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Until yesterday, the US stock market has 3 circuit breakers left before the eight meltdowns. The topics for a week have made everyone feel a little aesthetically tired, so today I will talk to you about the topic of bottom-buying in the stock market.
The history of US stock over the past 100 years tells us that every stock market crash is a spring for long-term investors, but there are always many friends who die on the hillside by buying at the bottom. How much is the bottom of every stock market crash? Even Graham cannot escape this curse. After the stock market bubble burst in 1929, Graham began to buy at the bottom. Despite his carefulness, he still lost 20% in 1930. He felt that the worst time had passed and he borrowed a loan to invest in stocks. Later, the so-called bottom was repeatedly broken, and time went by until 1932 when the joint account fell by more than 70%, and Graham was also on the verge of bankruptcy. At that time, the famous economist Fisher had already foresaw the bursting of the stock market bubble in 1929, but he still bought stocks that he thought were cheap and received the goods as expected. You see, there is always such a drama between rational correctness and emotional paranoia, and even the masters cannot avoid the vulgarity. Due to time constraints, the stock market has the end. Let’s go to the futures market to take a look.
There is also James Cordier, an old fox who has entered the futures market since he was 14 years old. He was published in 2004. "A Complete Guide to Options Sales" has been sought after for a long time as a textbook existence. His trading methods are very single, but he is extremely confident in his trading strategies. When he talked about the company's investment strategy, he said: "Our goal is to use the most radical tools and manage it conservatively.
When talking about Codill later, I will give an example first. If there are 10,000 investment managers, each of them will have a half chance of making losses. At the end of the first year, it is expected that 5,000 investment managers will make money and 5,000 investment managers will make money. Assuming that the loss of money will be eliminated, the profit will continue. In the second year, the conditions remain unchanged, 2,500 earned money, 2,500 lost money, and so on, in the fifth year, there are still 313 profits. The remaining 313 investment managers have an impressive record of continuous profitability for five consecutive years. Would you choose him to help you manage your finances? If your answer is no, please pay attention to what the promotional materials for stock funds raise are said.
In fact, due to the existence of volatility, some people will make money, which is purely based on luck. Friends who don’t understand can go to Baidu by themselves: Survivor fallacy.
The biggest illusion in the world is usually this stable, and the same is true for James Codill. He believes that he makes money because his trading strategy is very successful, but in fact it is just because he is lucky. In futures trading, buying a call option is to lock in the right to buy the securities at a certain price in the future, but you have to pay a premium first, and the proportion of the premium to the future purchase cost is generally very small. The trader who sells options actually bet that the opponent will not exercise the rights, so he can earn a premium while lying down.
The reason why James Codill loses his position is that he sells a call option naked short of the US natural gas call option (naked) Short on call), without any hedge against protection, as a result, natural gas surged, opponents exercised their rights collectively, and Codill's account was out of position. Not only did he lose all his principal, he also owed a debt to securities brokers.
He regards the most dangerous strategy in derivatives trading as his main trading strategy, and publicizes this strategy to his investors very safe. Although he and his fans firmly believe that they are correct based on their past achievements and experience, in fact, this is just a causal illusion in philosophy.
Red Heidius said: "A person tries to understand everything, but often knows nothing." Out of fear, people usually hate uncertainty, so they always try to find a certain basis from their past knowledge and experience and convince themselves based on it. But this empirical basis is often wrong, and in the capital market, it is especially fatal.
Those who can listen to my longing here, it’s time to receive the prize, so let’s get some real money.
This stock market crash is similar to the stock market crash in 1987:
(1) both fell rapidly.
(2) The long-term trend of economic development is still improving.
(3) are caused by the short-term liquidity stampede, causing short-term plunges in all assets.
1987, the decline was almost completed within one month in October. But the bottom hovered until November of the following year, and then a long bull market began.
The current epidemic has spread, information chaos, market panic, and the pedaling decline and the stock market plummeting are also completed within one month. The direct impact of the epidemic will continue until the third quarter of this year. The impact on disposable income and the long-term impact of the industry are expected to basically recover by the middle of next year.
Conclusion: The plunge has entered its final stage and is expected to bottom out in April. After that, the hovering and turbulent fluctuations will continue for about a year. A year later, a new bull market will be restarted.
