The More Bullish The Stock Market Is, The More Losses Will Be Incurred. The Greater The Risk Of The Bull Market Entering The Market Is

The stock of Alibaba, a Chinese e-commerce giant, plummeted 8.78% to $89.81 per share on January 29, 2015, down about 25% compared with $119.15 per share on November 10, 2014. This is the stock market. Stock speculators are like riding a roller coaster. The value of the stock they hold is constantly jumping up and down, and this change is more intense in the bull market.

Just like real estate speculation, housing speculation is not for housing, nor is it for dividends. All investors hope to buy at a low price and sell at a high price to earn a price difference. This is speculation, because it will not add any wealth to the society and will not add a dollar to GDP. The price of a house will not be changed into 10 houses from 100000 yuan to 1 million yuan, providing housing for more people; The price of a stock is raised from 5 yuan to 50 yuan, which will not make the dividend 10 times of the original, providing more products for the society.

In the stock market, we call the continuous rise of the stock index a bull market and the continuous decline a bear market. The bull market is the performance of the market's demand exceeding supply, that is, there is more capital entering the stock market and more demand for stocks. Without issuing new shares, the total supply of stocks is certain, and then stocks appear scarce. The invisible hand of the market will raise the price of stocks to achieve the balance between supply and demand. If people generally believe that stock speculation can make money, new investors will continue to enter the market, and old investors will also continue to increase their positions. The capital in the big pool of the stock market will become more and more, which will support the stock index.

Shareholders must be clear that this stock index is held up by shareholders with their own money. People who make money by speculating in the bull market earn the money of new investors or old investors. A friend called me to tell me how much money I made from stock trading. Seeing that I was not happy about it, he asked me why? I told him that you Stock speculation I made money because someone lost money in the stock market. I am happy for you to make money in the stock market, but also sad for the people who lost money in the stock market. When we neutralize the two, we are very indifferent to the news.

In fact, the nature of stock speculation is the same as that of "rat society". There will not always be people entering the market, nor will there always be funds entering the stock market, because people need to consume material things to survive. Therefore, shareholders should not expect that the stock market will continue to be bullish at any time. The stock index does not know when there will be a downward turning point to enter the bear market and complete a Market cycle 。

Most shareholders believe that bull market Invest in stocks to make money. If you are an old investor, the chances of making money in the bull market will increase, because there are new investors entering the market at this time, which makes it easy for the old investors to get out of the trap, that is, the old investors earn money from new investors. However, if the stock market is viewed as a closed system, the money earned by the investors who make money is the money lost by the investors who lose money. Stock speculation is a zero sum game like gambling.

However, the stock market is not closed, and there will be some spillover costs, because the government will charge transaction stamp duty on shareholders, and brokers will also charge commissions and other fees for shareholders. According to the statistics of China Securities Regulatory Commission, the transaction amount of shares in 2014 was 74391.298 billion yuan, and the transaction stamp tax was 74.238 billion yuan, or 0.1% of the transaction amount of shares. In addition, the commission and other fees charged by the securities companies are roughly three times of the transaction stamp tax, namely 222.714 billion yuan. In 2014, the government and securities companies absorbed 296.952 billion yuan from shareholders, accounting for 0.4% of the transaction amount of shares.

If the after tax net value of shareholders' dividends is less than 296.952 billion yuan, shareholders must lose money. China stipulates that the tax rate of dividend income tax is 5% when holding shares for more than one year; The tax rate is 10% from one month to one year; The tax rate for holding shares within one month is 20%. We calculate it at 10% per year, which means that the dividend must be more than 329.947 billion yuan for shareholders to be equal. At the end of June 2014, the stock market value was 20302049 million yuan, which requires a dividend yield of more than 1.63%. There were 2613 listed companies in China at the end of 2014, and how many of them would reach this dividend yield?

Since the transaction stamp duty charged by the government and the commission charged by the securities companies are proportional taxes, that is, they are levied according to a certain proportion of the stock trading volume. The higher the stock index, the larger the trading volume, the higher the spillover cost, and the more shareholders will be compensated.