Revelation of Stocks and Disasters in 1987: Soros's Giant Loss Retail Stocks and US Treasury Early Warning

The US stock market peaked on August 25, 1987, when the Dow Jones Industrial Average closed at 2,722.42. When I went to New York for business, I spent three weeks in Latin and Central America to learn about the stock market frenzy.

US stocks hit new highs and some things caught my attention. Most fund managers and investment advisers agree that US stocks are already high, but "will be even higher." The forecast of the stock market prophet, Robert Prechter, has been noticed for a while, and there are many people who agree with it. Others think his prediction is too conservative. He predicted that the Dow Jones Industrial Average could see 3,600 points in 1988.

I also met with some professional fund managers in New York. The topic is inseparable from the US stock market. Their general view is that "the stock market is not willing to fall back." The purpose of the fund manager is to have a bigger increase than the stock market and to "win the industry." They are optimistic about the stock market almost one-sidedly, which makes me very worried about the stock market.

They are worried about the rise of the market because if the stock market rises by 20% or 30% if they withdraw from the market, their fund performance will lag behind the market, and customers will definitely leave. But they never thought that if the stock market fell by 30% and the investment portfolio was fully invested, what reaction did the customer have?

At the peak of the stock market, the expensive RVs parked outside the Wall Street financial institutions were bigger and longer than before, but the characters in the car were younger than before.

There are also a few experts who feel that the stock market is at a high risk. Two well-known technical trend experts Wen Daoxun and Mai Yawei have warned that the US stock market is not healthy. In August 1987, the “High Quality Investment Trend” market news pointed out: “The average market price of US stocks is 2.7 times of the net book value of assets, the price-earnings ratio is 21 times, and the weekly interest rate is 2.6 percent. The current price of US stocks is the highest in 91 years. Overbought stocks should be sold; losing a chance to earn less is better than a big loss. Now, half of the stock should be sold."

However, similar comments have made investors more confident about the prospects, because as long as there are still people in the market who have doubts about the prospects, they feel that the market is still healthy.

Most investors simply don't know what they are doing. Today is optimistic, after three days of bearish, after a week, the idea has changed again, there are not many investors who can have strategies, strategies and principles. These people are half-hearted and, in the end, the investment results are bound to be eclipsed.

Early warning : retail stocks and bond prices fell rapidly

The Dow Jones Industrial Average fell to 2,492.82 on September 21, 1987, after seeing a historic high of 2,722 on August 25, 1987, then rebounded to 2,640.99 in early October. At that time, retail stocks and bond prices fell, and the decline was very urgent. I think the situation is not good. The market newsletter was issued on September 19:

Recently, the retail stocks were weak and have been lower than the lows of May and June. Normally, retail stocks are ahead of the economy. Before the economic environment improves, retail stocks rise first. Before the economic situation is unfavorable, retail stocks fall first. In the past, when the bond market was in full swing, Japanese bond brokers often went to the Gore Stadium in Japan (a membership worth 2 million US dollars, arrogant, now they stay at home to sigh green tea, the new generation is a security Warrants and brokers of futures futures, they think they can always earn a generous commission. Many people claim to be 'opposite theorists', but their words and deeds are not consistent. The investor's confidence indicators show that the current US stocks decline only It is of a temporary nature and will rise again after the fall. However, our views are more pessimistic. The reasons include: 1 The stocks of securities brokers are eclipsed, and many of them only account for half of the market price in the summer of last year. 2 Leading stocks such as IWC, GM and other shares. Can not rise above the new high in March and April; 3 elite stocks in some industries, the trend is weak; 4 aviation stock chart is not good; 5 drug stocks, tobacco stocks are weak. Retail stocks, aviation and basic industries The trend of the shares shows that there will be problems in the economic outlook.

Participants in the stock market will not be deeply concerned about the speculative activities of the stock market until the moment of the disaster, but it is too late. Keep in mind the lessons of silver's plunging plunge. Silver prices rose from 1978 to 1980 to other commodities, but then fell by 90%.

I also warned: "Overseas stock markets that have not yet fallen, such as Japan, Taiwan, South Korea, Hong Kong and Mexico, are already too high. Investors in these stock markets should leave the market quickly. Hong Kong investors should pay more attention to the changes in the political situation in Tibet. One day, if there is political unrest in Hong Kong, the first people to leave Hong Kong are journalists, and the second is tourists."

On October 17, the Dow Jones Industrial Average fell 108 points, and I sent a comment on the Asian stock market.

I sent communications market in October 17, 1987 Saturday, 002,291, attending shares) said: "The recent US stock market fell, did not seriously affect the trend of the stock market in Asia - though all regions of Asian economies, with the US economy is closely related From a high point, only the Philippines stock market fell 36% for political reasons, and Taiwan fell 27% due to excessive overbought four weeks ago; other markets, especially Japan, are active. If the US stock market decline does reflect the economic outlook is not good The wealth established in the Asian region will be adversely changed due to the reduction of imported goods in the United States. The foreign trade surplus in Asia may disappear invisible in a short period of time. Asian investors, if they think their economy will not be affected by the United States The idea of ​​the recession is stupid. In the mid-1970s, the economy was insulted and changed, and the changes can be used for reference. I believe that the stock market that is most prone to stock selling is Japan, Hong Kong, Australia and Taiwan, and investors should withdraw. These markets. The US stock market has fallen recently, causing a death knell for other stock markets. The New York Dow Jones Industrial Average closed at 2,246, we Feed three trading days, stocks will have a strong sell-off, then rebounded to 2,400, and finally fall further down. All Asian stock markets, to avoid all attempts to change. "

I admit, I completely did not expect that on the third day of the market communication (October 19), the Dow Jones Industrial Average plunged 508 points overnight, and it is not expected that the Hong Kong stock market will be closed for four days on October 20. By October 26, the market plunged 30%. But a few days before the global stock market crash, my views on stock markets around the world were indeed very pessimistic.

On the eve of the disaster on the global stock market on October 19, 1987, most people thought that the US stock market fell. It was only an adjustment period in the big bull market. Investors were used to large volume, and the market sentiment was not full of anxiety. This is true in the United States and in Hong Kong.

An analyst from Hong Kong Zhan Jinbao suggested in the company's "Weekly Stock Market Review" on October 12-16: "Buy, buy more, strengthen the shareholding, and try to hold more stocks."

The speculative trading period refers to people who suffer heavy losses. Before the stock market crash, it held a standard S&P index contract with a deposit of only 10,000 US dollars and a loss of 40,000 US dollars on October 19 (not counting the loss on October 16). The Dow Jones Industrial Average plunged 508 points, a drop of 22.6%.

Opening the stock market on October 19

On Monday, October 19, 1987, US time (the US stock market opened at 10:30 in the evening), it fell 150 points three hours after the market opened (the time was at 1:30 am on the 20th Hong Kong time). I left the office building and drank outside. After a little drink, I went home and fell asleep.

My home is equipped with three telephones, two of which are often used by the Taizu and the other are used in the kitchen for maids. When I went to bed in the early morning of October 20th. Pull up the plugs of the two phones outside the kitchen.

On the morning of the 20th, the maid told me that someone was looking for me through the phone in the kitchen. I think it was unusual because the phone number of the kitchen was not clear to me.

It turned out that the friend Robert Bao domain was called by Geneva and asked me what happened in the New York stock market. I just got up, I don't know. He said that the Dow Jones Industrial Index ran 508 points. I thought he was joking and wanted to hang up the phone immediately.

He told me that he has a client who holds $30 million worth of Japanese stocks and has short-selled a small amount of Japanese futures. He wants to short more Nisshin futures in the Singapore market. At this point, I know that the situation is very serious.

As for me, I stocked some stocks in New York before the stock market crash. Therefore, the US stock market fell sharply. I have no loss, but I was shocked by the big drop.

I have been in the securities industry for 18 years. I have never seen the tragic and chaotic situation of the US massacre on October 19.

After I hang up the phone number of my friends in Geneva, I called the company and sold 30 Nisshin futures contracts in Singapore. Luo Baobao's customers, the purpose is to sell 300 Nikshin futures contracts, I previously sold 30, thinking that although the market has fallen sharply after the market opened, but may rebound, I hope to sell 270 other when rebounding.

After an hour, I returned to the company and got a second shock. On October 19, the Nikko futures closed at 25,210. When I was on the next day, I opened 10,000 points. There was a small transaction price of 5,000 points, and then rebounded to 14,000 points. The spot index was about 22,000 points (October 19). In the day-to-day market, 25,750); in other words, the index is up to 60% off the market!

On October 20, the trading situation of the Nikko futures index was unprecedented. Unfortunate investors sold a contract on the opening day and lost $30,000 at the close of the market, because the Nikko futures index was 10,000. After the point is lowered, it finally rises to 18,200 (compared with the spot, the discount is reduced).

There are also lucky people who are getting big profits. One of my clients, who smashed all Nisshin futures on the 19th, replenished 30 contracts on the 20th. He bought it when the Nikko futures fell to 9,000 points and rose back to 18,200 when the market closed. The profit, more than 1 million US dollars - this is an unexpected profit.

One of the unfortunate is the index expert George Soros. Three weeks before the stock market crash, he was the cover of the US Fortune Magazine.

Market Hundred: Soros Giant Loss

After the October 21 stock market crash, Soros bought 5,000 S&P futures contracts, representing a stock value of $1.1 billion. On the following day (the US stock market has rebounded for two days), before the market opened, due to the widespread circulation of some large households being called for deposits, the market sentiment was already poor. Soros decided to sell the futures contract through the market. The position was closed, but the number of contracts awarded was too large and the market buyers disappeared.

On November 2nd, the financial publication "Baron" reported the following closing of the Soros sales date:

On October 22, the Standard & Poor's futures market, the city speculators, heard about a big whale problem, did not take immediate action, but hovered around the target. Soros’s broker hangs 230 for sale, then 220, 215, 205, 200. At this time, the on-site speculators attacked, and the futures index sold by Soros, the bid immediately rose from 195 to 210. Soros’s sell-off, compared with the spot, there is a 50 point (or 20%) discount, not the fund manager’s selling leads to a large discount. The premium price of the Soros 5,000 index futures represents less than the value of $250 million. The index refers to trading in the case of large discounts. The futures fund manager and the market speculators are buying lower, and the date refers to the closing price of 244.50. Soros's low-priced position, compared with the closing, the price of 沽 is 222 million US dollars, and the loss of the previous day has reached more than 200 million US dollars. A broker said that the broker who closed the position for Soros said that the market is the worst he has ever seen.

The Duanntum Fund managed by Soros had a loss of $840 million in the two weeks to late October and the fund's net asset value fell 32%.

I describe the trading on October 19, 1987 and the following days, the purpose is to show that in the chaotic period, the profit and loss of trading is only a line difference, luck is the most important. Most people lose a lot of money, but some people are taking advantage of the fleeting opportunity to make a big profit.

Although my client and I did not have stocks in hand or have been short-selling, I was extremely shocked by the stock market crash in October 1987. Soros is a veteran of a hundred wars. He is a hundred times more savvy than me. He also lost 1/3 of his assets in two weeks. The same terrible experience may also happen to me. For a while, I did not buy or sell.

When I mention luck, there is one thing I will never forget. This incident has caused De Chong Securities to avoid losing $20 million.

As I said before, the sale of US stocks at a lower price than the market price (Puts) has almost been profitable in the cowhide or rising market. In 1987, it also became an activity for many people. However, once the stock market has plunged and there are no stocks in hand to sell the options, the losses are extremely alarming.

After the stock market crash in October 1987, the low commission brokerage history obtained a large customer from the company's Hong Kong office. In a few days, he lost more than $80 million due to the sale of the option, but he was willing to bear only $60 million and the remaining $20 million. Obtained by history.

This big customer is a famous businessman in Hong Kong. He was originally a customer of De Chong Securities. Since De Chong Securities did not assign him a popular share called McCraw Cellular, he became angry and changed his mind to acquire the company.

The London office of De Chong Securities is responsible for allocating the relevant shares, but there is no quota for the Hong Kong office, and I have just vacationed in an overseas place without a telephone contact, and I am completely unaware of the big customer complaints. By the time I discovered it, Da Ke has become a customer of history. This big customer actually has a bit of dissatisfaction with De Chong Securities, which is the long-term holding of shares in De Chong Securities, but has been losing money.

De Chong Securities Hong Kong Office lost a big customer, but luck is not bad. If Daqian still sells the option through De Chong Securities, the loss of US$20 million in history will be borne by De Chong Securities.

Hong Kong stock market hit the world for four days

After the Dow Jones Industrial Average plunged 508 points on October 19, 1987, the Far East market stocks also appeared. The Australian stock market also fell 25% the next day, while the Hong Kong stock market closed for four days. On October 26, the market rebounded 33%. Together with the October 19 decline, the trading day plunged 44%.

Whether the Hong Kong stock market should be suspended for four days has caused controversy. I think it is up to the market to determine the stock price. For example, Singapore's Nikko futures market, it is enough to delay the opening of dozens of minutes. Before the market opens, the brokers have time to discuss with their customers what strategy to adopt. After the market opens, the market decides the futures index. Whether the big discount is reasonable. The market continues to buy and sell to avoid investor complaints.

The Hong Kong stock market has been closed for four days, mainly related to the market problems of the futures index. The holders of the futures index are unable to cope with the call deposit due to the sharp drop in the index. I think that the stock market and the futures index are two different markets. The futures market has a problem with stupid speculators or gamblers. Why is it that stock holders are prohibited from buying and selling stocks for four days?

It is a matter of course for a person to be stupid and punished. I have made some big mistakes in my life career, and I have to accept it reluctantly. The suspension of the Hong Kong stock market for four days is a wrong commercial decision that has a negative impact on the integrity of the stock market.

Recovering the cause of the stock market disaster

In October 1987, the stock market crash occurred in various stock markets (the only exception is Sri Lanka), which also became the headline news of the newspaper industry. Some people compared the stock market with the Wall Street storm on October 29, 1929.

As for the causes of the stock market crash, the reasons cited by various sectors include many aspects. Some people think that the US budget and trade deficit are too large. Some people think that it is caused by the procedural trading, and some people blame the US Treasury Secretary Baker for predicting the fall of the US dollar. I most agree with the explanation of the authoritative Walter Midas of the US investment community.

On November 2, 1987, Midas wrote in Barron magazine that the cause of the stock market crash was that the stock had risen to an excessively high level.

He said that investors are too "enthusiastic", which will undoubtedly cause a short-term high stock price, but this situation will be corrected sooner or later due to the stock price decline.

Whether it is stock market, real estate, gold, it will fall after it is high, but when it falls, it is the most difficult to predict.

It is important to analyze the causes of the stock market disaster, but it is even more important to study the long-term impact of the stock market disaster on the economy, the financial system and people's attitude toward stock market investment in the future.

The stock market should be regarded as a heat meter to measure the health of the economy. If there is an astonishing decline in October 1987, it should be assumed that something has already happened, or problems will occur. The risk-taking attitude of investors to investors has also had a major impact. When the stock market rises, everyone sees only the profit side and does not seriously think about the risks.

After the stock market crash, the situation changed, and people’s previous greed was replaced by fear. This is especially the case in the securities brokerage industry.

In a good market, the securities brokerage act itself holds a large amount of stocks, and the funds used to underwrite securities are also large. After the stock market crash, their attitudes became extremely conservative. The stock market crash also revealed that some securities firms had previously sold too much or held more than the appropriate level. (This is itself a precursor to the stock market problem.)

The securities firm's own investment results are of course defeated, and it also faces the bad debts of the lossy customers.

October 19, 1987 was a very important day in financial history. Overnight, the attitude of investors and the attitude of the financial services industry showed a 180-degree change. Although investors are not all pessimistic, they are at least conservative than before. As a result, the global stock market and futures market volume has shrunk significantly.

Before October 1987, investors had a "wrong optimism" mood, but after the stock market crash they became "financially conservative". In the next 10 to 20 years, this attitude will continue to be popular, people will try to borrow less and reduce unnecessary. Expenditure; banks are also more cautious in terms of lending.

1987 was a year in which the financial industry entered a new era. Even if the stock market crash did not bring immediate impact, the impact will also occur in the next few years.

The securities brokerage industry bears the brunt. From 1980 to 1987, the number of employees doubled. After October 1987, the brokerage bank saved money and layoffs replaced the previous expansion and recruitment. A few weeks after the stock market crash, some brokers in New York and London immediately dismissed 5%-10% of the staff.

After the stock market crash, there were some laughter and self-deprecating jokes. One of them: "I lost $100,000 in GM stock, but I never owned a car."