Walking on the Blade's Edge

2007/8/31 16:04:19

The current situation has been explained very clearly and repeatedly. A verdict of fairly serious bubble has already been given — and this didn't come from this ID. As for who said it, naturally that can't be disclosed here. Against the backdrop of such a clear verdict, every move in the market is like a game played on the edge of a blade.

Index drooping while second- and third-tier stocks rise — this is the most viable path under current real conditions, and this script has obviously achieved sufficient consensus. This way, at least it can slow the pace of index gains while making the range of beneficiaries as broad as possible. Why? Because the current powerful bullish desire must be consumed. This desire stems from the collective karma of human greed, anger, delusion, doubt, and arrogance — so powerful that it must ultimately burn itself out in frenzy before there's any possibility of turning back. Of course, there's another more drastic approach — another 5/30-style shock. That blade has been hanging overhead and laid beneath our feet all along. But the collective karma of greed, anger, delusion, doubt, and arrogance is so powerful — whether we can avoid triggering that blade while still letting the collective karma run wild in its frenzy — that is the most thrilling chapter of the current script.

Today being the last trading day before the weekend, the afternoon clearly saw volatility from concerns about weekend news. But ultimately, the lows found support at the highs of recent days, which fully demonstrates the urgency of consuming the current bullish energy. If there's no news of sufficient weight this weekend, then next week this energy will have a major release.

Let me once again use the most blunt words to repeat what I've been saying for N days: beating down the fast-runners, making the range of potential profits in the frenzy as broad as possible. The harshest way to put it: even if infinite hell follows the frenzy, a frenzy shared by the majority is fairer and more interesting than a frenzy enjoyed only by the Nifty Fifty.

Next week, a scenario of demons dancing wildly is absolutely not to be ruled out. If we can minimize index gains while driving an even broader frenzy, that would be the best state. Third- and fourth-tier stocks still have plenty of room, and combined with the momentum of breakouts, there's sufficient space to complete this frenzy. But it must be clearly noted: the cost of this frenzy is blade-related.

Having chosen to walk on the blade's edge, whether as a market or as an individual, one must clearly understand the cost of this walk. Actually, nothing is off-limits, but one must know the cost and be able to bear it. Those who want to play with blades but are afraid of getting cut — go home and play with tofu.

On individual stocks, there's not much to say. Everything that needed saying was said on August 13: "On individual stocks, the rally in first- and second-tier component stocks will continue, but beware of short-term volatility risk after excessive gains. Once earnings risk has been released, second- and third-tier thematic stocks will find renewed momentum."

As for those who keep saying this ID's original dozen-plus stocks have terrible fundamentals and are pure garbage stocks — their views should have changed recently. This ID never buys stocks randomly. If it were random, why would the two stocks most related to VC and PE in the entire market — 600635 and 000938 — both be in this ID's portfolio? Among this ID's dozen-plus stocks, are there not plenty with earnings surging hundreds of percent, even a thousand percent? Of course, this is just the tip of the iceberg. Like 000938 — who told you it's just about PE and VC?

Long-term positioning and short-term positioning are fundamentally different things. This ID has already shared the best method with everyone: use medium- and short-term trends to reduce long-term cost to zero, then hold for the long term. For large capital, this is essentially the only viable and most efficient method. For small capital, you don't need to do this — if you have the time and the skill, you can do a 419 play every day. The key is whether you have the time, the access, and the technique.

But when small capital grows well, it eventually becomes large capital, so ultimately everyone must walk this path.

Zero cost essentially means zero capital tied up — only then can you hold positions with peace of mind and efficiency. Those who can't even last a few months are simply not suited for stock trading. For example, 000938 is indeed very boring, but if you've been holding it at zero cost for the long term, then it's not boring at all. This stock's all-time high is 100 yuan. A Tsinghua-backed stock that can't make a new all-time high in a major bull market — do you believe that? Of course, this might take 1 year, 2 years, N years, but when your cost is zero, it doesn't matter. Moreover, the integration of Tsinghua enterprises is both necessary and inevitable — how much room there is, this ID doesn't want to predict, it's meaningless. In short, this ID will ride this one out till the seas run dry and the rocks crumble, at zero cost. Those dreaming of daily limit-up short-term trades — you'd be better off headbutting tofu.

Actually, this ID has another stock I've been sneaking around with on the side — even more boring than 000938 — it's 000021, formerly Shenzhen Technology. Entered at 7 yuan; it's been three quarters now. Apart from already reducing the cost to zero, this stock has nothing worth bragging about. But this ID has also pledged a three-lifetime bond with it.

Sorry, this ID only knows how to reduce stock cost to zero and then hold till the seas run dry. Beyond that, for large capital, this ID knows of no better operating method in a major bull market. Of course, during a major-level pullback, this ID will also do a short-term trade to increase the share count — that's probably the only other thing this ID can do.

On weekends, debauchery is lovelier than stocks.

Off you go.