Muzi: An Economic Actor Who Can't Make Money Is Just a "Philanthropist"!

Author: [Muzi]
Source: [Fund Analysis]
Article type: Recommended article
Publication date: 2008-11-17 10:24:50
Column: Distinguished Viewpoints

Teaching You to Trade Stocks: An Economic Actor Who Can't Make Money Is Just a "Philanthropist"!

Special Senior Advisor to This Publication — Muzi

Editor's Note:

On the morning of October 31, our Special Senior Advisor Muzi passed away.

Picking up the pen, I feel deeply saddened and don't know where to begin.

I first came to know Muzi when Fund Analysis was founded. He was a very low-key person.

He wrote over 30 high-quality articles for the "Muzi's Viewpoint" column in Fund Analysis. His pen was sharp, his positions unambiguous. Whether in macro-level judgment or technical analysis, his pieces were well-reasoned, incisive yet accessible, and deeply beloved by readers. During his severe illness, many readers called in to express their concern.

His "China's No. 1 Blog — Chan Zhong Shuo Chan" produced 1,134 blog posts in total, categorized as: Chan Zhong Shuo Chan (83), Poetry & Verse (95), Music & Art (67), Literature, History & Philosophy (Detailed Commentary on "The Analects") (114), Political Economy (Chan Zhong Shuo Chan Economics) (561), Science, Mathematics & Technology (Chan Zhong Shuo Chan Medicine) (15), Vernacular Essays (106), Pop Culture & Entertainment (36), etc. His articles spanned an extraordinarily broad range, and his knowledge system was vast and complex, with a devoted readership. Blog level: 24, blog points: 497, blog visits: 37,782,263. Diligence, dedication, and kindness to others were Muzi's greatest traits. Here we have selected one of his blog posts from June 7, 2006, in tribute and remembrance.

A title like "Teaching You to Trade Stocks" — there is no one in all of China more suited to write it than this ID. Of course, stocks are traded, not written about, so this ID never thought of writing on such a topic. But everything has its karmic occasion; when the conditions ripen, there's no harm in writing.

People are always strange creatures. Even very intelligent people, or those who have been highly successful in other industries — the moment they enter the capital markets, it's as if they become different people. The chasm between the virtual and the real means that those who run real businesses — never mind futures — can rarely perform well even in the comparatively less risky stock market. And those accustomed to playing games in virtual markets find it nearly impossible to go back and do real industry. There are too many examples of both.

Among my friends in economic circles, most are in finance, with a few in real industry. After the RMB was liberalized last year, we were all hanging out once and the conversation casually turned to stocks. My advice at the time was that due to the global rise in resources and RMB appreciation, domestic real industry would face significant difficulties, while the virtual markets would see major improvement due to their capital absorption function — there would be at least a major X-wave level rally — and they should divert part of their capital to the capital markets. Since people in the capital markets had been dropping like flies in recent years, these fellows were quite hesitant, and the time just slipped away. After the Spring Festival, they suddenly began pestering this ID relentlessly, saying they wanted to enter the market. By then this ID was already too busy to spare a moment. I scolded them and then told them: right now, anybody can make money — go play on your own, I've got no time for you.

Entering March and April, the commodities sector was already on fire, but these fellows wanted to go big yet feared the risk and kept dabbling in tiny amounts. One day we were together again and they insisted that this ID select specific stocks. Since many large foreign funds had been approaching Chinese fast-moving consumer goods companies for acquisition, and certain major cyclical industries were facing restructuring, I told them to focus on these two types of stocks plus warrants.

After May, the market surged and everyone was busy. We happened to meet again in mid-month, and upon inquiry, basically none of them had bought much — those who did buy had gotten off after just a few stops. They all seemed agitated, constantly asking what to buy. Feeling a mix of pity and annoyance, I somewhat off-handedly told them to go buy local stocks priced around 3 yuan in both Shanghai and Shenzhen. I also warned them that continuing like this would definitely lead to problems, and they'd better study and learn properly — no matter how skilled someone else is, they can't babysit you like children around the clock.

A few days later, we met again. These fellows had apparently loaded up on stocks, and this time each one was beaming with confidence. Having apparently devoured a few books, listened to some commentators, and read some magazines, they were now spouting technical terms about support lines and resistance lines, first-tier and second-tier stocks like experts, boldly predicting 1800, 2000, 2500 points like big shots. This market really does transform people! It's just that the market's meat grinder had received fresh cargo.

Some say the market is where old hands make money off new hands, but among the old hands, those who've been trapped for eight or ten years are a dime a dozen. In truth, the market has always been where the clear-headed make money off the confused. In a market economy, the moment you participate in the economy, you become an economic actor. An economic actor's purpose is naturally to make money — especially in the capital markets, there are no philanthropists, only winners and losers. And an economic actor who can't make money is simply a waste! No matter how successful you are in other areas, once you're in the market, winning and losing is the only standard. Everything else is empty talk.