October 16, 2007.

The Shanghai Composite Index jumped out of an exciting number of 6,214.04 points during the session.

This is a new peak that ChinaAMC's stock market has climbed to a new peak after 17 years of ups and downs since its establishment in 1990.

At the close, the Shenzhen Component Index also closed at 19,358 points, reaching an unprecedented height.

Countless shareholders squatting in front of the computer were extremely excited and cheered.

People on the trading floor high-fived each other as if a bright future was coming.

The numbers on their books look so beautiful that they may have forgotten that they are just a string of numbers, and there is still a gap between them and the lovely RMB in their wallets.

A gap where you sell and then take the money out.

And it is this seam that makes these wonderful numbers and their real wealth close at hand

During this period, the Chinese economy was in a golden age.

In 2006, the GDP growth rate was 12.7%, and in 2007, the economic growth rate even reached 14.2%!

We are low-key, and for some reason, we deliberately say that the economic growth rate is a little lower.

For several years in a row, the double-digit growth rate has made the growth rate of fixed asset investment, industrial added value, profits of industrial enterprises, and retail sales of consumer goods quite high.

At this time, China's economic operation can be said to be almost perfect.

The economic growth rate is high, inflation is very low, the PPI and CPI are not high, and the renminbi at this time has appreciated by 3% against the US dollar due to the exchange rate reform carried out in July 2005, and the appreciation against the euro and the yen is even greater.

The increase in the exchange rate has further contributed to the rise of A-shares.

Coupled with the institutional dividends released by the reform of equity division, financial capital represented by funds has officially begun to rise, and it has been playing games with industrial capital in the financial market.

In 2006 and 2007, A-shares once became the world's best-performing stock market.

During this period, the frenzied degree of shareholders was amazing, so much so that the subprime mortgage crisis in the United States failed to stop the crazy rise of A-shares.

Until 6124 points, the market was still extremely excited, and widely circulated, "it is difficult to buy a cow to turn back" view.

However, the deepening financial crisis across the ocean has directly caused our export-oriented economy to be hit hard, and on the other hand, just as important, if not more important, is that our own monetary policy has also gone wrong.

As our economy overheated, inflation began to rise.

The consumer price index and price index have both shown an upward trend.

The primary task of economic policy has become "double defense".

Prevent economic growth from turning from rapid to overheating, and prevent prices from rising structural prices from evolving into obvious inflation.

The central bank's monetary policy has shifted from "prudent" to "tightened" and raised the reserve requirement ratio 10 times.

Here, in fact, we have already made a mistake in judgment.

Since the fourth quarter of 2007, the global economy has obviously begun to weaken, the United States has begun to ease from monetary tightening, Europe and island countries have also stopped monetary tightening, only we are tightening monetary policy.

Such a large divergence in monetary policy was quickly caught by some astute financial institutions.

November 1, 2007.

The Shanghai Composite Index changed its previous upward trend and began to fluctuate and fall.

The decline lasted for a whole month, and it was not until 4800 that there were signs of stopping.

Such a decline, in the eyes of ordinary people, is nothing more than an adjustment of the market after a long period of rise.

So much so that many experts say: "The short-term pullback is for a better rise." ”

Including most brokerage institutions, they have also expressed their market views, and said: "4800 points is a long-term iron bottom, you can buy boldly." ”

However, investors have no idea that in those places that people can't see, a large number of funds have begun to gather secretly, waiting for a suitable time to smash the market to the end.

Fast forward to January 2008.

Our monetary policy has been further strengthened, and the central bank has raised the reserve requirement ratio five times in a row at a time when the external environment has changed dramatically.

This move did not have a direct impact on the trend of the stock market.

As a result, almost no one is wary of this.

The Shanghai Composite Index fell to around 4,800 points, and after stepping back to confirm the "bottom" for the second time, it seemed to have returned to its original upward trend, which lasted for a month, allowing the index to recover most of the mountains and rivers and return to the position of 5,400 points.

However, just when the index was near 5,500 points, the broad market candlestick closed three small doji in a row.

Many believe that this is after a month of continuous gains in the market, the upward offensive has met resistance, and soon the market will carry out the next round of upward offensive and break through 5,500 points in one fell swoop and return to 6,000 points.

But in fact, this is the bears beginning to find a unified pace, greeting each other, warming up for the big moves that followed.

On January 16, the bears, who had gradually adapted to the rhythm of each other, suddenly exerted force, and the Shanghai Composite Index dived directly at the close, falling by 2% on the day.

Among them, the Shenzhen Composite Index plummeted by 3.58%.

In the next two weeks, the bears smashed the market several times, causing the market to start a "sleet" downward mode, and on January 22, it gapped low and broke through the "bottom" support of 4,800 points.

The Shanghai Composite Index plummeted 7.22% on the day!

More than 1,200 listed companies in the two cities fell to the limit.

In this round of epic smashing, a large number of growth stocks represented by banks are the most disastrous.

Industrial and Commercial Bank of China, China Construction Bank, and China Merchants Bank were once smashed to the fall limit, which was unbearable.

In the end, the Shanghai Composite Index was able to hold the 4,500-point mark under the takeover of investors from all walks of life.

Such a signal is released, in fact, the more senior old shareholders know what the situation is.

As a result, many "high-end people" in the financial industry also began to ship with these institutions, resulting in the market being violently suppressed, forming a five-consecutive negative trend.

At this time, the market has formed a very clear downward trend.

So much so that the index fell steadily, and soon approached the 4,000-point mark.

This position is already the starting point of the fourth round of the rise of the market in 07.

Therefore, the market view generally believes that 4000 points should be a "medium-term opportunity to open a position".

Even some senior economists have frequently appeared on television, saying that "the market has fallen beyond its fall".

At this time, many listed companies began to release their performance reports for the previous year, including many high-growth and high-profit companies, which attracted more investors.

Under such a favorable situation, a large number of shareholders regained their confidence and did not hesitate to take out their passbooks and wives' books to increase and replenish their positions in the trapped stocks.

There are even some extreme investors who have begun to use leverage to invest more money in the market to buy the bottom, in an attempt to create the myth of getting rich overnight.

Financing and stock speculation have become a hot topic for a while.

However, to everyone's surprise, the 4,000-point mark did not show a decent rebound at all, and after only three trading days, it was exhausted by the market's selling, and accelerated its decline, heading straight for 3,500 points.

At this time, the market has completely lost its mind.

Many stocks began to blindly fall and suddenly crashed without saying a word, and were smashed to the fall limit in just a few minutes.

Originally, after listing, at least five new shares with a daily limit could be harvested, and they also began to fall below the issue price on the first day of listing.

At this stage in the stock market, almost all the investors who bought the bottom were trapped across the board.

The trading volume of the broader market, relative to the peak of 6,000 points, has shrunk by nearly half.

Although many people don't want to believe it, the bull market really seems to be gone forever.

April 9, 2008.

After hitting a 20-day high in intraday trading, the Shanghai Composite Index took a sharp turn and plunged 5.5% as of the close, with the share prices of more than 700 listed companies falling to the limit.

The market almost suffocated.

Looking at it, in just half a year, the Shanghai Composite Index has fallen from a peak of 6,124 points to 3,100 points today, a decline of 48%.

The depth and speed of the decline are unprecedented.

At this time, not only are investors worried that their wealth will evaporate, but even experts have begun to call for a bailout.

People from all walks of life, some influential figures, finally stood up at this time, shouting, "The financial market must be stabilized so as not to trigger the horror consequences of the deeper level of the economy!" ”

(End of chapter)