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moutai is trading at 1300, and the shanghai composite index barely holds 2700......

this is the situation on the last trading day before the mid-autumn festival.

although everyone has their own interpretation of the stock index and the results are different, when facing this point, everyone feels mixed emotions that are indescribable.

in the previous article, we said that a-shares are still one step away from a big rebound, but we did not explain how we can achieve the sharp drop we want.

today, i will add to this topic. this is my personal opinion. if you don’t like it, please criticize me.

friends who are familiar with the u.s. stock market know that the characteristics of the u.s. stock market are short bear markets and long bull markets.

bears are short, which means that when they retreat, they can complete it in a very short time. the decline is sharp but also thorough.

the most recent one was in february-march 2020, when the epidemic broke out in the united states, the economy came to a standstill, and the u.s. stock market collapsed.

the nasdaq alone fell 40% in one month, and individual stocks suffered even more.teslareached 60%.

if you were unlucky enough to be hit by the "flying knife" in that month, the worst case scenario would be "losing hands and feet", and the worst case scenario would be "killing you".

even the stock god sighed that he had never seen such a thing in his life.

however, the following scene shocked the world.

the federal reserve announced unlimited qe and made every effort to save the market. u.s. stocks rebounded rapidly, completely ignoring the fact that the epidemic continued to hit economic fundamentals. it then experienced a super bull market that lasted for two years.

in fact, this kind of strong rescue method is not uncommon. it was used as early as the 2008 financial tsunami, and the method was very skillful. at that time, it was more dangerous than the 2020 covid-19 pandemic. the nasdaq, s&p, and dow jones all fell by 50%, and the entire wall street seemed to have fallen into hell.

the same story happened. after the u.s. treasury and the federal reserve implemented emergency qe, the u.s. stock market bottomed out and rebounded six months later, ushering in a bull market that lasted for more than 10 years.

capital is not stupid. buying low and selling high is the eternal trading principle.

the best buying opportunity, of course, is an extreme low, a historic low, but how does such a low appear?

that is when encountering extreme situations, such as the great depression (1929), the bursting of a super bubble (the internet in 2000, the subprime mortgage crisis in 2008), a major natural disaster (the new crown in 2020), a large-scale war (world war ii), and so on.

when a good market encounters an extreme event, it always allows the market to free fall first, and then the government will consider whether it is necessary and how to rescue the market.

in fact, when the market falls to an extremely low level, as long as there is no danger of national destruction, the profit-seeking nature of capital will come out and they will pick up bargains themselves. you don’t need to worry or shout at them.

that's the power of the market.

if the crisis is indeed huge, big enough to endanger the entire country, then needless to say, the government should of course take out all the tricks it has in the bottom of the box and do everything it can to save the market.

so, we see that during every major stock market crisis, the us government did not rely entirely on market forces for natural recovery, but took active action.

although there are many controversies about this approach, and opponents believe that it is a disguised way of exporting the crisis and making the whole world share the mistakes of the americans, at least the results are good and there are indeed things worth learning.

back to a-shares, it is just the opposite. the basic characteristics are that bull markets are short and bear markets are long.

the two major bull markets, in 2007 and 2015, lasted about half a year, but the previous bear markets lasted for many years.

there are many reasons. in addition to economic fundamentals, there are two very important ones:

one is that the system and mechanism are not perfect enough, such as there are price limits, investors are mainly retail investors, there is no short-selling mechanism, etc.; the other is the so-called "active intervention."

regarding institutional issues, although the csrc has changed personnel and introduced many policies since last year, the actual results have not met expectations. history has proven that this problem cannot be completely resolved without a long period of time.

therefore, hoping for a rapid reversal of economic fundamentals in the short term or for a thorough institutional reform will be like pouring water into the fire from afar.

it is better to think about whether there is a more practical way to get immediate results.

in fact, if we simply refer to the practices of the united states, the answer is obvious.

that is, don't "actively intervene", or to put it more bluntly, don't rescue the market.

many people are pinning their hopes on a 10 trillion yuan stabilization fund or the national team stepping up its buying spree.

this is a simple wish, but unfortunately, up to now there has been neither a stabilization fund nor a strong rescue from the national team.

a little deeper look at the financials above will show that these ideas are wishful thinking.

take the stabilization fund for example. if there is really so much money, why not use it to buy back unsold commercial housing and stabilize the property market?

is stabilizing the property market more beneficial to the economy than buying stocks?

you should know the answer without arguing.

as for the national team's buying spree, on the surface it seems that it can stabilize the index and slow down the market's decline. but now that it has come to this, how many people are still cheering for the index to remain at 2,700?

in fact, the national team also faces the dual risks of financial and downward losses.

first of all, how much money can the national team take out for shopping? this is a big question. the market value of the entire a-share market is tens of trillions of yuan. even if we only count state-owned enterprises, blue chips and white horse stocks, it is still at the trillion level. no matter how powerful the national team is, it is still a little brother in front of the market.

secondly, if you keep buying and then the price keeps falling, who can take the blame for the losses?

besides, if you want to really stimulate the stock market, you need to buy in large quantities, and money is a problem; if you don’t buy in large quantities, but just touch the surface, it will have almost no effect on stimulating the stock market to rise.

the top leaders are worried that if the market falls too quickly, it will trigger systemic risks and affect the overall stability.

but in fact, this worry does not exist.

now that the big investment institutions have laid low, there are very few long only funds buying.

what we really need to worry about isthe big institutions are lying flat and big funds are unwilling to enter the market.

in fact, their idea is very simple. since the economic fundamentals are unlikely to be reversed in the short term, forget about the eps expectations. what remains is valuation. that is, you have to first offer a very low price so that i feel like i am getting a bargain, then i will consider buying.

in this case, why do we need to stabilize the index? why can’t we let the decline be more severe, increase the volatility, and force out panic trading?

there has always been a contradiction in the economics community.that's keynes and hayek.

the former advocatesactive intervention, the latter believes thatlaissez-faire。

it should be said that the theories of the two most important economists both make sense, but they also have flaws.

for example, the great depression of 1929 proved that hayek's laissez-faire policy was wrong. it was precisely this excessive and unrestrained laissez-faire that dragged the entire capitalist world into the abyss of economic crisis, indirectly leading to the outbreak of world war ii, bringing severe disaster to the entire human race.

fortunately, president roosevelt accepted keynesianism and turned the tide. since then, keynesianism has been "rampant" throughout the capitalist world without any rivals.

but history is so ironic that 50 years later, in 1980, keynesianism reached a dead end and brought no more prosperity, but stagflation, depression and turmoil.

at this time, president reagan decisively abandoned keynesianism and embraced the free market, absorbing the positive aspects of hayek's theory, hoping to help the united states out of economic stagflation through free competition and market mechanisms. at that time, there were countless voices of opposition, believing that reagan was acting recklessly, but the result was unexpected: it actually came true.

reagan's most famous quote:

Government isn't the Solution to Our Problem, Government is the Problem.

in fact, there have been such debates in china. the more famous ones are between two professors from peking university, zhang weiying and lin yifu.

on november 9, 2016, the two of them had a much-anticipated debate in the wanzhong building of peking university. the debate caused a stir in the domestic economics community. the topic of the debate was very simple, that is, whether my country should implement industrial policies.

this is actually the chinese-style showdown between keynes and hayek.

looking back now, it doesn’t matter who won or lost the debate, because time will give the answer, or perhaps time has already given the answer, it just depends on whether you are willing to accept it.

the debate about keynes and hayek will continue, and people will give different interpretations in different historical periods.

we often say that in a person's life, choices are more important than hard work. in fact, the same is true for the economy and the stock market.

today, whose theory is more suitable for a-shares? keynes or hayek?