The weekend market has been quiet. After spending the afternoon reviewing recent analyses in the cryptocurrency space, I can only say that those calling for a bull market seem a bit delusional, especially with the A-shares showing a 20% increase this week, which has made the teachers in the crypto space a bit restless. After all, compared to the unstable cryptocurrency market, the rise in A-shares is quite visible. Objectively speaking, if we don't start hyping up the cryptocurrency bull market now, clients will all rush to trade A-shares.
If you are currently torn between entering the cryptocurrency market or A-shares, and you see such bullish statements, I hope you can clarify your own needs and make a choice based on them.
Thoughts on the cryptocurrency bull market—
Although I have been a staunch bear this year, I never deny the possibility of a bull market next year. My short positions are merely because this year does not exhibit characteristics of a bull market, and we have not reached the optimal entry point. One thing I find particularly puzzling is that most retail investors seem to have a singular mindset. I do not mean to belittle anyone; I just want to tell you that any investment-related issue cannot be approached with a fixed conclusion to mechanically execute.
Arguing with me about bulls and bears is meaningless. This market is constantly changing over time, and the definitions of bulls and bears will not lead you to the pinnacle of life. If you think it's a bull market, you enter now, then get stuck and suffer losses, and when the bull market arrives next year, your conclusion is correct—what's the point? You have already been struck out.
The essence of the cryptocurrency bull market is that both the upper and lower limits are very high. Under the influence of leverage, you might exit or achieve returns far beyond expectations. The nature of gambling has never changed, which requires you to continuously monitor the market every day and make corresponding adjustments when the market changes.
As an ordinary person, the first thing you need to consider is whether you can endure the tediousness of watching the market long-term, and whether your understanding can reasonably interpret the daily fluctuations in the market, constantly modifying your operations. If you cannot, what qualifications do you have to play with leverage in a bull market? If it's just simple: I enter, I uninstall the software, the bull market takes off, and I become rich, then no one would ever face liquidation. In fact, during every bull market cycle, the liquidation rate far exceeds that of bear markets and stable markets within bull-bear cycles because bull markets amplify your greed, while bear markets reduce your desires.
Choosing the right track is far more important than your own efforts. I firmly believe that expertise is essential; finding the right talent in a field you are not good at is the most important. If you cannot find a suitable guide, no matter how much you learn, you will not grasp the essentials. Understanding the essence of the cryptocurrency market is more important than learning technical skills.
Currently, the issue facing you in the cryptocurrency market is that a major bull market has not yet begun. The market has experienced a long period of large box fluctuations this year, with multiple deep corrections in the second half. If you want to stay in the cryptocurrency market, you need to continue waiting and endure until the bottoming phase appears.
Advantages: Returns can far exceed A-shares.
Disadvantages: A single misstep can lead to total loss.
My personal view: If the amount of money you invest is very small and does not affect your normal life, then the cryptocurrency market is suitable for you to enter. The upper limit is very high, and even small amounts can yield significant returns in a bull market. Conversely, if the amount of capital is very large, the volatility of the cryptocurrency market will increase your pressure. If you belong to the upper-middle class or above, this circle is not suitable for you. Essentially, the so-called crossing of classes in the cryptocurrency market only allows the lowest-level workers to jump to the middle class, which is already the limit. It is not a simple leveling up; moving from level 1 to level 2 is relatively easy, but moving from level 2 to level 3 requires costs and energy that are not additive but multiplicative, often involving squares or even cubes.
Thoughts on the A-share bull market—
The only similarity between A-shares and the cryptocurrency market is that both are expected to experience a bull market next year, which is beyond doubt, and I will not reiterate this. Compared to the cryptocurrency market, A-shares have limited upper and lower limits, a high threshold, and are sufficiently safe. Moreover, A-shares are more straightforward and less complex than the cryptocurrency market. To put it bluntly, if you have a singular mindset, A-shares are more suitable for you. Don’t take offense at my bluntness; it’s a fact. It does not require you to possess high capabilities; you only need one conclusion: next year is a bull market, and you can execute mechanically.
Furthermore, relative to the cryptocurrency bull market, I cannot predict where the peak will be, nor can I find the basis for judgment at this moment. I can only provide a rough timeframe. Even that rough timeframe requires a series of policy announcements from the Federal Reserve next year to estimate. Simply put, it is not a static judgment but a dynamic one.
In contrast, the A-share bull market is a static judgment that has already been fixed. Let me explain.
In previous articles, I have already argued that this wave of the A-share bull market will not end hastily but rather encourage ordinary retail investors to enter and make money before capital enters China on a large scale to occupy the bottom.
Now we need to discuss the core purpose of this A-share bull market.
Understanding this is not difficult; choose the right perspective. Who does the A-share bull market serve? It serves to allow retail investors to make money, which in turn stimulates the economy, and stimulating the economy is for fiscal development. So, who is the player? The government! Knowing the player allows you to see the big picture.
The core purpose of this round of the A-share bull market is to help state-owned enterprises and local governments resolve massive debts (balance the books), with the core method being the issuance of new stocks to cash out and pay off debts. Based on this method, we can infer the stages of the stock market's development.
Stage one: The stock market surges, continuously rising, with the first batch of retail investors (old stockholders) occupying the bottom, while foreign capital waits in line to enter.
Stage two: Observing retail investors rush in, foreign capital slowly flows in, and the national team steps in to operate. State-owned enterprises and local enterprises begin to issue new stocks to cash out.
Stage three: The state-owned capital's debt resolution is completed, foreign capital is trapped at high levels, and bottom retail investors (old stockholders) continue to profit, leading the market into a slow decline, completing the bull market cycle.
We are still in the early stage of the first phase.
The second phase is the sprinting prosperity phase, where preparations are made to cash out and leave. The specific manifestation is that local state-owned enterprises begin to issue new stocks. Pay attention to the news broadcasts; do not listen to how good the economy is or how prosperous the stock market is. As long as the news mentions the start of stock issuance, you can run.
Where is the peak of this A-share bull market? It still depends on the fiscal goals. Currently, the total debt of state-owned and local governments is about 80 trillion yuan (this is just my guess without data, and I take no responsibility for it). Therefore, the total market value of the stock market must be raised to at least 1.2 times the domestic GDP. The current market value of the stock market is 90 trillion yuan, so it needs to be raised to 150 trillion yuan.
In simple terms, this wave of the A-share bull market is for balancing the books, meaning that when the market reaches 6000-8000 points, it will enter a sideways trend, followed by cashing out to balance the books. At that point, you can leave. You need to pay attention; this time it is not about pulling you in to balance the books, but genuinely allowing you to make money, letting foreign capital come in to fill the gap.
Conclusion: The A-share market has already set the upper limit. At the current price, you are looking at roughly double the returns. This kind of return expectation is only suitable for large capital amounts. Without several million, how can you achieve the expected returns? If it’s just a few tens of thousands of yuan, to be honest, it’s better to stay in the cryptocurrency market and follow me than to engage in the stock market.
Although I am in the cryptocurrency market, I absolutely will not force you to enter it. I am merely objectively telling you that when comparing the cryptocurrency market and the stock market, choosing the right track should be based on your own needs and capabilities, and then matching the appropriate track. Those who mindlessly hype the cryptocurrency market are either foolish or malicious!
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