China Stock Market Live News: Leverage Caused China Financial crash

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China Stock Market Live News

China Stock Market Live News

Forget the news regardless of whether is live or delayed. News equates to nothing but Gossip, instead, focus on the trend because it’s your friend.   After the housing market had tanked, investors were looking for a quick way to make a buck. What better way to try to lock in some big gains than trying one’s hand in the stock market.  This would be fine if the investors were educated and making calculated bets.  Turns out that over 67% of those who opened new accounts did not even graduate from High school.

Now a high education does not guarantee success in the stock market. Otherwise, everyone with PhD would be a millionaire, but that is not the case. Higher education does help one to evaluate the investing landscape and have a better grasp of what one is doing.  At least, individuals would not borrow large sums of money to invest in the markets; this is the equivalent of trying to put out a fire with gasoline.

Lack of Financial education played a huge role
China Stock Market Live News, crash was caused due to stupidity

Not only was a lack of education the problem, but the insane amount of debt the average investor took on in the hopes of making a quick buck indicated that the opposite would come true.  Chinese regulators banned the use of leverage, in 2007, but as an effort to boost interest in the financial markets, they reduced these restrictions, and the floodgates of hell opened.

In Dec 2014, the value of margin positions skyrocketed to 800 billion Yuan, double what it was in July of 2014.  In mass psychology, this phenomenon is called a feeding frenzy and when this occurs a crash is usually not too far in the makings.

Mass Psychology the forgotten factor

Sadly most investors are not familiar with the most fundamental of concepts of mass psychology; had they known this they would have not only walked away unscathed but would have managed to walk away with large profits.  Be wary when the masses are euphoric and Euphoric when the masses are wary is the most basic law of mass psychology.

Using this law would have had you bail out in around May or earlier and saved you a fortune.  This is exactly what we told our subscribers to do, and we managed to close our positions and walk away with a profit almost at the top.   Never invest when the masses are Jubilant and never pay attention to live news whether is China stock Market Live news or live news on the American markets. There is no such thing as live news. Live news equates to live gossip and we all know what Gossip is good for right.

China Stock Market Live Update Aug 2019, well not really

But its an update, live updates, for the most part, are full of b.S; the people behind the scenes are only gifted in areas that don’t matter. Fiction writing and Gossip on steroids are the topics most financial experts seem to excel in.

FXI iShares China Large-Cap ETF daily Stock Chart

The Chinese  Stock Market Index traded to new lows and in addition, they put in a lower high. Lower highs are generally associated with weakness and signal lower prices in the near term.  In this instance, the Chinese Stock Market Index could be sensing that the trade war is going to escalate instead of the two nations finding consensus.

So far China is losing the trade war fight and the way one call tell this is true is by looking at the stock market.  The Dow is almost trading 50% higher since Trump took office, while the Shanghai composite is now in negative territory.  If  39  is breached on a monthly basis (above chart), then FXI and by default, the Shanghai composite index will be on course to put in a series of new low

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