The Future of China's Economy and Stock Market Remains Bright

2007/10/25 21:04:33

I didn't intend to talk about stocks today, but right on cue with the full moon, the wailing of ghosts and howling of wolves — a true Ukiyo-e painting. So, as this ID said early on: without freedom from the stock market, there is no true freedom, because this is one of the world's great purgatories. Don't think the stock market is just the stock market — it contains the most greed, anger, delusion, doubt, and arrogance. It truly is a fine place for cultivation. Therefore, all who suffer in the stock market because of the stock market are blessed with fortune and wisdom. Suffering its calamities, dissolving one's calamities — how fortunate indeed.

Regarding year-end market trends, this ID made an overall analysis long ago. In "2007 Year-End: Trend Analysis Under the Game Between Capital and Policy 2007-09-17 00:41:48", the most explicit analysis of the market trend was given. All of this ID's subsequent judgments and actions had their script published on September 17. The 6100-point level was explicitly analyzed in that post — but how many people noticed? Most were probably worn down by daily fluctuations.

Without a grand vision and grand rhythm, being tortured by daily fluctuations means being made a plaything by stocks rather than making stocks your plaything.

Please look at this passage from the September 17 post:

"Since last year the market rose 130.43%, closing at 2675.47, by corresponding proportion, 6165 becomes a benchmark level for this year. Moreover, the Shenzhen Component Index in its 1996 rally, like the current Shanghai Index, also briefly dipped below 1000 before launching, and the former ultimately topped above 6100 — therefore the 6100 area is a particularly noteworthy level for the latter's rally."

And the final concluding passage: "Conversely, once the capital-driven frenzy exceeds reasonable bounds, the market will evolve into a crazed trajectory — forcibly breaking through the aforementioned 6100 area within this year. In that case, a correction exceeding the 5/30 level would be hard to avoid."

What needed to be said was said long ago. Without understanding the grand blueprint, what good is staring at the daily chart?

So, is this the end of the world now?

No — the future of China's economy and stock market remains bright. Here, this ID actually wants to boost everyone's morale, because the fundamentals of China's economy have not undergone any substantive change. RMB appreciation is also accelerating. All the bullish factors remain in place.

However, as this ID has repeatedly emphasized, what's needed now is a medium-term correction. For the future of China's stock market, this correction is necessary.

Regarding the grandest blueprint for China's stock market, this ID provided the clearest depiction in "China Shall Have Its Zenith Day; Ten Thousand Nations in Ceremonial Robes Dance the Nine Shao 2007-03-19 08:52:42". On the very day that post was published, the market pulled out a long bullish candle, breaking through the oscillation below 3000 and launching this year's magnificent rally.

At that time, the market was still swaying in storms below 3000. This ID clearly stated: "It is laughable to discuss stock market bubbles before total market capitalization exceeds GDP. The first stage of this rally will not end until China's total stock market capitalization exceeds its GDP."

Later, all of this came true. Moreover, this stage of the rally has actually not ended yet. After the medium-term correction, the rally will continue to unfold, will continue to new highs — this is beyond question.

But a reasonable correction to accumulate new energy, to make market trends more robust, to strengthen the foundation for a 20-year bull market — this is necessary.

Just as at 3600 points, this ID stood up and called for a "Man Jiang Hong" (full charge), because in China's market, retail investors are the majority, and retail investors are born dead-bulls. So of course that was popular.

This time, this ID stands up and calls for going short, and happens to have blocked the mad bull right at the pre-announced 6100 level. This naturally won't win any popularity. But for the future of China's stock market, this must be done.

Think about it: if China's stock market, like Taiwan's or Japan's, went through a dreamlike binge followed by fifteen or twenty years of bear market — who would ultimately suffer?

Especially for China, the economic transformation isn't fully complete yet. Once the capital market is destroyed, the core driving force needed for economic transformation would be completely lost, ultimately hurting the real economy — and after that, everyone's livelihoods.

For someone like this ID, whether the economy is good or bad won't affect my personal enjoyment of romance, fine living, and 99419. But for the vast majority of people — especially those who still have housing, healthcare, education, and other problems to solve — once the economy runs into trouble, they become the biggest victims.

The biggest bullish factor, for anyone involved in China's economy, is long-term stable economic development — not boom-and-bust cycles.

What we need is a long bull, not a mad bull.

China's stock market bull run continues. China's stock market future remains the most opportunity-rich in the world, with the most far-reaching prospects, and will inevitably become the world's largest market. Storms only make it healthier. Without this kind of grand vision, success in the market is impossible.

China's stock market is full of opportunities, with boundless future potential. And how these opportunities and this future become your own — that is the most important question for each and every person.

This market doesn't fear making mistakes — it only fears stubbornly refusing to correct them. Reflect on your own trading, and you'll probably find a better answer to the above question.