From Macau to Las Vegas
1/5, the casino's profit model
Wu Jinglian once compared A-shares to a casino, thinking that even a casino is not as good, and the casino must be fair, not a thousand dollars.
At that time, I thought this point of view was a bit exaggerated, because the impression of casinos came from the appearance of Macau casinos in Hong Kong gambling films, until I read the analysis report of listed companies in the gaming industry, I found that the business model between casinos and casinos is still very different.
Many people think that casinos mainly rely on some big gambling customers, in fact, this kind of "VIP high roller group" in Macau casinos is an alternative in the global casinos, and most casinos earn money from ordinary gamblers (tourists).
Macau has an average of 0.38 rooms per visitor per day, compared to 1.3 rooms in Las Vegas, and the average length of stay of Macau tourists is only 1.2 days, compared to about 4.4 days in Las Vegas.
In terms of revenue, Macau generated about US$37 billion in gaming revenue in 2019, five times that of Las Vegas, the second largest in the world, but non-gaming revenue accounted for 11% of the total revenue of Macau gaming companies, while Las Vegas in the United States accounted for 73%.
Obviously, it's gamblers who come to Macau, and tourists come to Las Vegas.
The basic business model of a Las Vegas casino is like this, assuming that the five-day budget for two people is 5,000 dollars, including 2,000 yuan for gambling and 3,000 yuan for food and accommodation. Suppose that 80% of tourists are losing their walks, 10% are flat, another 9% are more or less profitable, and 1% are making a lot of money, and finally a balance is reached. Casinos, on the other hand, make money through gambling commissions and other travel spending.
Judging from the revenue structure of the Las Vegas casino below, the casino is becoming more and more like a tourist integrated resort.
The mystery of this business model lies in the consumer's "psychological account", the general consumer will position the Las Vegas casino as a tourist destination, positioning themselves as vacation tourists, so they will not separate the gambling money and the cost of food, accommodation and transportation, but the all-inclusive into a comprehensive budget, so the casino lost 2000, and the general tourism expenditure is no different, and tends to bring out the money are "spent", not only play (lose) happy, there will be repeat customers.
However, if the gambler's gambling money is too large and obviously exceeds the cost of travel, this psychological account will become a gambling purpose, and he will care very much about winning or losing.
Therefore, although many gambling tables are gambling in nature, tourists lose is the casino earns, but the casino does not want small gamblers to lose too much, ordinary people lose 10,000 US dollars in one night, may not come again in this life, but if you lose 1,000 US dollars a year in ten years, but leave a good memory.
This is the reason why all casinos have to do entertainment and leisure tourism projects to attract tourists, the purpose is to confuse the psychological account of gambling funds and tourism expenses, from the above structural diagram, in recent years, casinos have also been reducing the proportion of gambling revenue.
Of course, there is still a difference between casinos and general tourism, and they still need to have an example of getting rich overnight as the core attraction, so this constitutes the most basic business model of casinos:
Let most people lose a small amount of money, support a very small number of people to get rich overnight, and then use the latter as an example to attract the former to continue to join.
It's a pity that A-shares are exactly the casino model above.
2/5. Is A-share a casino model?
It is generally believed that the difference between the stock market and the casino is that the casino is a negative-sum game, while the stock market is still rising for a long time after all, and it is a positive-sum game.
If you look at it in the long run, the stock market is indeed a positive-sum game, but the word "long-term" is only an ideal state.
According to statistics, more than 90% of the personal accounts that are still active entered the market at the high point of the big bull market in 2020, 2015 and 2007, of which more than half of the dormant accounts that have not traded for a year, and the rest are empty accounts that were sold in disappointment because of losses.
Therefore, most A-share investors will not invest for more than 3 years, because A-shares are almost a bull market every 7 years on average, and 3 years is just a bear market cycle, so even if A-shares are a positive-sum game in the long run, most retail investors are participating in a negative-sum game.
A standard retail investor portrait that is still active now is, 30~35 years old, graduated from a bachelor's degree, opened an account in the big bull market in 2020, although "make a year, lose three years", most of the people who speculated in stocks together at the beginning left, but still choose to insist, I believe that I will be able to earn back in the future, and continue to try new investment methods.
Some people believe that the national fortune will continue to rise, some people believe that the bull market will always come, some people think that as long as they accumulate experience, they can make money sooner or later, some people feel that they are unwilling to lose money, and they will leave when they return to their roots, and some people are purely "small gambling pleasures", after all, A shares are the only legal casino in China.
And the common spiritual pillar of everyone is that there has never been a shortage of myths of getting rich in my A shares, and everyone will have one or two shareholders around them who claim to be able to make money in the stock market for a long time.
So my big A is naturally a casino, and it is a "tourist-type casino" with a healthy model of Las Vegas, where most people lose a little and a small number of people make a lot of money, and by the way, they solve hundreds of billions of IPOs every year for the country.
The biggest feature of A-shares is that there are many retail investors, although the proportion of positions is not high, but the proportion of transactions exceeds 70%, which is a typical market dominated by retail investors.
Retail investors have made great contributions to large A-shares, but it is a pity that the regulatory thinking in the past ten years has been to reduce the proportion of retail investors and support institutional investors, and they have gone in the direction of "Macau casinos" without hesitation.
3/5. Return from the Macau model to the Las Vegas model
The reason why Macau has embarked on the high roller mode is because Macau is too small, tourists are all going back and forth on the same day, and the income of the non-gaming industry has not been able to rise for a long time, so it can only use the form of "high roller group" to attract large customers in China and Southeast Asia, but this has also led to a series of social problems.
In contrast, the U.S. stock market has also chosen the "Macau model" because it has a monopoly on the world's best listed companies, so it can attract global "high rollers", but the premise is that these highest-quality listed companies have provided a positive sum game for a long time, forming a virtuous circle and having an obvious monopoly in the global asset market.
Therefore, the long-term reform direction of the A-share capital market is also to learn from the United States, expand institutional investors, and focus on the direction of the regulator's support, first public funds, and then quantitative funds, in terms of actual resources, trading channels and even system design, are obviously inclined to large institutions.
If the results can be like in India next door, after being dominated by institutional funds, it will rise year by year, it will naturally be a great achievement. However, when A-shares are growing at a high speed, they are also short bulls and long bears, and the previous article has analyzed that there are profound reasons for the "short bulls and long bears" of A-shares, which are the excessive "involution" of domestic funds caused by capital controls, and any investment opportunity will quickly rise into a bubble, and then a long decline to "go to the bubble".
As a result, the proportion of institutional investors has increased, not only has it not become a "bull long and bearish short", but has increased the unfairness of market resources.
The most important thing in the casino is fairness, high rollers can have VIP private rooms, but the winning rate is the same, in order to make retail investors lose convincingly, in exchange for a tax-collecting term, it should be "pull the most geese, listen to the least goose call", now the goose feathers are plucked a lot, but the goose has been calling.
A small loss is just that, once it encounters the kind of stock market crash at the beginning of this year, or when other people's families are making money, the "goose" will call even harder, and it will run to XXXXX, which finally alarmed the Party Central Committee.
A-shares are characterized by a large number of retail investors and high loyalty, and they should naturally engage in the Las Vegas model, but you have to become a Macau casino and want to attract global high rollers.
4/5. The art of plucking goose feathers
The previous regulatory thinking of A-shares was to establish the concept of long-term investment and value investment, but this sounded lofty direction and was not realistic at all.
Where there are many retail investors, the easiest to rise must be junk stocks, everyone has seen "The Wolf of Wall Street" The secret to making money is to recommend to them companies in the pink sheet market, usually penny stocks, most of which are less than $1 (cheap and easy to start), do not need to provide financial reports, information is seriously asymmetrical (conceivable space), stock prices are manipulated by large funds (Belfort manipulated a shoe company), and often skyrockets and plummets (selling the myth of getting rich overnight).
Comparing the standards of A-share theme stocks, you will find that retail investors are the same thing in the world.
The real direction of supervision is not to care what retail investors buy, but to stabilize the bottom line of "fellow countrymen don't go".
Casinos welcome small gamblers, but also related to the ergodic setting of the gambling game, I have previously analyzed in the article about probability, in a 50% winning rate of the game, as long as you do not lose out, there is a chance to return to the capital, but in a certain period of time, the less the gambling money, the higher the probability of losing. Therefore, the small gambler business is a typical "plucking goose feathers and geese without calling".
If it is a negative-sum game, and there is no constraint, retail investors theoretically as long as they do not go, they will lose all, the stock market is not a casino after all, to maintain the long-term prosperity and stability of my big A casino, not to let retail investors do long-term investment, but to create a retail-friendly "casino environment", so that retail investors lose less "pain", which is the core of system design.
5/5, return to casino common sense
Returning to the positioning of casinos, there are three basic common senses:
1. Fairness, fairness, or TMD fairness
Since retail investors are inherently disadvantaged compared to institutions, this fairness is not "institutional fairness", but "outcome fairness".
Taking the controversial securities lending business and the resulting refinancing of restricted shares as an example, everyone's dislike for this business is not that the stock price is shorted, but that it is unfair.
The problem is that the management does not want to open up securities lending on a large scale, and wants to use securities lending to short-sell to make the valuation of A-shares return to reasonable, so that such a seemingly "fair system" business actually lacks "fair results", resulting in retail investors being repeatedly cut leeks by quantitative funds.
The short-selling mechanism is very important for a normal market, and instead of banning it, it should be opened to a greater extent, requiring brokerages to provide retail investors with the convenience of securities lending.
Many people think that retail investors will lose money if they are short. This goes back to the essence of the casino, gamblers are happy to lose all the gambling budget, lose money with their ability, lose 100,000 yuan are convinced, because of the unfairness of the system and lose money, loss of 100 yuan can not swallow this breath.
There is also high-frequency quantification, which is mainly harvested by retail investors, and it is also necessary to limit the frequency of its transactions.
Of course, it is not enough to lose too much fairly, but we still have to find a way to make the balance of results tilt in favor of retail investors.
2. Give certain compensation to loss-making retail investors
If the casino wants more people to come in to play, it is necessary to control the scale of single-family losses, if "seven losses, two draws and one earning" is inevitable, so that most people have small losses, and the losers get a certain compensation, similar to hotel discounts and other discounts.
The most genius innovation of A-shares is the world's only market value allocation system, the rate of return is generally the highest in the account market value of about 20~300,000, which is a typical way to give profits to small retail investors.
It's a pity that there are too few designs that are completely biased towards retail investors like A-shares, and most of the innovations in recent years are not conducive to retail investors.
I think it can also be considered that for retail investors with more losses, stamp duty, individual income tax and even brokerage commissions will be refunded.
3. Set up a pink sheet market for A-shares
One thing I have always wondered is, why does the Science and Technology Innovation Board have a starting point of 500,000 yuan, but ST has no limit? Do you think that the risk of companies on the Science and Technology Innovation Board is greater than that of ST stocks?
The ST system should be a good system for the protection of retail investors after the market value of A-shares, but it is not perfect enough, and the scope of ST should be expanded, and those who have violated the rules many times, been questioned by the exchange many times, and the total market value is too low, and then upgraded to a powder sheet market for A-shares, in addition to restricting the investment of retail investors below 500,000, it is also necessary to limit the trading time.
There must be a part of the retail investors who "play is the heartbeat" of bad gamblers, and some of the listed companies do not meet the delisting standards of bad companies, it is better to draw a special field with a high threshold to achieve resource matching, so as not to affect the normal field.
You may think that these measures are not market-oriented enough, but we have not worked hard to marketize, and we have not learned less from the advanced experience of European and American countries, but we are limited by the underlying system of politics and economy, and basically we can only learn a little bit, and the result is worse than not learning.
To summarize this article, if you want to do a good job in my big A shares, it is necessary to return to the essence of the casino, pay the myth of a few people getting rich with the losses of most people, and basically strive to be fair and protect the bottom line of small gamblers' accounts.
First published on the WeChat public account of "Thought Steel Seal (ID: sxgy9999)", it tells the concept and method of value investment