Applause for Shang Fulin — A Regulator Who Can't Provoke Interest Wars Is Not a Good Regulator (2005-6-20)

Two weeks ago, Shang Fulin spoke: "The split share structure reform is an arrow that has left the bow—there is no turning back." I gave my first round of applause: "Now that's a real man. Good on you, Shandong man. It's decided. Absolutely do not pay any attention to the clamoring of those with ulterior motives." Recently, seeing this Shandong man getting more and more on the right track, I'm giving Shang Fulin another round of applause.

A good regulator, or market maker, absolutely must not put the risk on their own head. Knowing how to transfer risk and letting various interest parties wage war against each other to reach equilibrium—that is the proper path. A regulator who can't provoke wars between various interests is not a good regulator. No market exists that doesn't need regulation, and a market without a good regulator or market maker can only be a garbage market.

The most correct move by Shang Fulin was handing the decision-making power to the shareholders themselves, rather than making a one-size-fits-all decision himself. So-called shareholders represent the interests of all parties. Let them fight it out amongst themselves. Never sympathize with anyone in the market—everyone who enters the market comes out of greed, and none deserve sympathy. If you want to sympathize with someone, you'd be better off sympathizing with those people in remote mountain villages.

Everything in the market is theater. The bears have their script, the bulls have theirs—it's all just for profit. Whether Huang Gai beats Zhou Yu or Zhou Yu beats Huang Gai, it's all with purpose. A regulator simply should not care about these people. Even if they stage a suicidal jump from a building, don't care. There are plenty of people—what's the problem if a couple die?

Markets always have problems—if not this, then that—and market greed is infinite. Don't let the market push you around.