Before I knew it, I had been dabbling in stocks for more than a month, and a summer vacation that ought to have been the busiest of all is now clearly on the verge of being wasted away in vain (of course, not because of stock trading). And as my life rhythm returns to normal, and my stock-trading ideas grow increasingly mature, I will no longer spend more time researching stocks. So I’ll just casually jot down here my reflections from this past month of stock trading:
Stock trading counts as yet another “social practice” I’ve done this summer. Originally, the point of my parents’ letting me trade stocks was not to make money, but to let me experience it for myself. Although the 20,000 yuan of principal I successively put in is already quite a large sum for many families, it is still nowhere near what they have in share capital. Still, although this bit of capital is not enough to play with those big-name stocks whose face value is over a hundred yuan, it is already enough for me to play with the usual two or three high-priced stocks, and to put my own stock-trading strategy into practice in a fairly proper manner.
Stock trading really is just like any other kind of game: if you only talk about it and never actually try it yourself, never personally play a few rounds, you will never grasp its subtlety. Reading however many books can’t compare with practicing with your own hands. Stock trading really is a kind of gambling, and also a form of entertainment. To say that stocks are a magic weapon for the new era of capitalism to narcotize the workers is by no means an exaggeration. Call it financing, or speeding up the circulation of capital, or rapidly redistributing social wealth—when all is said and done, one of the stock market’s most important functions is its “entertainment” function—just as the most important function of mass media is also entertainment rather than the transmission of information. Stocks make workers feel that their interests are aligned with the capitalists for whom they slave away; they also drag petty bourgeoisie into the game of capitalists cashing in and compounding interest with a sort of crazed enthusiasm. If they lose money, they can only blame themselves for being useless; if they make money, then everyone rejoices and all is harmonious. The stock market has made an indispensable contribution to the “harmony” of capitalist society.
That said, since we do in fact find ourselves in such a harmonious society, I have to say that one ought to participate in stock trading. One often hears people say that for ordinary Chinese people today, if you don’t buy a house and don’t trade stocks, your wallet will inevitably keep “shrinking” helplessly; that doesn’t sound like alarmism. Finance and real estate really are investment channels that hedge against inflation. You have to know that if you are a salaried worker who makes no investment at all, then even if your salary is raised every year, your savings can only grow in arithmetic progression—though this growth does acquire an acceleration thanks to the salary increase, it can never reach the realm of money making money, of interest compounding on interest. The basic difference between capitalists and workers is that capitalists make money with capital, whereas workers live by labor. The more capital a capitalist has, the more money he can make; but a worker must work more in order to earn more. Yet the amount of labor a person can contribute is always limited, whereas capital is limitless. Stock trading allows ordinary people to make money in the manner of capitalists. Although this is a kind of narcotization, if one does not utterly hate reality and is not oneself extremely stubborn, then for the sake of one’s own wallet one may as well—and in fact cannot help but—take part in this game.
In today’s bull market, making money by buying stocks is very easy. My assets have already increased by more than 10% over this past month, and that counts as doing rather poorly. Those professional stock traders and warrant speculators needn’t even be mentioned; just look at my mother, who, after coming to Beijing, personally taught a friend of hers how to trade stocks. Starting at about the same time as I did, she has now already made 30%. Of course, there are also people who lose money—in a bull market, losing money by trading stocks is something I originally found hard to imagine, but this time I witnessed it with my own eyes, and it was my mother… It seems my mother is suited to being a securities analyst: when teaching others to trade stocks, she is methodical and systematic, with rules and standards; but when she trades herself, sometimes she gets feverish and impulsive, and sometimes she becomes anxious over gains and losses, and in the end she chases rallies and sells into declines, desperately helping the securities company earn commissions…
Aside from the three stocks I bought on the first day on my mother’s advice, I basically operated independently after that. Although I always exchanged views with her, it seems she was the one who was influenced by me more.
The three stocks I bought on the first day were immediately sold right away, roughly with the intention of getting away from my mother’s influence. Actually, when trading stocks it’s best to do a little less short-term trading. For instance, by now the three stocks I bought on that first day have, at the very least, risen by half, and the most have almost doubled!
My current idea is that good stocks must be held tightly and not let go, while bad stocks must be cut quickly and the flesh sold off in a hurry. Not every stock is as active as those three I bought on the first day; some stocks, if you hold them tight and refuse to let go, just keep shrinking, and there are quite a few of those. After practical experience, I think the Darvas box method of stock trading I wrote about at the time was pretty good. More specifically, one can also add “scientific methods” such as corroboration and trial-and-error:
First, do research and look at the curves of each stock. For example, filter according to Darvas’s method, and in the end, and most importantly, judge good stocks by your own intuition.
Then, put forward a “hypothesis”: I think these stocks will rise very well.
Next comes confirmation of the conjecture: continue sitting tight and observing the selected stocks. If any stock really does start to rise (and break through the top of the box), that means the hypothesis is quite likely to be true, and at that point you chase the rally and buy in; if any stock turns out to be disappointing and instead falls (and shows no sign of surging upward), then that means the judgment was mistaken, and you give it up.
Finally, there is the trial-and-error method of waiting for falsification. If the stock you bought does not continue rising as expected, and is not apparently making a healthy consolidation at a high level, but instead falls back to its original box range or even keeps dropping, then quickly cut the flesh and let the blood out, and choose the next target.
The trial-and-error method can ensure that your principal does not suffer enormous losses. Once you hit upon a bull stock that doubles, the earlier bits and pieces of losses can all be ignored. Once you have a bull stock in hand, you can then sit back and watch it rise for ten days or half a month, even half a year or a full year, until its trend clearly develops a problem and then get out—of course, it is also fine to occasionally increase or reduce your holdings appropriately.
This past month I have not very well carried out my own thinking. Leaving aside the fact that the first two weeks were a period of exploration, the key point was that I got trapped in that Financial Street (000402)—if I could have followed my established policy and sold in time when Financial Street fell below the bottom of the box, then not only would I not have lost more than five hundred yuan on this one stock, I would instead have made more than a thousand yuan from it. And if the funds freed from Financial Street could also have been used to buy other stocks and make money, then with a bit of back-and-forth, making 5000 would by no means have been difficult.
The few stocks I currently hold, apart from Financial Street and Zhixin Electric (600517), were all only just charged into these past two days (mainly today), and whether they are good or bad will have to wait until next week to be seen. As for Zhixin Electric, the one that has earned the most, that was the first stock I selected entirely on my own—without listening to my mother’s advice, without looking at themes or concepts, only looking at the “curve.” At the time, stocks selected by me in this kind of needle-in-a-haystack way numbered about six in all, including Zhixin Electric and Financial Street. Among them, Financial Street and one other both surged sharply in the short term and then fell back; two others had already hit limit up several times; perhaps one or two were moving sideways. This Zhixin, meanwhile, was rising steadily and step by step. At present it has suspended trading for a week in a row because it is to issue additional shares. One week later, on the first day of resumption of trading, there will be no limit on rise or fall (in a bull market this is mostly a good thing), and I’m looking forward to it.
Each stock seems to have its own personality, regardless of whether that personality is governed by the market maker or by some other factor. For example, this Zhixin Electric belongs to the low-key, steady-growth type: over the past two years it has slowly climbed from 2-something to over 50, and one rarely sees it hit limit up, nor are there especially obvious ups and downs. Even when it rises sharply, it only goes up by 8%, 9%, 9.8% or whatever—it just refuses to hit limit up. Truly low-key enough. Some weak stocks used to perform disappointingly, and hoping that they will one day awaken and power upward is often very unrealistic; even if that day really does come and they power up, it won’t be too late to buy them then. In short, according to my observation, the better the historical performance, the better the current trend often is as well.
In addition, the curves of stocks seem to have a certain fractal characteristic, that is, they look similar at different scales. A stock’s possible performance over the course of a day may have some resemblance to its performance over the course of a month. Of course, in this bull market, the larger the time span, the more the rising curve shows itself, but the rhythm of its oscillations and movements seems to be regular. After looking for a while, one develops an intuition: by looking at a K-line chart with one-minute intervals, one can tell when it is about to surge upward. I looked at three or four stocks yesterday and today, and every time I was right. With this method, a short-term trade, once made, can earn at least 2% (of course, since the stocks bought today can only be sold tomorrow, there is still a certain amount of risk).
I’ll write this much for now. Everyone, go smash your pots and sell your iron to trade stocks~
2007年8月24日
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Capital and shares
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Currency
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Balance
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Available
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Market value
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Assets
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Profit/Loss
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Renminbi
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112.19
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112.19
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22523.00
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22635.19
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2560.08
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Capital flow
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Transaction date
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Business name
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Security code
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Security name
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Transaction price
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Transaction quantity
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Transaction amount
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Amount incurred
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Remaining amount
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