What is the essence of the stock market?

The author has always advocated that investors should first understand the nature of the stock market. Simply put, the stock market is three elements: capital, money-making effect and profit model. This is an objective law that no matter how the stock market changes, no country, no region and no time will change. The flow of funds forms the rise and fall of the stock price, and the constant movement of funds forms the trend of the market, but why do funds move? It is the money-making effect of the market. Profit-seeking is the nature of funds, and no fund has ever entered the market to do charity. Even if the stock exchange or the national level rescues the market, it is also to save the "market" system and let it play the role of making money again, instead of taking out some money out of thin air to help those who are trapped in the stock market.

This is also because each fund group in the stock market has different profit models, that is, different ways to make money, which is actually clearly analyzed in the author's book "The Law of Making Money in the Stock Market: The Secret to Make You Earn More". For example, the state provides financing channels for more legal persons such as state-owned enterprises, private enterprises and small and medium-sized enterprises through the financing investment and financing mechanism of the stock market, thus reducing the financial burden of the state, giving more support to the real economy, making the tax, employment and financial security systems have greater development space and giving more investment channels for funds. Exchanges and securities companies depend on the volume of market transactions and the number of listed companies. Maintaining such a market scale will enable them to continuously earn commissions, management fees, sponsorship and underwriting. Listed companies realize greater profit space through financing channels in the stock market. As for institutional investors, such as funds, self-operated brokerage funds and overseas institutional investors (QFII), on the one hand, they get the management fees of the funds they manage, on the other hand, they compete with various funds in the market through multiple advantages.

In fact, shareholders are now the most embarrassing group with the least advantages, and it takes the longest time and the most conditions to establish a profit model. Therefore, shareholders are the group that needs to work hard most, and also the group that should work hard most. But in fact, on the contrary, investors have become the laziest and most eager group among the above groups. On the contrary, the most advantageous exchanges, brokers, listed companies and institutional investors are constantly improving their own level and trying their best to develop and improve their profit models, so as to obtain more profits from the stock market. For example, the exchange constantly makes the market mechanism more rigorous and scientific, and makes the investment varieties more and more abundant. On the surface, this is to increase the money-making effect of the market. This actually masks the "transaction cost cycle", that is, the more funds enter the market, the more active the transaction, and the more funds the market "consumes" (such as commissions, taxes, financing, additional issuance, and money circle). ), the more you need funds to enter, the more you need to do. This directly leads to the improvement of the ability requirements for investors. For example, many investment products and listed companies have been deeply involved even before investors have had time to understand them.

Brokers and institutional investors who have the scale of funds to make money are not idle. With the deepening of investors' understanding of the stock market, it is difficult for traditional methods to attract customers. Therefore, it is necessary to whitewash the market more, expand the profit-making effect of the market, and attract investors by introducing superficial things such as various systems and technical indicators, without mentioning the three key elements of the market-capital, profit-making effect and profit model. Many investors mistakenly believe that as long as they know technology, graphics and indicators, they really understand the stock market. In fact, knowing this is not enough. Because these are only the appearances after the stock market trend, and they are the concrete embodiment of market rules at a certain point in time, not the whole market, you can't really judge what will happen in the market at the next point in time.

How to treat technical graphics and technical indicators? This is a realistic problem for investors. The stock market is unpredictable and rich in information. If investors want to get close to the stock market, they need to know the stock market trend. Then the easiest way is to look at the K-line chart, which directly reflects the market dynamics and derives various technical figures and indicators. By analyzing graphs and indicators, people can make various predictions about market trends, but at this time, investors are often easily confused and don't know whether to believe in market trends or technology. To answer this question, we need to look at the time sequence of the whole process from the generation mechanism, that is, first look at the stock market trend, then look at the K-line chart, and then look at the technical graphics and various indicators. This order determines that if the three appear at the same time, we should first pay attention to the stock market trend, followed by the K-line chart, and finally the technical figures and indicators.

This is very similar to weather or geological disaster prediction. Based on natural phenomena, relevant charts are made, and then various forecasting systems are summarized and sorted out on the basis of charts, and then various indicators appear. Indicators can help us predict weather or geological disasters, but such indicators need to rely on a large number of records and charts, and charts need to be obtained by analyzing enough natural phenomena, so it is easy to see some natural phenomena beyond the scope of existing records and charts (such as once-in-a-century disaster weather), which is beyond the application scope of indicators and analysis systems, resulting in blind spots and inaccurate predictions. So is the stock market. Technical indicators and graphics are only tools to help us understand the K-line chart, which is only an intuitive reflection of the stock market trend. Only when the stock market trend appears first can there be other kinds, which is why there will be hundreds of technical figures and completely different directions and conclusions in the same stock market trend.

Therefore, successful people never reject technology, because it is also a record of the market, but they are not superstitious about technology. They know that technology is only a means, not a dominant factor. The real significance of technology is to judge the "inertia" of the market through the re-integration of past history and data, and to comprehensively judge the market trend by understanding the "inertia" and superimposing other stock market laws, such as fund dynamics (funds are the ultimate executors of stock price and stock index changes), fund profit model and market profit-making effect (this is because the purpose of any fund is to make profits). Losers are easy to fall into misunderstanding, mistakenly thinking that technical figures and indicators dominate the stock market trend, putting the cart before the horse, and the result is lost in the trend. Because unless future indicators are added to the technical indicators (that is, tomorrow, the day after tomorrow or the future stock market trend), they will always lag behind the market trend, and each technical indicator has its scope of use. Once out of range, it is easy to produce wrong results. Therefore, if we only start from technology and ignore market trends, then the final result will be abandoned by the market. It seems to rain in your area. You can't complain about the inaccurate weather forecast, because it probably won't rain near you. This is a fact.