The stock market in 2024 has improved significantly compared to the second half of 2023.

However, the overall market still reveals two words.

Short of money.

And it's extremely short of money.

Don't be fooled by the highest trading volume reaching 136 billion, with the market being warm and lively, but the overall feeling is that there is a lack of money.

Most of the market trends lack sustainability, and the willingness of capital to chase high is very low, often extinguishing after just 1-2 days.

Looking at the economic data, M2 continues to soar, with money being printed rapidly, as if there is a massive release of funds.

But where is the massive release of funds that seems not to have entered the stock market?

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On one hand, it is claimed that the valuation of A-shares is low, and on the other hand, so much capital does not come in, which is somewhat contradictory.

In addition, the real estate market can no longer bear the role of the market's reservoir, and it seems natural for capital to enter the stock market.Adding the slogan of a financial powerhouse, the conditions of favorable timing, location, and people seem to be quite good. Theoretically, the stock market should have seen a significant rise, but why does it still move awkwardly?

In fact, the A-share market, starting from the low point of 2635 points, has already risen by about 20% (to 3160 points).

The fact that retail investors have not made money does not mean that there has been no capital entering the A-share market to bottom-fish.

It's just that the direction of bottom-fishing is greatly deviated from the direction of retail investors' positions.

Large capital always likes to buy the underlying blue-chip stocks, and those with higher dividends.

Because blue-chip stocks can have stable dividends, they also have a certain liquidity return, which will not be affected by short-term fluctuations in the rate of return.

But even so, the proportion of this part of the capital entering the A-share market is still relatively small compared to the entire market's liquidity.

Apart from what many people say, that money is idling in banks, where did the funds go, and why don't they enter the A-share market?

The fundamental reason is that as a reservoir, the A-share market has limited help for the real economy.Many people compare the A-share market with real estate, but they are completely different things.

The primary function of the stock market is financing, while the real estate market indeed drives many industrial chains.

There is a saying in the industry that the GDP driven by real estate is eight times the value of a house.

Starting from land finance, to bank loans, to steel and cement, later decoration, various building materials, home appliances, and so on.

It also includes the circulation process, nearby infrastructure construction, etc.

What the stock market drives is a series of listed companies, "no capital" financing, equity issuance, and seeking better development.

That is to say, the financing in the stock market can be used to inject blood into the real economy through A-shares, and the rest do not have a significant help to the real economy.

There is an argument that when the stock market rises, retail investors earn more and will go to the entire market for consumption.

At first glance, this view seems to be correct, but upon closer examination, it is not.

Translation:

Many people compare the A-share market with real estate, but they are completely different matters.

The main function of the stock market is financing, while the real estate market indeed stimulates many industrial chains.

There is a saying in the industry that the GDP driven by real estate is eight times the value of a house.

Starting from land finance, to bank loans, to steel and cement, and then to later decoration, various building materials, home appliances, and so on.

It also includes the circulation process, nearby infrastructure construction, and so on.

What the stock market drives is a series of listed companies, "no capital" financing, equity issuance, and seeking better development.

That is to say, the financing in the stock market can be used to inject blood into the real economy through A-shares, and the rest do not have significant help to the real economy.

There is an argument that when the stock market rises, retail investors earn more and will go to the entire market for consumption.

At first glance, this view seems to be correct, but upon closer examination, it is not.So, may I ask, if it is not philanthropic capital that is buying up the retail investors' shares at high prices, who will be the ultimate buyer?

If the ultimate buyers are again the retail investors, it will be similar to the previous bear markets, leading to a sharp decline.

The direct result is that the money in the pockets of the retail investors is once again squeezed out by the capital, and their purchasing power will be insufficient for a long period.

From this perspective, the logic of the market giving money to retail investors is wrong and will never happen.

This is also why, even though the index has risen by 20%, the actual return rate of most retail investors is still below 20%.

Because the capital has "taken" the money away.

The way the stock market operates is completely different from real estate, so the results are also different.

However, one thing can be seen, there is indeed an intention to turn the stock market into the next reservoir.

But this requires a long process.

It is not to say that today we need to open the sluice to let the water into the stock market, and immediately the water will overflow and all kinds of premiums and increases will occur.Compared to the real estate sector, which is more closely related to people's livelihood and has a stronger ability to drive the economy, the stock market has too much liquidity, and funds can enter and exit too conveniently.

Real estate can lock in funds for decades at a time, while the longest lock-up period for stocks is only three years, and most transactions are T+1.

Once funds speculate on the market and then want to withdraw completely, it may lead to a stock market crash like the one in 2008, including the one in 2015.

This means that to turn A-shares into a reservoir, it requires a very long preparation, short as 2-3 years, and long as 8-10 years.

If A-shares want to become a reservoir, they must know what conditions a reservoir must have.

Real estate is a reservoir because houses can be lived in, so there is purchasing power, demand, and it is easy to form a closed loop.

At the same time, loans can "kidnap" the cycle of funds, forming a closed loop.

The rise in housing prices has also made the market pursue, but this also has sequelae, which everyone knows.

If the stock market wants to become a reservoir, in addition to rising, how to lock in funds?

The answer is also relatively simple, a stable dividend return.When you deposit money in a bank, the annual return is less than 2%, but when you invest in the stock market, you can get a dividend of 4% annually. In this case, wouldn't you prefer to invest in the stock market?

If you also consider the growth in market value, wouldn't the return on investment be even higher?

There is no need to double the investment every year; as long as the return is higher than traditional investment channels, that's sufficient.

When you feel that you have made money in the stock market and want to withdraw your funds, you will also consider whether placing the funds elsewhere can yield more stable and better returns.

As long as the overall dividend rate is slightly higher than the risk-free rate of return, the market has the ability to attract capital.

This is why, in the past two years, the capital market has undergone bold reforms, and the first cut was made on the issue of dividends.

Only when the underlying issue of dividends is in place can the market become a reservoir.

Otherwise, once you fill it with water, it's only a matter of time before the water flows out and dries up.

The outlet of the reservoir is the cashing out of various capital, the reduction of major shareholders, and the escape of those who take advantage of the market.

If this area is not blocked, or if the market is not allowed to generate its own blood, it is impossible to form a closed loop of the reservoir.From never paying dividends to "mandatory" dividend payments, there is a process involved. The ST designation serves as a "warning," and some mistakes need to be forcibly corrected.

Secondly, there is another point, which is about market control.

This is a sensitive topic and cannot be elaborated on in detail.

However, if a large capital reservoir cannot achieve market control, and if it experiences dramatic fluctuations like the previous two bull markets, it will definitely lead to problems.

Some people do not understand why we are opening up so many short-selling tools.

This is not an opening, but a test, to test the market pressure, to see if it can withstand the pressure, and to ensure market stability to prevent a market crash.

The essence of all stock market declines is not the short-selling tools.

The U.S. stock market is so open, with so many short-selling tools, why is it still in a big bull market, a slow bull market, and why don't capitalists make money through short selling?

Think about the underlying issues.

Only by controlling the capital market in our own hands, and having a stable market control ability when opening up and injecting liquidity, can we achieve the so-called reservoir function.