Sha Zhu's Rebirth in the Courtyard: Starting with Hitting Someone in the Head

Chapter 423 The Illusion of Market Rescue

Lehman Brothers collapsed, leaving global stock markets in ruins. Many Wall Street investors, who considered themselves insightful, rushed in to buy at the bottom of the market when stock prices plummeted.

Americans revere him as the "Oracle of Omaha." Warren Buffett, the "investment legend," also invested $5 billion to buy Goldman Sachs preferred stock on September 23, just eight days after Lehman Brothers' bankruptcy, and then invested another $3 billion to buy General Electric preferred stock on October 1.

Seeing the investment guru make his move, many Wall Street institutions followed suit and bought at the bottom.

On October 3, 2008, at 1:28 p.m. Eastern Time, the $700 billion bailout bill was officially passed by vote.

The news caused a brief surge in US stocks, with the Dow Jones Industrial Average rising nearly 300 points. However, this euphoria lasted only three minutes before the market reversed sharply, with a flood of selling causing the index to plummet and ultimately close lower.

Even with a weak closing, most Wall Street institutions remain optimistic. In their view, with the government providing $7000 billion in financial support, the crisis is pretty much over.

Many investment banks and hedge funds are already planning to enter the market and accumulate shares.

On October 17, Warren Buffett published an article in The New York Times titled "Buy America Now," publicly calling on the world to buy US stocks at rock-bottom prices. Global media reported on it extensively, and a large number of institutions followed suit.

Hong Kong, Zhonghuan Financial Trading Room.

He Xiao, He Chen, and He Xin stared at the US stock market data displayed on the screen.

"Big brother, third brother." He Chen leaned forward slightly, his eyes never leaving the screen.

"With the $7000 billion bailout bill in place, even Warren Buffett has made a significant investment. Wall Street institutions, large and small, are all rushing in. These established, large companies have solid foundations, and with their stock prices having fallen to this level, the opportunity is right in front of us. Shouldn't we allocate some funds to follow suit and invest in European and American stocks?"

He wasn't gambling recklessly. From a normal market perspective, with policy support and big players leading the way in buying at the bottom, it seemed like a rare opportunity.

He Xin, sitting to the side, gently shook her head, disagreeing with the idea.

"Second brother, don't move yet."

"The old man has repeatedly emphasized that the real bottom for US stocks won't be this year. The current rise is just a temporary phenomenon driven by policy. Rushing in now would easily result in catching a falling knife. We should stick to our original plan."

He Xin has always strictly adhered to the long-term strategy set by his father and will not be swayed by the ups and downs of the market in a day or two.

The two men had conflicting opinions, one pushing forward and the other holding firm, creating a somewhat tense atmosphere in the trading room.

He Chen frowned, still feeling it was a pity.

"The policies are real and tangible, and so much capital is optimistic about them. We've been watching from the sidelines, letting opportunities slip by."

He Xiao watched the constantly fluctuating market prices, weighing the options repeatedly in his mind. His father's past predictions had all come true, without a single mistake. But now, global capital was collectively bullish, and He Chen's logic would have been perfectly valid in any normal year.

However, the group has hundreds of billions of yuan in funds, and we brothers cannot make decisions based on our subjective judgments.

He Xiao broke the deadlock by speaking.

"The situation is too unusual. Everyone outside is in complete agreement. We can't make a decision rashly on our own. I'll call Beijing via encrypted line and hear what Dad has to say in the end."

The call connected quickly. He Xiao pressed the speakerphone button, and He Yuzhu's calm voice came through the speaker, as if the earth-shattering turmoil outside was just a normal fluctuation.

He Xiao explained the current state of the market and the differences in opinion among the brothers who were observing from the sidelines.

"Dad, we're unsure, so we're asking for your advice."

On the other end of the receiver, He Yuzhu listened without the slightest hesitation.

"That slight surge in the market is all an illusion."

"The $7000 billion figure may seem alarming, but it won't solve the fundamental problem. The US housing credit system is rotten to the core, and the black hole created by bad debts cannot be filled with this money."

"The current market cannot be repaired by a bailout bill. Most of the institutions that rushed in to buy at the bottom will be trapped halfway down the mountain. I predict that the real bottom of the US stock market will not come until March next year. Don't touch it at all now."

His tone was calm, but his judgment was completely contrary to the mainstream opinion around the world.

After a brief pause, He Yuzhu gave the direction for the next steps.

"For now, don't get involved in the US stock market frenzy. Focus your energy on the domestic A-shares and Hong Kong stocks. I have a good grasp of the overall situation overseas; just keep a close eye on the mainland and Hong Kong markets."

He Xiao solemnly agreed: "Understood. We will absolutely not touch US stocks and will focus all our efforts on the mainland and Hong Kong stock markets."

After hanging up the phone, He Xiao turned to look at her two younger brothers.

"You all heard what Dad said. The US stock market is a trap, not an opportunity. No matter how exciting it is outside, we can't follow the crowd and jump in."

He Chen felt a little unwilling after hearing this, but he could only suppress the restlessness in his heart. He still felt that the opportunity was rare, but his father's past accurate predictions were there for all to see, and he dared not disobey the order.

Over the next ten days or so, the market gradually confirmed He Yuzhu's statement.

The bailout bill failed to stop the decline, and US stocks fluctuated repeatedly, with each wave of decline higher than the last.

Large and small institutions that rushed in to buy at the bottom following the favorable policies are now facing huge paper losses. Even Goldman Sachs and General Electric, which Buffett invested in, have seen their stock prices continue to decline, showing signs of being deeply trapped, and financial news reports on this every day.

Around October 25th, Wall Street realized that the $700 billion bailout couldn't turn the tide, and the crisis was far from over. All the capital that had rushed in to buy at the bottom was now trapped; cutting losses was painful, but holding on meant daily losses, leaving them in a dilemma.

In the trading room in Central, Hong Kong, the three brothers looked at the market reports from New York every day, talking about how major institutions failed to buy at the bottom and how even the stock market guru could not avoid being trapped.

He Chen stared at Goldman Sachs's plummeting stock price on the news, let out a long sigh, and broke out in a cold sweat.

He himself almost insisted on allocating funds to rush into the European and American stock markets. If his father hadn't stopped him, the He family would be mired in the same quagmire now, just like the Wall Street elites, trapped.

"Thank goodness I have Dad," He Chen said softly, his voice filled with lingering fear.

"It's terrifying to think about. So many smart people outside, including Buffett, have fallen into this trap. If I had acted according to my thinking at the time, we would have suffered huge losses as well."

He Xin sat beside her, watching the constantly refreshing data on the screen, and slowly spoke.

"Policies can temporarily boost the market, but they cannot reverse the overall trend. Even the most astute person will fall into a trap if they try to catch a rebound against the prevailing trend."

He Xiao remained calm as he scanned the stock quote pages for Hong Kong and A-shares.

"That's why Dad always tells us to stay calm and wait. Real opportunities come from patience. The tough times for US stocks are far from over. From now on, we should focus on holding onto A-shares and Hong Kong stocks and wait for our time to come."

Outside the window, Hong Kong's night was deep and dark, but the trading room was brightly lit. Across the ocean, Wall Street was in turmoil, but the Ho family remained calm and unperturbed, quietly awaiting the historic low point in the domestic market.