Young programmer loses 320k in 4 days trading China A-shares - Perspectives on current market and asset management

The recent heated China A-share market has attracted hordes of new investors hoping to capitalize on the upward momentum. However, the inherent volatility of the market has posed severe challenges, especially for inexperienced retail investors. Relevant data indicates that a significant number of these new entrants suffered losses shortly after entering the market, with the current market condition tilted towards more losses than gains.

On Oct 12, Haibao News reporters interviewed investors from Shandong, Anhui, Sichuan and other regions, both online and offline, to understand their recent stock trading experiences. Their stories paint a sobering picture:

32-year-old programmer Yang from Chengdu, Sichuan lost 320,000 RMB in just 4 trading days. “I bought 1.02 million worth of stocks on the 8th. Made some money the first day but kept losing the next few days. As of now, I’ve lost 320,000,” Yang told reporters. As a programmer, he had traded stocks before. Hearing the market was bullish recently, he went all-in with his savings right after the holiday break ended.

“Many people urged me to cut losses, calling me a ‘loser’, but I don’t think so,” Yang said. He believes his strong learning ability will allow him to master stock market knowledge and turn the losses around. However, with such a defiant attitude, tougher days may still lie ahead for Yang.

Xiaoniu, a full-time retail investor in Tongling, Anhui, said the most important thing is to protect principal, not use leverage. She started trading 3 years ago and has lost about 1.5 million RMB so far. “I was up around 300k this bull run but ‘spit it all back’ on the last trading day, losing another 20-30k.”

Although currently trapped, Xiaoniu remains optimistic about the market’s long-term prospects. But for retail investors, making money is extremely difficult. She advises new investors not to use leverage and that protecting principal is of utmost importance.

The rapid rise and fall of the market has made sentiment very unstable, especially for funds that entered near the top. At first, lacking trading experience, their impression of the market was colored by the official stimulus and rapid ascent - they thought stocks could only go up. Once upward momentum stalled and gains evaporated, their confidence was shattered. Hot money will leave gradually as trading volumes normalize and the index finds an equilibrium. Those still holding unrealized losses will become increasingly anxious.

In fact, the “seven lose, two flat, one win” pattern for A-share investors has not been broken. Those rushing to open accounts and trade on margin near the peak are most at risk, while the real winners are those who accumulated at lower levels and held on patiently. If you can’t understand or adapt to the A-share market’s counter-intuitive and irrational behavior of “love chasing gains, fear cutting losses”, then it’s best not to participate.

Managing your assets and making money in the stock market requires independence - don’t follow the crowd or buy into training hype. Have the discipline to build positions gradually during market corrections - that’s when odds of success are highest. You don’t need to pick stocks. Just consistently buy index funds at relatively low levels. Losers are the ones who chase and follow the herd. If you love your country and can tolerate some losses, invest spare cash. But for most people, it won’t make you rich - just contribute to the nation.

The A-share market is driven by policy. Direct fiscal stimulus from the government to bail out over-leveraged local governments and SOEs can ease interest burdens but won’t resolve underlying solvency issues. The stock market may be the ultimate venue to truly realize debt cleanup. While the current bull market aims to boost confidence, it’s still in an early, volatile stage and fundamentally resolving debt problems will be a long process.

For those fully invested based on a momentary policy-driven surge, risks outweigh rewards - it’s still a trader’s market. Have a holistic asset allocation plan. A-shares shouldn’t dominate. Different time horizon trends warrant different strategies. Investing is not gambling or speculating on macro trends. The house always wins against those without an edge.

In short - have discipline, stay rational, don’t follow the herd, and focus on the long-term. Only commit what you can afford to lose. Mood swings and short-term volatility are normal. Never use leverage. Take a gradual approach and keep your day job. Trading full-time is extremely difficult. If it stresses you out, stop doing it. No amount of money is worth sacrificing your wellbeing.