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

Chapter 132 The Four Trillion Yuan Has Arrived

January 9, 2008, Sunday.

Baidu Tieba and stock forums.

"Who watched the market on Friday? Who was buying Changchun High & New Technology Industries Group Co., Ltd. with that surge in volume at the end of the trading day?"

"I saw it, they ate from 5.05 to 5.19, it's like it's free."

"I heard it's a public fund management company from Renmin University that's buying it."

"Renmin University? Renmin University has public offerings?"

"It's not owned by the school; it's run by one person named Lu Chenzhou, a third-year university student."

"A junior in college? A student? Running a public fundraiser?"

"He manages two mutual funds, one investing 200 million yuan in A-shares and the other investing 100 million US dollars overseas. On Friday, the A-share fund started its position building, buying 20 stocks."

"Twenty? What did you buy?"

"Changchun High & New Technology Industries Group, Oriental Yuhong Waterproof Technology, Hengyi Petrochemical, Gujinggong Liquor, Guangdong Rare Earths Group, Dahua Technology, Goertek, Zhongheng Group, Yunnan Baiyao, Gree Electric Appliances — a total of 20 stocks, each worth 20 million yuan."

"Twenty million each? That's four hundred million in total."

"The public funds invested 200 million, and the private funds went all in, pouring it all in."

What have private equity funds bought?

"Baotou Steel Rare Earth, Sanan Optoelectronics, Sany Heavy Industry."

"Sany Heavy Industry? The construction machinery one? Should I buy Sany now?"

"People bought it on Friday, and Sany's stock price rose by almost two percent by the close."

"What's two points? If it opens lower tomorrow, it'll all go back up."

"What about Changchun High-Tech? It closed at 5.19, with an average price of 5.06, meaning it has a floating profit of nearly 500,000 in half a day."

"Five hundred thousand? How much did he buy?"

"Changchun High & New Technology Industries Group has approximately 400 million shares, with each share worth 20 million yuan, totaling 400 million yuan for 20 shares."

"Four hundred million? Where did he get so much money?"

"It's raised through public offerings, by investors."

"Who would be so foolish as to give him money in this market?"

"I don't know, but they managed to raise the funds."

"Anyway, I don't dare to follow suit. In this market, cash is king."

"He didn't touch the US$100 million in Hong Kong stocks, which can be considered as keeping cash."

Why are Hong Kong stocks not moving?

"I don't know, maybe they feel the Hong Kong stock market hasn't fallen enough?"

"Has the A-share market already fallen enough?"

"He thinks that's enough. Otherwise, why would he have a full position?"

"I looked at his twenty stocks, and they are all industry leaders."

"Yunnan Baiyao, Gree Electric Appliances, and Kweichow Moutai are indeed leading companies, but do leading companies not fall? Moutai has fallen from 230 to 80."

"But he didn't just buy blue-chip stocks. Guangdong Rare Earth and Baotou Steel Rare Earth are cyclical stocks, Goertek and Dahua Technology are technology stocks, and Oriental Yuhong is a building materials stock. He has stocks from various industries."

"so what?"

"So it's not just blind buying, it's based on a system."

"If the system were effective, we wouldn't have suffered such heavy losses this year."

1

"How much did you lose?"

"Don't ask anymore."

"Ha ha ha ha."

"What are you laughing at? You're no better than me."

"I didn't laugh. I just think that Lu Chenzhou is quite interesting."

"What's so interesting about that? You're just wasting money."

"Someone started with ten thousand yuan and grew it to billions. How much did you grow from ten thousand yuan?"

"That was just good luck."

"One stroke of luck, and you'll always be lucky?"

How do you know he'll always be lucky?

"He made a profit by acquiring a stake in Galaxy Entertainment in Hong Kong. Private equity funds built positions on Friday, and most of them closed in the green. Among the twenty public funds, more of them closed in the green than in the red."

"Just one day."

"Even a day's work is still making money. Did you make any today?"

"6

""

"You didn't make any money, did you?"

"You made a profit?"

"I didn't make any money either, but I admire those who dared to go all in at this price."

"What's the use of admiration? Can admiration be spent like money?"

"No, but I want to know why he dared to do it."

"Why don't you just go and ask him?"

"They're on the 18th floor of the Renmin University Cultural Building, go there."

"I don't know him."

"That's settled then, stop thinking about it, let's look at it again tomorrow, Monday."

"Watch it on Monday."

"Holy crap! Look at the news! It's explosive! It's really explosive this time! Lu Chenzhou is about to become a legend again!"

At 7 p.m. sharp, the TV station broadcasts the evening news.

"Good evening, viewers. Today is Sunday, November 9th, 2008, the 11th day of the tenth lunar month. Today's program will mainly include..."

The State Council executive meeting studied and deployed ten measures to further expand domestic demand and promote economic growth.

"Preliminary estimates suggest that implementing the aforementioned projects will require an investment of approximately four trillion yuan by the end of 2010."

The scene shows a conference room, a long table, teacups, and a flag.

The leader's voice came out steadily, each word like a nail hitting the floor.

Four trillion.

The moment those three words popped up on the TV screen, it was in a certain neighborhood in Beijing.

A stock investor held a bowl, his chopsticks hovering in mid-air, soup dripping onto the table, but he didn't move.

He stared at the screen, with only one thought in his mind: Oh no, I've missed a step.

In Lujiazui, Shanghai, a fund manager had just finished showering when his phone lit up. He picked it up and glanced at it, but the towel had fallen to the ground. Without picking it up, he ran barefoot back to his study and turned on his computer.

In a rented room in Shenzhen, a retail investor sat in front of his computer. The forum posts had exploded. His eyes scanned line after line, and his hands began to tremble. He had just sold all his shares on Friday.

In Hangzhou, Alibaba, Jack Ma had just arrived home, hadn't even changed his shoes, and read the entire news article while standing in the entryway.

In Dalian, at Wanda, Wang Jianlin watched the news replay twice in his hotel room, then picked up his phone and called the CFO.

In his office at the Yinfeng Building in Beijing, Liu Qiangdong saw the news and was a little excited. Although the four trillion yuan stimulus package has little to do with JD.com, it is still good news.

Baidu Tieba and stock forums exploded instantly.

"Four trillion yuan!!! It's out!!!"

"Holy shit! Holy shit! Holy shit!!!"

"Really?!"

"The evening news just aired: ten measures, four trillion yuan, to be implemented by the end of 2010."

"I was eating just now, and my chopsticks fell on the floor."

"Can anyone tell me what to buy tomorrow?"

"Buy whatever you want: infrastructure, cement, steel, non-ferrous metals—you can buy it all."

Sany Heavy Industry.

Sany Heavy Industry.

Sany Heavy Industry.

"Stop swiping."

"I'm serious, Lu Chenzhou just bought Sany Heavy Industry shares on Friday, and he went all in."

"Who?"

"That guy from Renmin University, the junior, his private equity fund bought Sany Heavy Industry."

"How much did he buy?"

"All in, what do you say?"

"He bought it on Friday?"

"Yes, Friday."

"Buy on Friday, policy announced on Sunday."

"The timing is just too perfect."

"Does he have inside information?"

"I don't know, but Baogang Rare Earth, Sanan Optoelectronics, and Sany Heavy Industry are all three stocks that are riding the wave of the four trillion yuan stimulus package."

"Rare earth elements, LEDs, and construction machinery—we've covered them all."

"How did he make the selection?"

"I don't know, but he made the choice."

"And what about his publicly offered stocks? Oriental Yuhong, Gree Electric Appliances, and Dahua Technology are all in the spotlight."

"Oriental Yuhong, which makes waterproofing, directly benefits from infrastructure construction. Gree Electric Appliances, which makes home appliances, also benefits from the real estate boom. Dahua Technology, which provides security solutions, is also a component of infrastructure projects."

"He has over twenty votes, all of them online."

"This can't be luck, can it?"

"What else could it be but luck? How could he know in advance that the boss was having a meeting?"

"I don't know if he knows it or not, but I know one thing: his money is already there."

"And we're still watching the news."

"Stop talking, I'm feeling unwell."

"I'm feeling bad too."

"On Friday I saw that Sany Heavy Industry had increased its sales volume, and I wondered who was buying it. Now I know."

Did you buy it?

"no."

Why?

"I thought it was a shipment."

"Shipping? Which location should we ship to?"

"I thought it would fall further."

"And now?"

"Now I feel like an idiot."

"You're not a fool. The fool is the one who's still hesitating."

"What should I do now?"

"Buy with your eyes closed when the market opens on Monday."

"What should I buy?"

"Buy the ones he bought before."

"Chasing the high?"

"Son, go for the high."

"Aren't you afraid of getting trapped?"

"I'm afraid, but I'm even more afraid of missing my target."

"Missing out on the 4 trillion yuan stimulus package is worse than being trapped in a losing position."

I agree with that.

"When he bought it on Friday, everyone said he was crazy."

"And now?"

"Nobody says he's crazy now."

Everyone says he's awesome.

"It's not that he's awesome. It's that his money is awesome."

"What's so great about money? It's people who are great."

"How come this person is so awesome?"

"It takes real guts to buy when everyone else is afraid."

"You give up?"

"I give up."

"I give up too."

"What's the use of clothes? Can clothes be used as money?"

"I can, but I need to go and open the body tomorrow."

"You haven't opened an account yet?"

"It's open, but there's no money in it. I'll transfer some tomorrow."

"How much?"

"all."

"How much is all of them?"

"I'm not going to say anything more, it'll be embarrassing."

"Don't worry about whether it's embarrassing or not. Buy it tomorrow, and check back in a few months. You might not feel embarrassed anymore."

"I hope so."

"Don't get your hopes up. The news has already come out: four trillion, not four hundred billion."

"I know."

"What do you know?"

"I know I made a mistake on Friday."

"If you make a mistake, correct it. Correct it on Monday."

"Is it too late to change it on Monday?"

"There's still time; the four trillion yuan stimulus won't be fully realized in a single day."

How did you know?

"I don't know, but Lu Chenzhou's money is still in there. He hasn't sold it, so I'm not afraid."

"Do you know him?"

"I don't know him."

"Then why do you believe him?"

"Because he went all in on Friday."

"this one?"

"So, this guy, who started with 10,000 and grew to billions, went all in on A-shares on Friday. He bought them, so I followed suit."

"This isn't investing, it's superstition."

"Maybe! But I'm willing to believe it just this once."

"This reminds me of what happened on September 18th, when Lu Chenzhou used 10,000 yuan with 60 times leverage to buy CITIC Securities shares that had hit the daily limit down. As a result, the market almost hit the daily limit up the next day."

"You mean the market is going to hit its daily limit up again?"

"High probability of hitting the daily limit."

"Whose glove is Lu Chenzhou, you say?"

"Use your pig brain! It's not like they've gotten it right just once or twice. CITIC Securities, BYD, BYD Electronics, CEFC China Energy, China National Building Material, Galaxy Entertainment—did they all rely on insider information?"

"Indeed, he's a bit outrageous, like he's been reborn, always perfectly catching the right trend."

"I heard he invested $1500 million in JD.com on Friday?"

"Yes, countless people in the investment banking industry have been mocking him. I wonder if those people who mocked him can still laugh now?"

""

"Lu Chenzhou said at the Renmin University Salon on September 17 that the market below 2000 points is a golden opportunity, and buying now is a sure way to make money. It seems that he was right."

"Yes! This person is so farsighted, I can't see through him."

"Hey! Those investors who put money into him are probably too excited to sleep tonight."

"Yeah! Following Lu Chenzhou has really made a fortune, especially his classmates from Renmin University, who have made a killing."

"Um! How about I buy some of his mutual funds?"

"You're too slow. The official website of Zhizhou BJ Investment Co., Ltd. has been overwhelmed. I estimate that the $3 million quota for QDII funds is already full. Fund No. 1 might still have a chance, but it's hard to say."

"Aren't there no upper limit to the value of mutual funds? I can understand that QDI funds have foreign exchange quota restrictions, but why are there restrictions on mutual funds investing in A-shares?"

"The China Securities Regulatory Commission (CSRC) has provided guidance that the maximum issuance amount for public funds is around 150 billion yuan, which is an industry standard."

"Holy crap! They have this too! I need to subscribe right away, or I might really miss out."

"Good luck."

The post is still being shared, but no one is questioning Lu Chenzhou anymore.

It wasn't because they understood it, but because they discovered that this person hadn't missed a single one since September 18th.

Not even once.

Not even once.

Beyond Tieba, the broader public discourse is only just beginning to heat up.

Television, newspapers, portal websites—everyone is talking about those four words: four trillion yuan.

Behind these four words, a name named Lu Chenzhou is transforming from a small-scale discussion within the financial circle into a nationwide phenomenon.

It wasn't because of the 4 trillion yuan stimulus package; it was because he was fully invested before the 4 trillion yuan stimulus package was announced.