Becoming the King of Bottom Fishing After Going All-In on A-Shares

Wednesday evening, September 17, 2008.

The third-floor lecture hall of the School of Finance and Economics, Renmin University of China.

The blackboard displayed today's salon topic: "Where is the A-share market headed amidst the financial crisis?"

The projector displayed the alarming monthly candlestick chart of the Shanghai Composite Index.

The index plummeted from 6124 points to 1929 points, a drop of 68.50%.

There were two people on the stage: the host, Mr. Zhou Xingbang, and Mr. Fan Zhi, a senior researcher at CITIC Securities.

After clearing his throat twice, Zhou Xingbang said, "Everyone is free to express their opinions. To be honest, from this vantage point, nobody can see anything clearly."

A female student in the front row stood up first and said clearly, "On September 15th, Lehman Brothers went bankrupt, Merrill Lynch was acquired, AIG was in crisis, and the global stock market crashed."

On September 16, the People's Bank of China cut interest rates and reserve requirements, but A-shares fell sharply on heavy volume and dropped below 2000 points.

Today, market panic reached its peak, with almost all institutions discussing the global financial crisis, a hard landing for the economy, and further declines in A-shares.

99% of institutions believe that it is time to control positions, prioritize cash, and avoid risks.

CITIC Securities and CICC have consistently been bearish, believing that A-shares will fall to 1500 points.

I think the A-share market might fall below 1500 and head straight for 1000 points.

As soon as he finished speaking, the classroom erupted in discussion.

"Agreed. I think going in now is like catching a falling knife; the market might drop to around 1300 points."

"The A-share market should be completely rebuilt! It's beyond saving!"

"However, Li Daxiao of Yingda Securities said that the area below 2000 points is a long-term investment zone, and many stocks have investment value, but there will still be short-term fluctuations."

"Give me a break! I listened to him and he kept comforting me, but the market has plummeted from 6124 points to the current 1929 points. I've lost a fortune."

Fan Zhi, a visiting researcher at CITIC Securities, said in a low voice, "From a fundamental perspective, there are indeed no clear signs of stabilization. In our internal strategy meetings, we also advise clients to control their positions and observe more while acting less."

The atmosphere froze instantly, and everyone fell silent.

Zhou Xingbang glanced around and noticed a student who seemed dazed.

"Lu Chenzhou, stand up and state your opinion."

His roommate gently nudged him before he realized what was happening.

He was reborn.

Just moments ago, he was a data analyst at Oaktree Capital.

Oaktree Capital is globally recognized as the "King of Bottom Fishing" and "Market-Fighting Gold Rush".

With a core focus on distressed assets, low-priced bonds, and oversold targets, it is a benchmark institution in the field of professional bottom-fishing.

He was working overtime at the company, researching how to buy A-shares at the bottom, when he suddenly felt chest pain and difficulty breathing.

Suddenly everything went black, and when I opened my eyes, I was back in 2008, the first half of my junior year of college.

"1929 points is not the beginning of hell, but a golden opportunity given to us by history. Buying now is making money, and now is the time to buy at the bottom."

The classroom fell silent for a moment, then erupted into chaos.

"Are you crazy? Lehman Brothers has collapsed, and you still dare to call for buying? Buying at the bottom? That's more like ransomware!"

"From 6,000 points to 1,900 points, is this a golden opportunity? It's a bottomless pit."

"Are you out of your mind from all that studying? You think buying stocks is a guaranteed profit? Do you really think the stock market is child's play?"

Fan Zhi's tone was somewhat cold: "Classmate, the market can't be conquered by courage alone. The consensus among institutions is that it's only a matter of time before it falls below 1500 points."

Lu Chenzhou said calmly, "You're afraid because you're only looking at past candlestick charts."

What I look at are valuations, policies, cycles, and human nature.

I assert that the area below 2000 points is the ultimate bottom of this bear market.

Now is the time to buy in with all your funds.

Zhou Xingbang's expression changed slightly, and he quickly tried to smooth things over: "Shen Zhou, the market is extremely risky, you must be careful what you say..."

Lu Chenzhou shook his head slightly, his gaze sweeping over the faces that were mocking, questioning, and pessimistic:

"I'm not betting, but as of today's closing, the A-share market's price-to-earnings ratio has fallen below 15, and the price-to-book ratio is approaching 2. This is the lowest valuation range since the A-share market opened, bar none."

The index plummeted from a high of 6124 to 1929, a drop of 68.5%, with the correction lasting nearly a year.

Whether it's comparing it to the stock market decline during the Great Depression in the United States, the bear market cycle after the bursting of the Japanese bubble, or the several major bear markets in the history of A-shares.

The magnitude of the decline and the duration of the correction have both reached the critical point where the bear market may be ending.

If the price continues to fall, it's not due to a deterioration in fundamentals, but purely an irrational sell-off triggered by panic. This downward trend simply cannot last long.

Every true bottom in history has looked like this now.

Everyone was desperate, everyone was bearish, and everyone thought the price could drop another 50%.

When even the bulls dare not speak out in the market, it is the eve of a reversal.

Therefore, my conclusion remains unchanged: below 2000 points is the ultimate bottom of this bear market.

"If you dare not buy now, in six months when the market takes off, you will definitely regret your cowardice today."

The lecture hall was completely silent; people stared at him in disbelief.

A soft laugh rang out in the lecture hall, and everyone turned to look. It was Zhao Xianglong.

Everyone in the college knows him. He entered the stock market with 10 yuan in his freshman year, caught the bull market and soared to a net worth of tens of millions in just two years.

The students who followed suit also made a fortune, becoming recognized as practical experts and campus stock market gurus in the School of Finance.

However, the recent bear market crash caused a severe pullback, and he lost most of his wealth, leaving him with almost nothing of his former high spirits.

I suffered a limit down today and I'm currently seething with anger with nowhere to vent it, when I happened to run into Lu Chenzhou, who was publicly praising the stock.

Looking at Lu Chenzhou, who was spouting nonsense, Zhao Xianglong said sarcastically, "I've made 10 million from 2000, and I've worked my way up in the market with real money. Now I have no confidence in the future and can only stay out of the market and wait and see."

You're an investment novice who's never even traded in a real account and only knows how to do theoretical research, yet you dare to publicly advocate for a bullish market and even claim it's a golden opportunity?

Ask anyone here, who doesn't understand valuation, policy, cycles, and human nature?

However, you can't make money in the stock market by relying solely on theories from books.

"The people who lose the most and the most in the stock market are investment novices like you who studied finance but have never actually traded."

As soon as he said this, the students all agreed.

"Brother Long is right, investment novices who haven't had any real experience shouldn't make pronouncements."

"Anyone can talk the talk, but you'll know how panicked you are when you actually put money in your mouth."

"I guess he's just putting on a brave face; if he were to actually invest money, he'd probably be quite hesitant."

"Theories in books are just for reference; don't take them too seriously."

Zhao Xianglong was very satisfied with his classmates' reaction. He looked at Lu Chenzhou and challenged him, "If you think it's so good, then buy it. Don't just talk the talk."

Lu Chenzhou was stunned for a moment. Me? A complete novice in investing? A theorist?

"Okay, I'll buy it."

The entire room fell silent instantly. Everyone was stunned, even Zhao Xianglong froze. He had never expected that Lu Chenzhou would actually accept the bet.

Lu Chenzhou looked around and said, "Tomorrow morning, I will invest all my savings and buy A-shares with all my capital."

After he finished speaking, he looked at Zhao Xianglong, whose expression was changing: "You lack confidence because you can't see through the cycle and can't grasp the turning point."

I'm willing to bet real money because I know this is the bottom, a once-in-a-lifetime opportunity to buy at the bottom.

After he finished speaking, the lecture hall fell into a deathly silence.

Teacher Zhou Xingbang looked completely bewildered, opened his mouth but didn't know what to say.

He wanted to offer some words of advice to be cautious, but Lu Chenzhou's resolute gaze rendered him speechless.

Fan Zhi frowned, his gaze sweeping over this unusual student with a complex expression.

A strange feeling inexplicably arose in my heart; perhaps this student's judgment was not just empty talk.

Zhao Xianglong was speechless, his cheeks flushed red, and his previous arrogance vanished completely.

A girl behind Lu Chenzhou, who was taking notes, stared blankly at his back.

The students stared at Lu Chenzhou in disbelief, thinking he had gone mad.

At this critical juncture when the financial crisis has erupted and affected the entire world, going all-in on A-shares is tantamount to a moth flying into a flame.