Teaching You to Trade Stocks 1: An Economic Man Who Can't Make Money Is Nothing but a Waste!
2006/6/7 18:08:15
A topic like "Teaching You to Trade Stocks" — there isn't a second person in all of China more suited to write this than this ID. Of course, stocks are traded, not written about, so I never thought of writing on such a topic. But everything has its karmic origin, and when the time comes, why not write a bit.
People are always quite strange. Even very smart people, or those highly successful in other industries, the moment they enter the capital markets, it's like they become different people. The chasm between the virtual and the real means that those running real businesses — never mind futures — even in the comparatively less risky stock market, rarely do well. And those accustomed to playing games in virtual markets can hardly ever turn back to real industry. There are far too many such examples.
Among friends around me involved in economics, those in finance are the majority, with a few in real industry. Last year after the RMB was liberalized, we were hanging out together and the conversation happened to turn to stocks. My opinion at the time was that due to the global uptrend in resources and RMB appreciation, domestic industry would face great difficulties, while the virtual market, due to its capital absorption effect, would see significant improvement — there would be a rally of at least a major X-wave level — and I advised them to divert some funds into the capital markets. Because in the previous few years, people kept getting burned one after another in the capital markets, these guys were very hesitant, and before they knew it, the window had passed.
This year, after the Spring Festival, these guys suddenly started pestering this ID nonstop, saying they wanted to enter the market. By then this ID was already too busy to spare any attention, so I gave them a good scolding and told them: right now even a dog could make money, go play on your own, I don't have time for you.
Entering March and April, by then the non-ferrous metals and other sectors were already blazing hot. These guys wanted to go big but feared the risk, and had been just dabbling in small amounts. One day, we were hanging out again and they insisted this ID pick some specific stocks. Because over these two years, many large foreign funds had been coming in to acquire Chinese fast-moving consumer goods companies, and some large cyclical industries were facing restructuring, I told them to focus on these two types of stocks plus warrants.
After May, the stock market surged and everyone was busy. When we had the chance to meet again in the middle of the month, I asked around and found that basically none of them had bought much, and those who did had gotten off after just a few stops. They all seemed very agitated, constantly asking what they could buy. Feeling both a bit sorry for them and a bit annoyed — how is it that people who do perfectly fine outside the market all become like this once they're in it? I somewhat dismissively told them to buy local stocks priced around 3 yuan in both Shenzhen and Shanghai, and warned them that continuing like this would definitely lead to problems. They'd better learn properly on their own — no matter how skilled someone else is, they can't babysit you like a child every day.
Last Sunday, we met again. These fellows, probably all loaded up on stocks by now, were beaming with excitement this time. Having probably flipped through a few books, listened to some stock commentators, and read some magazines, they were now spouting jargon left and right — first-tier this, second-tier that — acting like experts. 1,800, 2,000, 2,500 points — real big shots now. This market really does transform people! It's just that the market's meat grinder now has fresh material.
Some say the market is where veterans make money off newcomers, yet among market veterans, those who've been trapped for 10 or 8 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, as long as you participate in the economy, you are an economic man, and an economic man's purpose is naturally to make money — especially in the capital markets. There are no philanthropists here, only winners and losers. And an economic man who can't make money is nothing but a waste! No matter how successful you are in other areas, once you're in the market, winning or losing is the only standard. Everything else is just noise.
(To be continued)