Chapter 66 Drinking Soup or Eating Meat?

As the market closed at 3:00 PM, there was no miracle in the A-share market. The Shanghai Composite Index dropped by 1.77%, failing to break below the 2,400-point mark and closing at 2,405.35 points, while the Shenzhen Component Index fell by 2.5%, landing at 9,082.22 points.

The sluggishness of the banking sector and the weakness of securities left the entire A-share market shrouded in a lifeless atmosphere.

When the short-term trend remained uncertain, Zhang Yang chose to stay in cash and wait.

Many retail investors learned how to go all-in or split their positions, but they persistently failed to learn how to stay completely in cash, which is also the primary reason they lose money.

In no stock market is it possible to rise every single day; only a market with fluctuations can truly be called a stock market.

Take today, April 27th, for instance. By choosing not to make a move, Zhang Yang avoided the broader market's 1.77% decline. If he decides to enter the market tomorrow, his entry price will be lower than that of other retail investors.

Making money in the stock market is not a contest of luck, but of endurance.

Peter Lynch, hailed as the world's best fund manager, mentioned in his book *Beating the Street*:

No matter what investment method you use, ultimate success depends on one ability: the capacity to ignore the pressures of the environment and persevere until investment success is achieved. It is not intellect that determines an investor's destiny, but endurance.

British fund manager Terry Smith also stated in his book *Investing for Growth*: Investing is like a marathon, requiring long-term persistence rather than short-term strategies.

Learning and skillfully applying basic investment strategies such as staying in cash, splitting positions, and going all-in is the very first step toward profitability.

Since he was not utilizing leveraged funds, Zhang Yang did not need to pay daily interest to "Hongyue Investment."

……

Shanghai Financial Library.

Study area of the Financial Analysis Room.

Wearing a pure white, tight-fitting, high-necked short-sleeved top paired with a gray, high-waisted A-line mini skirt, the curvaceous He Jing watched as Zhang Yang approached with his laptop bag and asked, "Where did you go this morning? Why weren't you trading here?"

Clearly, she had been to the library earlier in the morning.

Zhang Yang put down his laptop bag, took out his laptop, and replied, "I used leverage, so I needed to find somewhere I could make phone calls."

"You went to a margin financing company?"

A flash of worry crossed He Jing's eyes.

Professor Wang Xingbang had once advised against leveraged investing, because out of every ten retail investors who jumped to their deaths from buildings, all ten had used leverage.

Without leverage, if the market dropped from 6,000 points in 2007 down to 1,800 points, you would lose at most 70% or 80%.

However, with leverage—even just 2x leverage—encountering such extreme market conditions would lead to a margin call, wiping you out completely with not a single penny left.

"Yes."

Zhang Yang did not hide it from her, nor was there any need to do so. He then steered the topic away, asking, "Is the third market research report finished?"

"It's done. I'll send it to you right now." He Jing did not dwell on why Zhang Yang chose to use leverage; she respected other people's choices.

"Good."

Zhang Yang acknowledged with a nod, then added, "There are still four days left this month. Push yourself and try to hand the fourth one over to me before the 30th."

Four market research reports a month was an agreement between Zhang Yang and Tao Yuyang.

Although they signed the "Co-creation Agreement" on April 9th, an agreement was an agreement. Even if it hadn't been a full 30 days yet, if four a month was the promise, then four it had to be.

"Isn't that too rushed?"

"It certainly is a bit tight."

"I'll do my best."

"Alright. If you lack inspiration, you can start with individual stock sectors; it's a bit simpler."

"Understood."

After a brief exchange between the two, Zhang Yang opened the third market research report prepared by He Jing, which focused on the economic recovery trends in Asia.

According to the research report, Japan's real Gross Domestic Product (GDP) in the first quarter of 2009 fell by 3.3% quarter-on-quarter, or at an annualized rate of 12.7%. The "75 Trillion Yen Investment Plan" did not seem to directly stimulate economic recovery as anticipated.

However, during the interest rate briefing in March, Japan indicated that it would further lower interest rates, not ruling out the possibility of negative interest rates.

What is a negative interest rate?

Taking Zhang Yang's leveraged financing as an example, borrowing 800,000 in funds to use at a 10% annualized interest rate means daily interest expenses of over two hundred yuan.

If the annualized interest rate were -10%, however, not only would Zhang Yang not need to pay borrowing interest, but the financing company would also have to pay Zhang Yang over two hundred yuan every day. That is a negative interest rate.

Japan's renewed easing finally caused a turning point to appear in the domestic economy.

On the other side, South Korea had already announced a rate cut on October 9, 2008. As of April 27th, it had cut interest rates six consecutive times, bringing the benchmark interest rate to 2% with a negative real interest rate, thereby increasing market liquidity.

The economic recovery of Japan and South Korea was somewhat helpful to their neighbor China, especially under negative interest rates, where foreign capital tended to seek out investment targets.

……

After thoroughly digesting He Jing's research report, Zhang Yang began making revisions.

He added content to the concluding page, mentioning the global impact of the H1N1 influenza epidemic in the United States and Mexico, smoothly extending it to the "shikimic acid" concept, and finally attaching his own evaluation of today's limit-up "fake dragon" stock, Rhein Biotech, along with a list of five domestic companies capable of producing shikimic acid, among which was Apex Group.

Busy until nightfall, Zhang Yang sent the market research report to Tao Yuyang via QQ files, leaving a message: "Shikimic acid is the new market mainline, and monster stocks will be born from it."

Afterward, he forwarded it to his VIP research report group, and then excerpted his trading insights for the day along with the latter portion of the research report, posting them onto his Baidu Post Bar account under the username "joker."

At this moment, Zhang Yang was taking a gamble. His distribution channels had very limited reach, but if it went out through Tao Yuyang, given Huaxin Securities' influence, it might just yield miraculous results.

After all, now that Huaxin Securities intended to promote him, it was impossible for them not to drive traffic his way.

Additionally, Zhang Yang learned from the list of brokerage buying departments for Rhein Biotech's top-list transactions that the controlling hot money group was the "Ningbo Dare-to-Die Corps."

As the leader of the Dare-to-Die Corps, Xu Xiang had a control style that Zhang Yang had specifically studied: he basically played trends that could feed you for ten years once opened, and he would never rush to smash the price after just two or three consecutive limit-up boards.

Furthermore, Zhang Yang knew from his memories of his past life that Rhein Biotech was a major monster stock of 2009, meaning the shikimic acid concept would be hyped to the skies in the coming period.

If you couldn't get into the leading stock, you could completely follow along and drink some soup behind the "second dragon" or "third dragon."

However, Zhang Yang could never have imagined that his VIP research report group had not only been joined by "Building-Jumper Bro" Chen Sanrong, but also by the second-tier hot money player "Chancheng Shadowless Kick."

……

Meanwhile, far away in Yueguang, Liao Guopei (Chancheng Shadowless Kick) was carefully examining the market research report Zhang Yang had issued a short while earlier.

After the failure of his previous attempt to control Changan Automobile, he had deeply reflected on his problems, determined to learn from the strengths of all schools of thought.

Like Chen Sanrong, he had inadvertently stumbled upon Zhang Yang's strategy posts, but instead of replying, he had simply clicked "follow."

Ever since then, he would occasionally check Zhang Yang's posts to compare operational strategies.

Upon discovering that Zhang Yang had created a communication group, Liao Guopei immediately joined to take a look.

Unlike Chen Sanrong's decisive withdrawal from the group, Liao Guopei transferred the money with a "give it a try" mentality after learning that Zhang Yang was selling market research reports.

Not looking meant nothing, but upon reading it, he realized the other party genuinely possessed real skills.

"Shikimic acid concept, Rhein Biotech," Liao Guopei muttered to himself as he looked at the research report.

As a hot money trader himself, he naturally knew this was the masterpiece of the "Ningbo Dare-to-Die Corps," orchestrated personally by the "Grand Helmsman" Xu Xiang.

"Perhaps I can follow along and grab some scraps." While muttering to himself, Liao Guopei closed the research report and opened an exchange group for seasoned retail investors.

The topic being discussed in the group instantly caught his attention.

[Little Bear Loves Limit-Ups]: Hahaha, this joker is such a clown, actually trying to rope Building-Jumper Bro into messing with the Ningbo Dare-to-Die Corps.

[Stock Trading Family]: Today's entertainment has arrived. This is a true joker, hahaha!

[Little Ares]: I've read his trading strategy posts too. I thought he was an alter ego of some big shot, but turns out he's mentally ill.

Because Zhang Yang's private message was too fantastical, Chen Sanrong had treated him as a joke, taking a screenshot and posting it in a 500-member discussion group. Soon after, this screenshot spread like a plague across major stock discussion groups.

However, the moment Liao Guopei saw Zhang Yang's idea of "intercepting the dragon," he didn't treat it as a joke like everyone else. Instead, his mind went completely blank, and goosebumps broke out all over his body.

"Plucking food from the tiger's jaws..."

"Robbing in broad daylight..."

After briefly recovering his senses, he began to ponder the feasibility of the matter.

Having gone nearly half a year without "feeding," Liao Guopei was hungrier than any other hot money trader; he desperately needed an upward surge that would shoot straight to the clouds.

Yet, his opposing player was the Grand Helmsman Xu Xiang, and deep down, he couldn't help but feel a lingering sense of dread.