Why Did The US And Germany Stock Market Go All The Way After The Crisis?

Entering the 2015 year, China's economy is very difficult, a large number of manufacturing enterprises have no orders, and the stock market is soaring all the way.

China's stock market is basically a "policy market", and the rise of the stock market is basically the result of conceptual speculation.

What I must emphasize here is that the manufacturing crisis in China has never received the attention of the relevant departments, which will bring serious consequences.

We must learn from the experience of the United States and Germany that only the manufacturing industry can really pull the economy, because only manufacturing can really create wealth.

The Federal Reserve announced that the federal funds rate will be increased by 0.25 percentage points, and the new federal funds target rate will remain between 0.25% and 0.50%.

The first increase in US interest rates in ten years will trigger the shock of the global investment market. So what kind of consultation can we get from the "A" stocks in the global stock market during the past few years of several rounds of decline? I made a detailed analysis in the book "where your investment opportunities are" by Lang Xianping.

In April 14, 2015, the Shanghai Composite Index soared to 4160 points, which has risen by 100% from 2036 points in July 10, 2014.

Compared with the global stock market, our stock market seems to be an alternative. When others are going up, we fall. When others are modest, we suddenly go crazy.

As early as 10 months in 2014, I asserted that there was only one reason for this wave of share price rising, not the fundamentals, but the concept of reform driving the stock index.

My judgement was fully confirmed after several months of testing.

I looked for three main countries: the United States, Germany, Japan, and China's Taiwan, China's Hongkong and Mainland China A shares (Shanghai Composite Index) to make a comparison.

This figure is from August 1, 2007 Shanghai Composite Index 6000 points to July 10th 2014.

Why did it start in July 10th, because the huge increase in this wave began from the 11 day of July?

We see that during this period, U.S. stocks rose 35%, German stocks rose 29%, while China's Shanghai Composite Index fell 53%.

Comparatively speaking, our stock market has the worst performance during this period.

In August 2007, the global stock market reached the highest point before the financial crisis. The subsequent financial crisis led to the global stock market falling all the way, and only slowly began to recover after the crisis in 2009.

By the 7 month of 2014, global stock markets basically recovered their lost territory and returned to pre crisis levels.

Among them, the United States rose the highest, and the S & P 500 was 34.65% higher than before the financial crisis.

Germany's DAX index has risen by 28.92%. Germany is a big country in traditional manufacturing, and it is not as big as the impact of the financial crisis itself.

Japan is relatively disappointing, coupled with the "3? 11" East Japan earthquake, and the economy has recovered very slowly.

It was not until 2012 when Andouble began quantitative easing that the stock market rose slightly, but it did not reach the level before the financial crisis.

China is leading the world by 53%, down from the previous financial crisis.

The chart below shows the trend of global stock index from July 11, 2014 to May 5, 2015.

We see that during this period, the global stock market rose basically around 20% yen, and the Japanese stock market was slightly higher because of the low base, which was 30%.

China's stock market has gained 115% worldwide.

See if everyone here has a feeling that China's stock market is best or worst performing, and has no predictability at all.

I ask you, are you nervous? Do you dare to invest? That's why no matter whether you make money or lose money, you have a deep heart to China.

I dare not trust.

So here I want to talk about an important topic: is China's stock market a "policy city"? Why did the US and Germany stock market go up after the crisis?

We all know that after the outbreak of the financial tsunami in 2008,

At that time, I adopted the 4 trillion stimulus policy I had always criticized.

I have always appealed to the government not to invest in these 4 trillion dollars, but to use this money to revitalize China's manufacturing industry.

If the government adopted my proposal at that time, giving the private manufacturing enterprises a continuous duty-free fee for three years, then the manufacturing industry would be pulled up and profits would rise exponentially, and the share price would go up.

At the same time, enterprises have more money for R & D and higher staff.

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After the salary goes up, the consumption increases.

As a result, the wealth of the common people increased and consumption increased, and finally, China's economy was stimulated by consumption.

This is my original proposal. Unfortunately, the government has not adopted it.

The United States and Germany adopted similar policies with my proposal.

I take the United States as an example, in 2009, 9 months and 8 months, the US government launched the "American innovation strategy: promoting sustainable growth and providing excellent job opportunities"; in 2010, 8 months and months, Obama launched the manufacturing promotion act, which reduced tariffs on some imported products to reduce the cost of enterprises that needed to import parts to produce, and stimulated the manufacturing industry in an all-round way. The recovery of the US economy was stimulated by the recovery of manufacturing industry. In 2009, February, 2013 and 3 months of 2013, the government launched the enterprise tax reform scheme again, focusing on increasing the rate of tax cuts for local manufacturers that create their own jobs, encouraging investment in the US, reducing or even ending tax preferences for overseas investment enterprises.

We see that this series of manufacturing revitalization policies has helped the US economy rebound strongly.

I speak with actual data.

In 2013, US manufacturing accounted for 13.9% of GDP in the United States, and the increase in GDP was over 14%. This is an incredible achievement.

In 2012 and 2013, the GDP growth rate in the United States was 2.8% and 1.9% respectively, of which the contribution of manufacturing industry was 0.77% and 0.84%, respectively, which was higher than the contribution of the service industry to GDP in the same period.

In addition, we will give you a set of data.

In the 2 month of 2015, the US employment market reached its best in 20 years, and the unemployment rate has dropped to the lowest level since the great depression, only 5.5%.

As a result, the US economy has been improving all the way, and the stock index has gone all the way.

So let's see if the stock market in the US can reflect the fundamentals of the economy, which is exactly the same.

In other words, the rise of the US stock market fully reflects the prosperity of the US economy.

The manufacturing industry of the United States will flourish in the future, so the future of the US GDP will continue to rise, and the US stock market will go up as well.

I suggest friends, if you have spare cash on hand, you can change it into US dollars and fry US stocks.

What about Germany? In the 2009 year of the year, Germany's real GDP dropped by 4.7%, the worst recession in the history of the Federal Republic of Germany, and the stock market went down.

The policy adopted by Germany also promoted the development of manufacturing industry, and the German economy began to recover from the 2010 year.

In 2010, Germany's GDP grew by 3.6%, the fastest annual growth in two years since the unification of Germany and Germany in the past 20 years.

In 2015, it rose again, and Germany has already taken the lead in Europe to achieve recovery.

In the 3 month of 2015, the unemployment rate in Germany dropped to 2 million 932 thousand, and the unemployment rate dropped to 6.8%, the lowest unemployment rate in Germany since 1990 March.

The German Ministry of Economic Affairs said the German economy is expected to grow by 1.5% in 2015 years and 1.6% in 2016.

The results of the German economy are rapidly reflected in the stock market. Please look at the chart below.

Since 2015, the German DAX stock index has risen by more than 21%, ahead of the 15% euro in the euro area and leading the world in addition to China.

The conclusion is that the German stock market also reflects the fundamentals of the economy, and Germany's manufacturing industry will flourish. The German economy will continue to improve and the stock market will continue to grow.

So I also suggest that friends can change some of your spare cash into euros to invest in the German stock market.

Here we can conclude that the US stock market and the German stock market all reflect the economic fundamentals of their respective countries.

Why? I think the most fundamental reason is that the stock market in Europe and America is dominated by institutional investors.

The ownership data of the 1000 largest enterprises in the United States show that institutional investors account for more than 70% of the total market capitalization, and the largest shareholders of enterprises are not founders and their families, but institutional investors.

What is the advantage of institutional investors? That is, institutional investors are rational investors.

Specifically, I would like to explain from the following three aspects.

First, agencies intervene in corporate governance and protect shareholders' interests.

For corporate governance, institutions will submit proposals to the company, such as limiting managers' salaries and nominating directors.

Private negotiation is also a common way. The largest five pension funds (TIAA-CREF, CalPERS, CalSTRS, SWIB, NYC) of the US stock market can be resolved privately in the 70% shareholders' proposal.

Second, expose the bad company.

This is very important. Institutional investors share common interests as a group.

They set up an institutional investor Association, which included black listed companies with poor long-term performance and put pressure on the board and management of these companies by exposing them to improve their business.

Starting from the 20 century 80s, the pension fund CalPERS publishes a catalogue of "poor performance companies" every year, and the 1993 year old institutional investors Committee has published a list of "low performance companies".

Institutional investors are holding large amounts of cash to invest. Once the list is reached, the company is basically sentenced to death.

Third, class action.

Class action refers to one or two plaintiffs as "chief plaintiffs", representing many victims to sue for the rights and interests of shareholders.

This approach originated in England in 12 and thirteenth Century, and was officially incorporated into the Federal Civil Procedure Act of the United States in the 1996 year.

It is precisely because of these three magic weapons that institutional investors can well supervise the behavior of listed companies, so that the stock market presents a rational side, which can well reflect the economic fundamentals.

As the economy becomes better, companies expect higher returns and share prices rise. This is a pparent process.

Can China's stock market reflect the fundamentals of the economy?

Now, according to our analysis, the stock market in the US and Germany reflects the fundamentals. Let's see if the stock market in China can reflect the fundamentals.

China's GDP has been moving upward in recent years, while China's stock market is not only unable to reflect China's economy, but most of the time is still in the opposite state, that is to say, it has a negative correlation.