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Medium-Term Advice for Retail Investors

2007/10/9 8:03:06

Note: last night, this ID merely expressed a personal medium-term stance and operation. But even this ID must follow this ID's own theory. This ID is just one component force among many. How component forces ultimately guide the resultant force—that's what this ID intends to accomplish. But that doesn't mean it can necessarily be done in a single day.

Recall the 3600 point level—a long bearish candle followed by a long bullish candle forming a bear trap, then holding firm below 3900 to break through the bottom. This time, it's not necessarily a mirror image of that; the techniques of course cannot be the same. How to use one component force to guide the resultant force—this is inherently a more advanced lesson in this ID's theory.

The key to completing this lesson lies in manufacturing the resonance point of technicals, capital, and policy. There's quite a lot of knowledge here, but whether it succeeds in practice hinges on the grasp of the coordination points among these factors. It's like three tennis balls moving in different directions at different speeds meeting at a single point in midair. For example, the policy tennis ball—no one can control it. The only thing that can be adjusted is the structural relationship of technicals, capital, etc. This requires a component force to come out and stir things up. Bottoms and tops are all created through such stirring. Stirring takes time—eventually the corresponding pattern forms, then you hold firm, and finally break through. Of course, when going short, it's a breakdown instead.

So this is a large process, not something to be completed in a single day. But if policy cooperates, this process can be quite streamlined. This time, the reason this ID proactively turned bearish is to avoid a repeat of the 530 episode, where technicals and capital had to accommodate policy. Instead, this ID wants to play a different game—making policy accommodate technicals and capital. It's like first manufacturing the intersection point of two tennis balls, then having the policy tennis ball happen to hit that point. The difficulty of this should be self-evident.

But this kind of game is what makes it worth playing.

From the perspective of this ID's theory, this ID is merely a component force, and retail investors only need to know what the final resultant force looks like, then decide their entries and exits based on that resultant force. You really don't need to care too much about this ID's stance.

Ordinary retail investors can get in and out in 1 second—just patiently wait for the major sell point to appear. Of course, if you feel you don't have the skill or the temperament for it, then gradually reduce positions in batches, or lower your position to a level where you can sleep soundly no matter what happens.

If this ID's actions can ultimately manufacture a large-level sell point, then this ID's game succeeds. Otherwise, this ID gets squeezed by continued bulls. Of course, if at that point policy shows a new bullish direction, then there's no squeeze issue—this ID can simply move into new sectors or reverse to go long. But currently there's no indication whatsoever that policy might turn bullish. The above is just the complete classification scenario in theory—virtually impossible to occur.

To put it plainly, the more important reason this ID is telling everyone so openly is the hope that, like at 3600 points, you'll experience firsthand the relationship between resultant force and component forces, and at an even higher level, how to actually use component forces to guide the resultant force. Whether this ID succeeds or not this time, it's the best live teaching material available.

If you won't even watch this teaching material drawn with untold amounts of capital and shares, then just go read stock commentaries instead—there's no need to learn anything at all.