Chapter 471 [Sound Control City, this is the pricing power]
The forum dialogue has just started. Not only are many future industry elites paying attention through media channels, but many stock investors are also paying attention. Although most stock investors do not have much money in their accounts, they have become more and more concerned about people's livelihood and livelihood since they started trading stocks.
National events, economic development, huge changes in the industry, etc. are all true.
At the scene, the host had a face-to-face interview with Lu Ming: "Do you have any expectations? How high do you think gold will rise in the short term?"
Lu Ming shook his head with a smile and said: "I won't make a prediction because it is meaningless. How can I calculate the short-term price fluctuations with my fingers? All I can tell you is that the downside space is basically sealed.
Especially after the speech of the newly appointed head of the Federal Reserve, now it is more about looking at its call options, when will it rise, and how much will it rise."
After a while, Lu Ming, who was still smiling, added: "For us, we don't make price predictions at all. We just follow the logic. The logic is still there. Hold the position. The logic ends. Close the position. It is impossible to say that I just calculated 2O2O.
Can London Gold reach 2,000 in August 2020? It makes no sense.”
When Wang Yue, who was sitting in a row at the scene, heard these words, he also looked at Lu Ming who was talking eloquently above him intriguingly. He clearly remembered that not long ago in the lounge behind the scenes, Lu Ming made it clear in front of him.
Some said they saw 2000, and some said they would not make predictions when they got here.
Sure enough, you can only believe half of everything.
What's even more interesting is that Wang Yue discovered that he had hinted, intentionally or unintentionally, that the international gold price would reach 2,000 in the future, and gave a clear figure. In the eyes of others, Lu Ming just said it casually, but Lao Wang didn't think so.
This gives a clear target price and a very specific time point!
The wealth code has just been revealed, but whether you believe it or not depends on the individual.
Tiansheng Capital is once again extremely bullish on gold. This news was quickly reflected in the stock market. Big A immediately moved. There are still about ten minutes before the end of the morning session. The gold concept sector has moved up at this time.
.
Chifeng Gold, Zijing Mining and many other stocks directly closed their daily limits!
This is the embodiment of pricing power!
Lu Ming didn't know or care about the reaction of the stock market now. The dialogue forum was still going on at this moment, and the host quickly extended the topic to the Federal Reserve's monetary policy.
Lu Ming leaned comfortably on the sofa and said in an orderly manner: "...In my opinion, the Federal Reserve's monetary policy has fallen into a self-contradictory dilemma. In 2008, the United States was forced to continue to release water.
In recent years, it has been forced to continuously withdraw water. The current inflation, under various combined factors, will force the money it sends out to cause losses to the assets in the market with a forward period of 30 years, so this money is also passively flowing to the market.
Recent Movements.”
"Especially in the money market, after a large amount of money is sent out, due to the panic caused by the squeeze of inflation, funds will flow into the money market on a large scale. So much money forms a huge so-called depression where funds are flooding, which leads to various
Money market interest rates continue to sink closer to zero."
"If the money market is very low, then the hedge funds that borrow money from the market will have more fun. They can use higher leverage. They used to use fifty times, but now the cost of capital is so low. How many rounds of borrowing from the repo market?
It’s easy to reach a leverage of 100 times or even 200 times.”
"Money is so easy to come by. With borrowed money, you can speculate in stocks, futures, government bonds, gold, Bitcoin, etc., and all kinds of derivatives, which will of course push up asset prices."
“So when asset prices rise to a certain level, a large number of hedge funds will lower the volatility, because the higher the assets, the better the market’s expectations for the future. Of course, volatility must be lowered, and lower volatility means market interest rate expectations.
It will also be lower.”
At this time, the host of the dialogue with me said: "Mr. Lu, can I interpret what you said as a strong positive feedback effect of ultra-low profits and asset inflation? That is, the lower the interest rate, the more assets will rise.
Will rising prices push profits and volatility even lower?"
Lu Ming immediately nodded: "Yes, that's right. This kind of cycle can enter a positive feedback state, mutual promotion and mutual stimulation, becoming more and more intense... But we also know that all positive feedback systems are unsustainable.
, because it requires constant oscillation and constant amplification, it must constantly obtain energy from the outside. When your scale is getting larger and larger, your speed is getting fiercer, and the outside world cannot meet your large energy needs, this
The system will inevitably collapse on itself."
It is worth mentioning that Tiansheng Capital will no longer accept management requests from external funds in the short term. It actually has the same logic. For a 100 million entrustment, the annualized return of +160% is 160 million, and 100 billion is
160 billion, this is an exponential growth. If Tiansheng Capital is not controlled, it will self-explode in a few years, which is referred to as self-destruction!
Therefore, Lu Ming drew a slope for Tiansheng Capital. Only by going up steadily along this slope can we go in the long run. Deviations within this slope range can be allowed, but the deviation must not be too large, and deviations must be taken proactively.
Pull it back.
Reflecting on the reality, many LPs now want to hand over their money to Tiansheng Capital, but Lu Ming will no longer refuse anyone who comes as he did before. If he wants to get on the bus, he has to wait until the time axis extends backward, that is, wait.
, or investors withdraw midway, and other LPs come in to fill the gap.
At the same time, Lu Ming continued: "When you exceed the maximum carrying limit of this system, the result will inevitably be collapse. The collapse of all debts, financial collapse, enterprise collapse, and even the collapse of empires are due to this kind of
The breakdown of positive feedback mechanisms.”
The host looked at Lu Ming and nodded silently.
Lu Ming paused for a moment and then continued: "How do funds flow in this market? You will find that the U.S. dollars begin to flow to the market from the Fed's bond purchases, and then stay in the hands of primary dealers and in the accounts of large banks.
For a short while, but because the bank's balance sheet has reached its limit and cannot expand any further, it cannot retain the money, so it will overflow the bank's balance sheet and emerge as the balance sheet of money market funds."
"But the problem now is that money market funds are also facing a great asset starvation. They can't find assets to invest in. Many people joke that Beijing has unlimited capital bullets and always buys and buys. The logic can be explained here. In short, there is too much money.
, I have to throw it out, it’s too hot to hold in my hand.”
"But the Mainland Stock Connect has a limit, which prevents most of the hot money from entering and impacting our market, but what should we do if this money has nowhere to go? In the end, it can only be returned to the Federal Reserve's balance sheet through overnight reverse repurchases.
Is there any economic value to this entire cycle? It’s a typical idling of funds. Apart from leaving Wall Street people with nothing, it makes no contribution to the real real economy.”
The host quickly elaborated: "The key is whether the Fed's game can last forever? Can this positive feedback mechanism continue in an infinite loop?"
Hearing this, Lu Ming leaned back on the single sofa where he was sitting and said with a smile: "I think this should be Wall Street's highest dream, but anyone with a little common sense knows that this is counter-intuitive.
It violates the conservation of energy. How can you make more and more money without doing anything? So this game from the United States has a fatal flaw in my opinion.”
"If this game can continue in an infinite loop, it means that all the money in the world will eventually be made by the Wall Street family. The question is what will other people do? There are 3.5 million people on Wall Street and more than 7 billion people around the world will die?
"
The host asked along the way: "Is it possible that this really happens?"
Lu Ming said categorically: "It is absolutely impossible. If we really move towards this trend, the most likely result in reality is that all mankind will join forces to destroy Wall Street with violent means and lightning speed, so logically
According to deduction, it is impossible to reach this point in reality. After all, this dream of Wall Street is just a dream and cannot be reflected in reality."
The host added: "Mr. Lu, you just mentioned that there is a Achilles' heel in the Federal Reserve's game. Where is it? Can you expand on it a little bit on the spot?"
Lu Mingyan said succinctly and comprehensively: "Inflation!"
Host: "Inflation?"
Lu Ming nodded and said: "Yes, it is inflation. Theoretically speaking, it is impossible for money to be idling in the financial market, and it will always leak. For example, if you go around in the currency market, whether it is a stock or an overload
, in the end, after the person who issues stocks or owns stocks gets cash, he will always buy things, luxury cars and mansions. This money has to be spent, so when there is enough money and the scale is large enough, it will push up the price."
“This also explains why the Federal Reserve has continued to raise interest rates in recent years, because severe inflation will force it to raise interest rates, thereby breaking the operation of the entire positive feedback system. Therefore, the Federal Reserve will definitely raise interest rates next, either in September or October.
It is also clear internally that if they wait until inflation reaches the extreme value that this system can bear, they will be unable to control it even if they want to, but this positive feedback game cannot continue to be played and will collapse sooner or later."
