sell. The decline isn’t very deep, so they don’t have the guts to buy more. What a tornt!
"Suddenly, there’s another swift downward plunge, and they can’t take it anymore. ’I’m done with this ga, alright?’ In a mont of frustration, they cut their losses!
"After one or two such occasions, all the fools have sold off, and no more floating chips can be found in the market. Those who are still holding on either have completely stopped paying attention to the market or are convinced that the market has bottod out. And finally, the stock price can’t fall anymore.
"The trading volu shrinks to a certain level. You can’t buy many stocks even with money; tens of millions can push a stock to its daily limit up. That’s the bottom of the cycle. Simple, isn’t it?
"Next week will bring the swift decline that will spook the fools. The market will definitely move according to my prediction: an irrational crash, collective panic, a mass release of floating chips, and then the beginning of a minor rally. The rally will reach about 2,200 points, then fall back down again, continuing to scare the fools. The index will touch the 2,000-point mark for the second ti, then consolidate laterally and slowly grind.
"Why consolidate? Because those who could sell have sold, it really can’t fall further. And the stock market lacks a clear reason to rise—external capital doesn’t have the impetus to enter on a large scale.
"This entire process will likely last until the middle of next year. It will continue until 4G becos widespread, the mobile internet industry sees explosive profit growth, and this, in turn, stimulates a strong macroeconomic recovery.
"By this ti, industrial capital will have already completed building positions in multiple sectors. Keen-nosed financial capital will start accelerating its pace of entry. Speculators, having hyped up 4G-related concepts enough, will then decide to turn their attention to quality blue-chip stocks. All it takes is one spark to ignite a massive fire. What could that spark be? It could be a key favorable policy or a mid-year forecast from the National Bureau of Statistics.
"In short, everything is in place. The bull market is like an arrow on a taut bowstring—no one can stop it.
"You asked to talk about cycles, but honestly, there’s not much to say. Let give you a piece of direct advice instead.
"Don’t rush next week. Wait and see if my prediction is accurate. If it is, continue to wait. When the stock market falls to 2,000 points for the second ti, enter the market with your eyes closed.
"And then, the most important part!
"Pay attention to a few people in your social circles whom you think aren’t very smart, those who usually don’t play with stocks, and observe them closely. When they start to actively discuss the stock market, and even the most cautious person among them joins in the frenzy, sell off all your holdings. Goodbye, ga over."
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