Two Stock Markets In Shanghai And Shenzhen Fell Desperately.

Today, also on the last day of February 2016, the two stock markets in Shanghai and Shenzhen fell desperately.

The Shanghai Composite Index fell 79 points to 2688 points, or 2.9%, at 3:18 p.m., the biggest decline in the past two weeks.

Many investors are depressed. Many waiters lose hope again, and many of them are losing their bearings again.

In fact, the reason is very simple. China's stock market is still in progress.

Maybe the bottom is 2500, maybe even lower.

However, investors are not convinced that they are still good. Why do people buy 5000 points? And more than 2600, there are so many people waiting to see that they are still selling at a cost.

In order for the Chinese stock market to enter the normal track, the most important thing is to establish a stock investor's basic confidence in the stock market and standardize the company's behavior so that investors can buy stocks as a long-term investment rather than speculation.

Even if the short-term minimum expectation is achieved before the problem is solved properly,

There will not be much improvement.

Have you ever bought cabbage? If you have bought it, farmers who used to have a lot of Chinese cabbage would rather rot in the field than sell it.

Why? Because the price is poor.

However, the price of vegetables before and after the Spring Festival in Guangdong is unusually high this year, and a pound of celery is sold for 20 yuan.

Why is that? Because the market supply of vegetables has been reduced by the weather.

The price of vegetables can rise and fall, mainly because the supply and demand relationship of the market is changing.

Farmers can not predict the market supply and demand before harvesting vegetables.

Once everyone is too optimistic about the market and vegetables, it turns out that when the vegetables are on sale, they find that they are oversupplied, the prices are dropping and vegetables are losing money.

In a few months, everyone grew less vegetables. Later, the market was short of demand for vegetables, and prices soared.

The changes in the stock market are different from those in the vegetable market.

The similarity is that price changes are all influenced by market supply and demand.

The difference is that the supply and demand relationship in the vegetable market is determined by the quantity of vegetables, and the supply and demand relationship of the stock market is determined by the fluctuation of the confidence of the shareholders.

Confidence in the stock market is determined by two key factors.

The first factor is the highest expectation in the short and medium term. The second factor is the fundamentals of the stock market.

For China's stock market, fundamentals have always been bad, mainly because the listed companies have not kept the position of shareholders, especially small and medium-sized shareholders.

The company made money, instead of thinking about dividends first, it continued to invest, or increased the salaries of executives, or large shareholders.

Over time, small and medium shareholders only have the desire to rise in speculative stocks and do not buy stocks as the main purpose of investment.

As early as many years ago, there was a popular saying in the civil society: "one foolish stock speculation turns itself into a shareholder."

This sentence is still very suitable until now.

That is to say, buying in China.

The main purpose is not to really become shareholders instead of stocks.

No change in stock investors' psychology of stocks is a complete failure of the stock market and a fundamental factor in the turmoil of China's stock market.

Another factor determining the confidence of the stock market is the short-term and medium-term stock price expectations.

Judging from the current situation of China's stock market, the short-term expectation should be 2500 points or lower, and the medium term expectation may be 3500 points.

However, the short-term volatility of stock market is inevitable before the short-term expectation is reached.

That is to say, the stock market crash today is a surprise, and this will happen for some time to come.

Recently, investors thought that a chairman of the SFC would be changed, and the stock market would inevitably get rid of the bear market.

In fact, the stock market has never been able to be tied up by manpower. Its performance is a concentrated response to the change of confidence of hundreds of millions of investors.

The buyer power of the stock market is always greater than the seller's strength before the worst short term expectations have not arrived.

That is to say, before the fundamental problems of China's stock market are resolved, the fate of the stock market will not be lost.

If you have any hope for the chairman of the new SFC, then don't give him the power to be myths. We hope that he can manage the listed companies at best, and everything will be on the right track.

But it takes courage and time.