Why do bull markets exist? Why do bear markets exist? Why do bulls and bears alternate?
In most cases, we attribute the cycle of bull and bear markets to the cycle of time.
After experiencing a bear market phase, the index has fallen a lot, and then it will enter a bull market phase to repair the decline and rise.
When the rise is significant, it will produce bubbles, leading to a day when the stock price turns back to the path of decline and enters the bear market again.
This alternates repeatedly, continuously producing the cycle of bull and bear markets.
However, the formation of bull and bear markets is not actually due to the cycle, and there is no inevitable connection with the economic cycle, but it is related to human nature itself.
Perhaps many people do not believe it, always thinking that bull and bear markets are related to the economic cycle.
But the bull and bear markets themselves have little to do with the economic cycle.
For example, the sharp decline in 2015 and the circuit breaker in 2016, was the economy in a bear market cycle?
In fact, it is not the case, it is just because a large amount of financing entered the stock market.In order to clean up the financing of stocks and avoid financial asset bubbles, the bubble was forcibly popped.
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However, because the intensity was not well controlled, it directly led to a cliff-like market drop, forming a stock disaster, which is a bear market.
The bear market here is not formed due to the cycle, but is derived from human nature.
Take 5178 as an example.
Why did so many people finance the market? It's because there were too many people using leverage, all hoping to get rich through financing.
Why did so many people take over at 5000 points? Because the market looked too profitable, and it was quick money, and everyone wanted to take a gamble.
Go a little deeper.
Why was financing stopped? Because the financial risk is getting bigger and bigger. Once the follow-up funds are insufficient, it will explode sooner or later.
Why dare to stop it? That's because the people who really made money have already taken the money and left, so it's possible to clear the plate and start over.
Who died in the 2015 bear market?It's not the smallest retail investors at the bottom, nor the main force institutions, but the greedy big players who use hundreds of thousands to finance millions to trade stocks, hoping to get rich overnight.
When human greed reaches its peak, the dream of a bull market shatters, and a bear market follows closely.
This is not a cycle at all; it's all about human nature.
When every corner of the streets is discussing how to make money from stock trading, it naturally indicates that the peak of the bull market has arrived, and it's time for capital to withdraw.
Those cunning (smart) funds, when the noise is at its peak, quietly leave the market.
How does the bottom of a bear market come about? Think about it carefully again.
If you don't remember 1664, don't remember 1849, you should at least remember 2440 in 2018, and 2863 and 2885 in 2022.
Which bottom of a bear market was not conceived in despair.
Either it's a long-term bottom with slow declines, or it's a series of rapid large bearish lines smashing the market.
What's behind this?It is the panic of killing multiple times, the despair of continuous stop-losses, and the reality of a market that is ignored by everyone, with no funds daring to bottom-fish.
Think carefully, isn't it always like this? Every time is the same.
Those who bottom-fish have spent all their bullets halfway up the mountain, while those in panic sell more as the price falls.
Originally bullish, they start to turn bearish as they approach the bottom, always feeling that the bottom is an abyss with no opportunities at all.
In the end, either they lie down completely or they fall before the dawn.
It's all human nature, without exception.
It's not that the leeks don't remember, but people themselves don't remember. Once the wound is healed, they forget the pain.
When a bear market is nearing its end, 90% of people think about getting their money back and promise to quit.
But when the bull market really comes, at least 80% of people bring their money back into the market.Perhaps many people do not believe it now, but the bloody facts are right in front of us.
Let's look at it from another perspective, why do casinos always have customers?
Most people know that going to a casino is to lose money, and there is only a small probability of winning, with nine losses out of ten bets.
And those who lose everything, often still owe a lot of debt, and they theoretically can't gamble anymore.
So where do the casino's customers come from, and why is the business always thriving?
Who is making new gamblers, and why do they go to the casino even though they know they will lose money?
If you can figure out this question, then the matter of stock trading will naturally be understood.
Because everyone is pursuing an opportunity to make money, that's all, even if they know the risk is great, even if they know they will lose money, they all want to try and take a chance.
This is human nature.
The charm of the casino lies in the excitement of gambling, which can make most people excited and immersed in it.The thrill of stock trading is no less than gambling, so naturally, there will always be people coming to the stock market to play.
When you see the index rising from the lowest of 998 to 6124, from the lowest of 1849 to the highest of 5178, and even just from 2440 to 3731, can you resist the temptation?
It is said that risk is created by rising, but when the stock really rises, you feel that there is no risk.
And when the stock falls, you will feel that the risk is getting bigger and bigger.
That is because when the loss continues to expand, you will face collapse and hope to stop the pain as soon as possible, and the probability of cutting the meat to stop the loss is very high.
Similarly, when the stock price continues to rise, it stimulates a person who has missed the opportunity.
He will also bear a lot of pressure and finally choose to take over at a high position, re-buy the stock he lost, and then gamble on the space for further rise.
Human nature is to see that people around you have made money and think that you can also make money.
Indeed, the person who makes money from stock trading seems to be no better than you, it's just that he made some money by luck.
But you are envious, so you also go down to the stock market to trade.Regardless of whether you have been hurt before, whenever you reach a critical juncture where everyone around you is investing in stocks, you naturally can't help but join in.
Human nature is irresistibly tempted by the prospect of profit and is inherently greedy.
The world of stocks is actually very fair. Those who claim it is unfair have yet to fully comprehend it.
Where is the fairness? It lies in the very nature of the game itself, which is essentially equivalent.
Some might argue that large capital can manipulate the rise and fall of stock prices, where is the fairness in that?
Large capital cannot solve the cycle of human nature, nor can it change the laws of the market.
To put it bluntly, when human nature is in despair and chooses to lie flat, large capital trying to continue to push prices down will be fruitless, as there are no more chips to come out.
Only when human nature is greedy can large capital make a smooth and large-scale exit; otherwise, it becomes a one-person show.
The current market, when retail investors are once again on the brink of collapse, is actually very close.
Some might still say, where is the bottom of this market? Perhaps here, it really isn't the super bottom.But don't worry, let's first release the emotions that have accumulated here.
Because the nature of human nature is to have emotions, and since there is already fear, there is bound to be a dawn.
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