Chapter 5 Chapter 5 "Taking advantage of the fire" and the reverse movement in the stock market

Readers who like literature must know that Mr. Mao Dun, a master of Chinese literature, once wrote a famous work-this grand masterpiece vividly reproduced the various living beings on the Shanghai Stock Exchange in 1930 in a dramatic way.There is such a plot in it that is quite intriguing: The comprador capitalist Zhao Botao, backed by financial capitalists from the United States and Japan, has great powers in the stock exchange, unleashed air, colluded with the military and political circles, bullied the market, and was always unfavorable in public bond speculation, even forcing famous industrialists in Shanghai to Wu Sunfu colluded with him and jointly invested in public debt.Due to the strong strength of the two, and Zhao Botao's smooth journey in public debt, they have attracted many followers.Everyone followed his actions, thinking that following him would make a fortune.Unexpectedly, Zhao Botao was long and secretly short, and took advantage of the sharp drop in public bonds to make a fortune and then left, causing a large number of his followers to go bankrupt. The squire Feng Yunqing hanged himself in despair.

Of course, Zhao Botao and his like willfully trample on the securities trading law and arbitrarily manipulate the public bond market, which will be criticized by thousands of people.However, if we exclude these factors, then we have to admit that Zhao Botao's short position should be a legal means in stock investment. The so-called short position is also called short selling.It refers to such a trading behavior: Investors predict that the stock price will fall, borrow stocks from others and sell them, and when the stock price really falls in the future, they will buy them back at a price lower than the selling price and return them to others, from which they themselves Get the price difference.Some countries stipulate that short transactions can only be made when the stock price rises, so as to prevent speculators from adding fuel to the fire and profiting from it.Our country has not yet clearly stipulated this.

The trading behavior opposite to short is called long, which refers to such a trading behavior: when investors expect the stock price to rise, they buy the stock, and when the stock price really rises in the future, they buy the stock at a price higher than the purchase price. Sell ​​at the price, and get the price difference income from it.Also known as shorting. The positions of "bulls" and "shorts" in the stock market are absolutely opposite.Those who are "long" hope to increase the price, and those who are "short" hope to decrease the price.If there are many long-losers and strong strength, demand will exceed supply. At this time, the stock price will rise, and longs will make profits; if there are many short-sellers and strong strength, supply will exceed demand. At this time, the stock price falls, and the short position earns a profit.

But here, the author wants to teach you a way to do the opposite, that is, to be a "short" when the price rises, and to lose a "long" when the price falls.Because, the stock market has a law that ordinary people are not easy to notice, that is: "When most people are optimistic, the stock price will fall, and when most people are bearish, the stock price will rise." So what is the reason for this? When the stock market has just entered the recovery period, the market turnover is relatively small, and most investors dare not enter the market rashly. Only discerning investors dare to enter the market to buy at this time, and they can buy high-quality stocks at a lower price. stock.When the number of stock investors entering the market gradually increases and the trading volume begins to increase, the stock price also gradually rises due to the tense relationship between supply and demand at this time, and gradually exceeds its actual value by far.However, due to the influence of "herd mentality", the market does not give more consideration to some issues, such as whether the stock price truly reflects the company's operating conditions, whether it truly reflects the factors of economic development, and so on.This is the reason why "the stock price will rise when most people are bearish".

But as the saying goes, "the heights are too cold", when 99% of the people in the market are scrambling to buy stocks, it means that there is no more hot money in the society to enter the stock market.As a result, the stock market began to thin, buying volume gradually decreased, and the rate of price rise began to slow down.Some investors have begun to consider some practical issues.After a calm analysis, they came to the conclusion that the stock price has greatly exceeded its actual value, and they also analyzed from the market trading volume that the market is thinning and there is no great upward force.So why not sell at a high price?So they began to quietly sell the stocks they held.Careful investors, after discovering this clue, immediately regard it as a sell-off signal from the market, and sell immediately. Quickly notify investors of this signal through various channels, and people will come out to sell.Once a large number of sell-offs are formed, the stock price will decline rapidly, and if there is any adverse news at this time, it will cause the stock price to plummet, from an upward trend to a downward trend, and it will last for several days.Just imagine, if you just "follow your feelings" and follow the crowd blindly, you can only learn to sell when everyone is selling stocks. You must know that it is already too late at this time, and the stock price is likely to drop to the level before you bought it. price up.Therefore, if you "follow your feelings," you will "lose all your money" during the rise in stock prices.This is the reason why "the stock price will fall when most people are optimistic about it".

Because of this, if you go "short" when the price rises, then, since most people are bullish, the stock price will fall quickly, and you can make a lot of money; ", then, because most people are bearish, the stock price will skyrocket quickly, and this is another good opportunity for you to make a fortune.When most investors who follow the trend are in a mess like ants in a hot pot due to unexpected skyrocketing or plummeting, you have obtained unexpected benefits by doing the opposite. How about a little bit of "take advantage of the fire" fun?Of course, you don't have to feel guilty about this, because you just chose the proper investment method that you think is correct.

Of course, the strategy of "looting while taking advantage of the fire" is more used in the struggle against the enemy. It can be seen in the fifth strategy in the first set of victory strategies in "Thirty-six Strategies": Jue Rou Ye." It means: take advantage of the fire in other people's homes to rob other people's property during the chaos; when two armies confront each other, there is only justice and evil. Therefore, when the enemy encounters difficulties and crises, take advantage of the opportunity to send troops to seize victory. There are two ways to "rob while taking advantage of the fire": one is to take advantage of the fire to rob, and the other is to set fire to rob.Whether you take advantage of the fire or set fire, the purpose is to rob others and enrich yourself.Although you don't have to do it yourself while taking advantage of the fire, your actions are passive.A real planner should take the initiative in doing things and ask others to create opportunities for himself. It is better to create opportunities for himself, or formulate a route for others to create opportunities for himself.All in all, those who use this strategy must have the heart to put their own interests above the pain of others.Because in war, if you treat the enemy with benevolence and righteousness, you will only lead to your own destruction.

The key to "taking advantage of the fire" is to take advantage of the enemy's crisis.Generally speaking, the enemy's crisis comes from two aspects: internal and external troubles.When the enemy invades, it is an external trouble; when natural disasters, civil wars, riots, and treacherous dictatorships occur in the country, it is an internal trouble.When the enemy has internal troubles, we can occupy its land; when the enemy has foreign troubles, we can seize its people and property; when the enemy has internal troubles and foreign troubles, then we can simply annex its country .In this regard, Goujian, king of Yue in the Spring and Autumn Period of our country, can be called a model.

In 494 BC, a fierce war broke out between Wu and Yue.The Yue army suffered a disastrous defeat. As a condition for retaining the Yue State, the Yue King Goujian was taken as a hostage and raised horses in the Wu State for three years. He was not released until 491 BC. Gou Jian was humiliated and humiliated, and vowed to take revenge after returning home.He endured hardships, took various measures to reward women for childbirth, developed farming and weaving, and trained soldiers and horses hard.After seven years of recuperation, the Yue Kingdom gradually recovered from the wounds of the war and gradually became stronger.During these seven years, someone once persuaded Goujian to attack the state of Wu for revenge, but Goujian, ministers Wen Zhong, Fan Li and others thought it over and over again, thinking that the state of Wu was still strong and the time for revenge was not yet ripe, so they did not do it.

Nine years later, the situation in Wu State changed a lot.Wu Yuxu, the famous and resourceful prime minister who crowned the armed forces bravely, offended King Fuchai of Wu with his outspoken words and daring advice, and was forced to commit suicide; However, there was no harvest, and the people had no food and clothing; but the fatuous King Fuchai of Wu was still building large-scale construction projects. He ordered the construction of Gusu Terrace. The people of Wu State complained a lot.All these show that the time is ripe to attack Wu. In 432 BC, Fu Chai sent troops to defeat Qi State, and formed an alliance with Jin and Wei in Huangchi (southwest of Fengqiu County, Henan Province today).Goujian believed that the time was ripe for Wu to attack Wu because the country was empty at this time, so he personally led the army to attack Wu. Fu Chai hurriedly led the army back to help, but was defeated. In the hands of Goujian, Goujian also became one of the overlords of the Spring and Autumn Period.

"Take advantage of the fire" is applied to the military, and it is to put it bluntly at the expense of others, but if it is applied to the stock industry, "injury to others" is out of the question, and "self-interest" is the ultimate goal.Don't think that other people's failures and bankruptcy are all your fault.Financial laws are cruel and ruthless, anyone who violates them will be punished, and the reason why you succeed is because you conform to this law, which is why you are better than them.Readers read the content written above, I am afraid that some people will think that this is alarmist talk, which is no wonder, because I am telling everyone to go against the trend.But in any case, the saying "the stock price will fall when most people are optimistic, and the stock price will rise when most people are bearish" is the true truth.Do not believe it?Please see the example below. In 1990, since the United Nations Security Council passed the proposal to urge Iraq to withdraw from Kuwait in various ways, the world stock market has been shrouded in an atmosphere of war. Push the U.S. economy to the brink of collapse or even death.So people dumped American stocks one after another. At this time, almost no one believed that the American economy would come back to life and turn around, and stock prices would rise again.However, when the multinational force led by the United States launched a violent attack on Iraq on February 17, some investors believed that: first, the violent attack by the multinational force would bring the war to a quick end, and a quick end to the war would be detrimental to the U.S. The economy has a huge supportive effect; secondly, the current stock price is too undervalued by the market and cannot correctly reflect the US economy, which they believe is not too bad to be incurable.Now that the above two points are established, now is an excellent time to buy.So they start buying.Sure enough, as they expected, shortly thereafter, the average price of Dow Jones shares began to skyrocket.The prospects for these first-time buyers are naturally very optimistic. Dear friends, if you were in the situation, would you be like them?Do you have the courage to swim against the current and keep good judgment? The stock market is changing, but fate is in your own hands. If you are ruthless, accurate, stable and flexible in this chaotic stock market, then you can definitely make a fortune by taking advantage of the sharp fluctuations in stock prices to eat the price difference.But there is an important prerequisite, that is: you must learn to take advantage of the fire and win in chaos.