Yang Delong: The market has fallen irrationally again, and it is recommended that the national team increase its efforts to rescue the market

On Monday, the Shanghai and Shenzhen markets saw a V-shaped rebound. In the morning, the market fell sharply, especially the small and medium-cap stocks fell in a large area, and investor confidence was greatly hit. With the inflow of large funds into the small and medium-cap indexes represented by the CSI 500 and CSI 1000, the ETF market has seen a V-shaped rebound, the ChiNext index has turned from a sharp decline to a sharp rise, and the Shanghai Index has also rebounded sharply after bottoming out, boosting the market's confidence. Recently, there has been an irrational decline in the market, and I have repeatedly called on the national team to increase its efforts to rescue the market, not only to buy large-cap index ETFs such as CSI 300, but also to buy index ETFs representing small and medium-cap stocks such as the ChiNext index and the Science and Technology Innovation Board index, so as to completely reverse the trend of the market. Today, the market can bottom out and rebound, to achieve the trend of the golden needle bottoming, the national team to increase the amount of funds into the market has contributed to the move, which has completely changed the previous downward trend, which is a great encouragement to investor confidence. My view that the national team may be expected to increase the rescue efforts has rushed to today's Tencent hot spot, and it also reflects the high level of attention that everyone has paid to the current national team rescue market. In the current situation that the market has fallen irrationally, it is of great significance to reverse the downward trend of the market through external forces and prevent the phenomenon of liquidation and panic selling. Although it is not entirely certain that the market trend has completely reversed, the panic decline in the market has been stopped, and some high-quality stocks that have been wrongly killed may take the opportunity to rebound sharply, and individual stocks are expected to end the previous continuous decline, the market will have a respite, and investment confidence has also been restored. It is suggested that the national team should continue to increase the amount of funds entering the market, not only to achieve the bottom, but also to achieve a pull-up, and to pull up more than 20% in the current position, which can reverse the market trend and make the market re-enter the upward channel.

On Monday, the market differentiation was more serious: white dragon horse stocks, leading stocks still maintained a downward trend, and even many high-quality leading stocks were red, but small and medium-cap stocks, especially the ChiNext board, the Science and Technology Innovation Board index, and the Beijing Stock Exchange index fell sharply, hitting a new low in recent years. This shows that in the stage of accelerating decline, stocks with good performance and fundamental support have a certain degree of resistance. Investors are willing to hold. There have been some small and mid-cap stocks that have seen rapid declines, which shows the importance of value investing. Because the target of value investment is supported by performance, even if the market falls irrationally, it can maintain a certain market value. And some small and medium-cap stocks, because there is no performance support or the valuation is relatively high, so when it falls, there will be a continuous downward trend. The irrational decline in the current market has led to a significant increase in the number of stocks that fell on Monday, which also shows that the market is now at a very critical moment.

Recently, I have also repeatedly called on the national team to increase its efforts to rescue the market, and to clearly show its determination to the market, for example, under 3,000 points, prepare 2 trillion funds to support and rise, and completely reverse the decline of the market. Once the market is given clear expectations, investor confidence will be greatly boosted. It may be that the national team does not need to spend trillions of funds to attract the power of bulls to go long, so anticipatory guidance is very important. On the other hand, when the national team buys ETFs, it must not only buy ETFs such as large-cap stocks such as CSI 300, but also buy popular indices such as ChiNext, Science and Technology Innovation Board, and Hong Kong Hang Seng Technology Index ETF. Because most investors do not buy large-cap stocks with Chinese prefixes, but buy more small- and medium-cap stocks. Therefore, only by stabilizing the continuous decline or even the continuous decline of small and medium-cap stocks can we completely boost the confidence of investors. The irrational decline in the market may have triggered a lot of passive liquidations, resulting in a sustained technical decline. At this time, it is crucial to take decisive measures to stabilize market expectations and change the panic among investors. Because in the stage of irrational decline in the market, it is also necessary to use unconventional means, including the establishment of a trillion-scale equalization fund, or the existing national team's funds to increase the purchase, and give the market clear expectations.

At the same time, it is suggested that the central bank can provide a large amount of liquidity support to the market. When the epidemic first broke out in the United States in 2020, U.S. stocks continued to fall sharply around March, and the market saw panic selling. At that time, the Federal Reserve said that it would provide unlimited liquidity support to the market, which greatly changed the pessimistic expectations of the market, and the broader market also jumped, and the three major U.S. stock indexes quickly hit record highs and have continued to this day. As the last provider of liquidity, the central bank should act decisively when the current market has an irrational decline and provide liquidity support for the market, or even unlimited liquidity support, which will be an important aspect of changing the market decline and can also greatly boost investor confidence. In times of irrational market declines, confidence is more important than gold. Because only real money can buy a large number of stocks with these lost liquidity, or provide liquidity by buying related ETFs, so that investors' confidence can be gradually restored, thereby changing the trend of continuous decline in the market. Investor confidence will also be boosted gradually.

There are now 200 million shareholders and 600 million basic people in the capital market, so the performance of the capital market is related to the wealth of hundreds of millions of families. The continuous decline of the stock market will affect the property income of hundreds of millions of families, which will have an impact on consumption, and will also affect the strength of economic recovery, so it is urgent to take decisive measures to save the market, by completely changing the downward trend of the market, forming an upward trend, and pulling up more than 20% at the index level, so that the confidence of the market can be effectively boosted, thereby changing the pessimistic expectations of many investors, and avoiding more leveraged funds to passively close their positions, resulting in a stampede. For example, snowball products, financing orders, major shareholder equity pledge orders, etc., must prevent large-scale passive liquidation of these leveraged funds, which is the key to enhancing market confidence.

Now many high-quality stocks have been discounted by two or three percent, or even lower, from the perspective of value, so they already have the value of reverse layout. Now many long funds do not dare to enter the market, because they are afraid that the irrational decline of the market will be beyond their ability to endure, so through real money to save the market, change the decline of the market, give the bulls more confidence, is conducive to reversing the market trend. Over the weekend, the China Securities Regulatory Commission held a meeting of the party committee, saying that it would conduct in-depth investigation of clues of violations of laws and regulations, severely crack down on major violations of laws and regulations such as market manipulation, malicious shorting, insider trading, and fraudulent issuance in accordance with the law, and encourage and support all kinds of investment institutions to increase counter-cyclical layout and guide more medium and long-term funds to enter the market. In addition, the meeting said that it is necessary to actively coordinate with relevant parties to implement various measures to stabilize the market, stabilize expectations and confidence, and resolutely prevent abnormal market fluctuations. This is also the fourth time in half a month that the China Securities Regulatory Commission has spoken out to stabilize the market. From the perspective of the regulator, it is very desirable to take favorable measures to stabilize the market and stabilize expectations, so the risk of increasing leverage is once again reflected at this time. I have always emphasized to you to invest with spare money, never increase leverage, because once leveraged, time is not your friend, but your enemy, this is Buffett's original words, especially when the market is in an irrational decline, leveraged funds are easy to passively close positions. In the current stage of irrational decline in the market, it is recommended that everyone watch more and move less, maintain confidence and patience, wait for the national team to increase the efforts to rescue the market, and wait for the market to come to the market and appear a counteroffensive.