ABC (agricultural bank) have been going around installing state of the art trading setups in housewives spare rooms all over middle china. Im talking quadcore, 3 screens, bloomberg- style keyboards. Ive seen this with my own eyes. These "investors" are grossly underqualified for this stuff, they should be sold mutual funds instead. They never even had a computer before, Anyhow, i was in one home where the following trading instructions were given: whenever the stock drops to MA20, buy. Now, this is obviously Crazy with a capital C. But man you should see these setups, technical indicators and flashing lights all over the place. In my view you need ten years experience of learning analysis methods and losing money, before playing the markets works.
The stock market was initially created to "crowd fund" companies that needed capital to expand their business, but could not secure sufficient conventional finance.
Today - the stock market is a gambling platform, flooded with day-traders - akin to picking winners in a horse race, and in my self-effacing opinion - akin to hedge funds and derivatives trading.
Gambling on the up and down movements of a stock is akin to playing red or black on a roulette table. When the market is bullish - everyone's happy and bragging about how smart they are playing/investing in the market. When the market turns bear - those gains are quickly lost - many times also obliterating the original capital investment.
So, if you're in the market for long-term investments - the up and down slides of the market are not so relevant, unless your investments tank into bankruptcy.
The PE (Price to Earnings) ratios of stocks trading across the world and especially in China are rather stratospheric and beyond the perceived logic of intelligent investing. The PE ratios - again in my dubious opinion - more often than not, reflect the public hype surrounding a company - and is generally more prone to bubble or illusory public valuation.
For China, which controls the banking sector rigorously - I was shocked that they'd allowed the stock or investment market to run rampant for so long. It's uncharacteristic of the government, so conspiracy theorist that I am - I'd be suspicious that this was a ploy to flush out more old guard clique from Shanghai...to the delight of the general public, which was hammered by the market falls.
@laotou: 'old guard' meaning...?
I had assumed he meant the Shanghai Gang (上海帮 Shanghai bang).
Actually, I meant ANY predecessors who could potentially be a "nuisance". Standard Chinese imperial practices.
Personally, I'm ambivalent about political purges, based on corruption - as corruption can suck out (or increase costs) of over 30% or higher (I vaguely recall numbers floating around 60% or higher) out of the professional economy, depending on the industry.
@laotou: By 'nuisance', do you mean 'political nuisance', or some coalition/category that formerly was able to control/manipulate the stock market? I'd guess you may have something here, and that it includes both - economic & political power works together nearly everywhere. "Standard Chinese imperial practice" perhaps, but certainly continued throughout the incredibly corrupt KMT period., absolutely ruinous to the population and heavily contributing to the popularity of the revolutionaries who sent them to hell (though not a few went to Taiwan & the US).