Cohort 1, Session 1 · Investment and capital operations

The stock market is a greedy game of winners and losers, with no experts

Key insights

The stock market isa battleground of greed, with only winners and losers, no experts. Only by understanding "the Dao moves in reversal" can you stay clear-headed in investing.

2.1 Understanding the Nature of the Stock Market

Structure of Stock Market Participants

• Stock Market Food Chain
• Top tier: state-backed funds, large institutions, foreign investors (market makers)
• Middle tier: hot money traders, private equity funds, big players (big players)
• Bottom tier: retail investors (leeks)

Data Overview

“More than 5,400 stocks means more than 5,400 market manipulators; retail investors are the ones being fleeced.”

2.2 Stock Market Harvesting Cycle Model

Complete Cycle Diagram

阶段1：低位吸筹
    ↓ 散户：恐惧、观望
阶段2：启动拉升
    ↓ 散户：小仓位试探
阶段3：一字涨停
    ↓ 散户：买不到，更加饥渴
阶段4：横盘震荡（换手率阶段）
    ↓ 散户：终于买到了！
阶段5：继续拉升
    ↓ 散户：加仓！卖房卖车！
阶段6：高位派发
    ↓ 散户：站岗
阶段7：暴跌收割
    ↓ 散户：套牢、割肉
阶段8：回到起点
    ↓ 开始新一轮...

Retail Investor Psychology Trajectory

2.3 Investment Applications of “The Reversal Is the Movement of the Dao”

Soros’s Law

"I am fearful when others are greedy, and greedy when others are fearful."

Current Market Outlook (End of 2025)

Market Conditions：

• The stock market rises from 2,700 to over 3,000 points
• Consecutive up days; trading is booming
• There are even system outages (a mad scramble for money)

Fund Flows：

存款 → 股市 → 楼市资金流出

Forecasting Logic：

1. Stock market rises → funds flow out of the property market → home prices fall
2. Stock market fluctuates and corrects → funds flow back into the property market → asset acquisitions
3. Tycoons complete another round of wealth accumulation → small investors and the middle class are fleeced

The see-saw effect between the property and stock markets

• Stock market rises
  • Funds flow into the stock market ← · Funds flow out of the property market
• Deposits decrease
• Conclusion: When the stock market rises, the property market must fall

2.4 Investment Decision Principles

Conditions for participation

Conditions under which not to participate

Investment discipline

Entry Principles：

1. Build positions gradually near the bottom
2. Set a stop-loss level for each stock
3. Allocate no more than 20% of total capital to any single stock

Holding Principles：

1. Take profits gradually when the target price is reached
2. Exit decisively if the price falls below the stop-loss level
3. Do not let greed control you or fear dictate your decisions

Exit Principles：

1. Exit within 3-6 months
2. Recover at least your initial investment once the position doubles in value
3. Leave the profits invested to keep growing

2.5 Personal Investing Lessons

Instructor ＊＊'s Personal Experience

"In 2006-2007, the stock market climbed to 6134 points. I kept trying to exit at the top, but failed to get out."

Lessons Learned：

1. Overconfidence: "We always feel that we're really capable"
2. The technical analysis trap: "Studying candlestick charts and human nature is useless"
3. Unable to take profits: "From 1 million to 3 million, unable to stop"
4. Cut in half and trapped: "Even after being cut in half, still thinking it needs to undergo an adjustment"

Core advice：

"You can participate and give it a try; small-scale messing around is fine, but I don't recommend playing with anything major this way."

Key quotes

• "The stock market isn't there to help you make money; it's there to fleece you."
• "There are only winners and losers, no experts."
• "It rises by the daily limit in a straight line and falls by the daily limit in a straight line, making it very difficult to get in or out."
• "The people standing at the top of the mountain are the final bagholders."
• "The people who truly make money are the ones who rush in now, hold on, and exit after 3–6 months."

Practical application

Pre-investment self-checklist

• ☐ Would losing this money affect your life?
• ☐ Are you prepared to lose 50%?
• ☐ Have you set a stop-loss point?
• ☐ Can you hold for 3-6 months without making a move?
• ☐ Can you withdraw your principal after doubling your investment?
• ☐ Will you avoid borrowing money and using leverage?

Cultivating the right investment mindset

1. Admit that you're a sucker: Knowing your own weaknesses keeps you from becoming blindly overconfident
2. Reverse thinking: Don't go where the crowds are
3. Control greed: Set a target and leave once you reach it
4. Accept losses: Stop-losses are part of investing

*"Investing is a game that goes against human nature; only by conquering yourself can you conquer the market."*