Mu Zi: An Economic Man Who Can't Make Money Is Just a "Philanthropist"!

Author: [Mu Zi]
Source: [Fund Analysis]
Article type: Recommended article
Published: 2008-11-17 10:24:50
Column: Expert Perspectives

Editor's Note:

On the morning of October 31, our publication's Special Senior Advisor, Mr. Mu Zi, passed away.

Picking up this pen, I feel deeply saddened and momentarily do not know where to begin.

Getting to know Mu Zi was through the founding of Fund Analysis. He was a very low-key person.

He wrote nearly 30-plus high-quality articles for the "Mu Zi Perspectives" column in Fund Analysis — sharp-penned, with clear positions. Whether in macroeconomic judgment or technical analysis, they were well-reasoned, penetrating, accessible, and beloved by readers. During his critical illness, he received numerous phone calls from readers.

His "China's No. 1 Blog" — Chán Zhōng Shuō Chán — produced 1,134 blog posts in total, categorized as: Chán Zhōng Shuō Chán (83), Poetry and Ci Lyrics (95), Music and Art (67), Literature, History, and Philosophy (Detailed Analerta Commentary) (114), Current Affairs and Economics (Economics of Chán Zhōng Shuō Chán) (561), Mathematics, Science, and Technology (Medicine of Chán Zhōng Shuō Chán) (15), Vernacular Essays (106), Pop Entertainment (36), and more. His articles covered an extraordinarily wide range, with a vast and complex knowledge system, and he cultivated a devoted readership. Blog level: 24; blog score: 497 points; blog visits: 37,782,263. Diligence, dedication, and kindness were Mu Zi's greatest traits. Here we select one of his blog posts from June 7, 2006, as a tribute to his memory.

A title like "Teaching You to Trade Stocks" — in all of China, no one is more suited than this ID to write it. Of course, stocks are traded, not written about, so I never thought of writing on such a topic. But everything has its causes and conditions, and when the time comes, one might as well write a bit.

People are always strange. Even the very clever, or those very successful in other industries, once they enter the capital market, seem to become different people. The chasm between the virtual and the real means that those who do well in real industry — never mind futures — even in the much less risky stock market, rarely do well. And those accustomed to playing in virtual markets basically can never go back to industry. There are far too many such examples.

Among friends connected to economics, more work in finance, with a few in industry. After the RMB was liberalized last year, we were hanging out and happened to talk about stocks. My advice at the time was that due to the globalization of resource prices and RMB appreciation, domestic industry would face great difficulties, while the virtual market, thanks to its capital-absorbing effects, would see significant improvement — it would produce a rally of at least a major X-wave level. I urged them to divert some capital to the capital market. Since the capital market had been a graveyard over the past few years, these fellows were quite hesitant, and the opportunity slipped away.

After the Spring Festival, these fellows suddenly started pestering me nonstop, saying they wanted to enter the market. By then I was already too busy to spare a moment. I gave them a scolding and told them: right now, any warm body can make money — go play by yourselves. I've got no time for you.

Into March and April, with non-ferrous metals and other plays already blazing hot, these fellows wanted to go big but feared the risk, and kept dabbling in small positions. One day we were together again, and they insisted I pick specific stocks. Since for the past two years many large foreign funds had been approaching companies to acquire Chinese FMCG enterprises, and some major cyclical industries were facing restructuring, I told them to focus on these two types of stocks plus warrants.

After May, the market surged. Everyone was busy. When we happened to meet mid-month, I asked and found out they'd barely bought anything, and those who had bought had jumped off after barely a few stops. They all seemed very agitated, constantly asking what they could buy. Feeling both sorry for them and annoyed, I wondered: they were doing just fine outside the market — what happened to them once they got inside? A bit dismissively, I told them to buy local stocks in both Shenzhen and Shanghai around the 3-yuan level. I also warned them that continuing like this would inevitably lead to problems, and they'd better study hard on their own — no one can watch over you like a babysitter forever.

A few days later, we met again. These fellows had apparently loaded up on stocks. This time, everyone was beaming. Having apparently cracked open a few books, listened to a few stock commentaries, and read a few magazines, they were now spraying saliva about this front and that line, first-tier and second-tier, like experts — predicting 1800, 2000, 2500, like big shots. This market really can reform people! But the market's meat grinder now had fresh inventory.

Some say the market is where old hands make money off newcomers, but among market veterans, plenty have been trapped for eight to ten years. In truth, the market is where the shrewd make money off the confused. In a market economy, as soon as you participate in the economy, you become an economic man. An economic man's purpose is naturally to make money — especially in the capital market, where there are no philanthropists, only winners and losers. An economic man who can't make money is nothing but a waste! No matter how successful you are in other fields, once in the market, winning or losing is the only standard. Beyond that, everything is empty talk.