In the renowned essay "Xiaoyaoyou" from the Zhuangzi, there is a passage that is revered as the golden rule of investment: "The sun and the moon have risen, yet the torch still burns; is it not difficult to compete with their light? The timely rain has fallen, yet still one waters the fields; is it not laborious to add to the moisture?" The meaning of this passage is that when the radiance of the sun and the moon illuminates the earth, holding a torch for illumination, or when it begins to rain, watering the fields, are both acts of foolish overestimation of one's own strength.

In investing, the situation is the same. For us investors, the wisest investment method is not to invent certain investment theories or make investment judgments on our own, but to find those excellent investors and see how they do it. In other words, we should find the light of the sun and moon, the timely rain in our investment industry, and then simply follow their example. By doing so simply, we can certainly do well in investing.

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If we observe all the masters of value investing in history, including Benjamin Graham, Warren Buffett, Charlie Munger, Peter Lynch, Seth Klarman, Walter Schloss, Howard Marks, and others, and look at their investment theories, we will find a common point: they all tell us not to try to judge short-term market fluctuations, as one cannot make money by judging short-term market fluctuations. Looking at their investment records, we also absolutely do not see records of them making money by predicting market fluctuations.

The extreme market conditions that occurred after the National Day of 2024 once again reminded me not to judge short-term market trends, as one cannot make money this way. As George Soros said, recognizing and admitting one's own mistakes is a necessary task in investing. Now, let me review what happened.

Before the National Day of 2024, the A-share and Hong Kong stock markets were filled with a bull market atmosphere. Stimulated by multiple favorable policies such as the People's Bank of China providing liquidity support to the capital market, the Shanghai Composite Index rose from 2,749 points on September 23 to 3,337 points in just five trading days, with a 21.4% increase in five trading days. At the same time, the Hang Seng Index also rose from 18,247 points to 21,134 points during the same period, with a 15.8% increase in just five trading days.

In the A-share market, there is a high probability rule that if the market rises or falls sharply before a long holiday, the probability of the market continuing in the same direction of fluctuation after the holiday will be very high. This is because the emotions of panic or optimism will spread during the holiday, infecting more investors.

During the National Day of 2024, which was from October 1st to October 7th, this optimistic sentiment indeed spread. During the seven-day long holiday, a large number of investors flocked to the securities market, and many securities company business departments gave up their rest to work overtime to open securities accounts for investors. It seemed that the rule of "a sharp rise before the holiday, and a necessary continued sharp rise after the holiday" was taking effect.

More importantly, during the seven-day National Day holiday from October 1st to 7th in mainland China, the Hong Kong market did not rest much, with a total of four trading days on the 2nd, 3rd, 4th, and 7th. During these four trading days, the Hong Kong stock market continued to surge, and the Hang Seng Index rose by 9.3% like a rocket.

9.3% may not seem like much, but it is important to know that this is the result achieved in just four days. Assuming there are 240 trading days in a year, and if it rises by 9.3% every four trading days, then one can turn 1 yuan into 207.6 yuan (1.093 to the power of 60) in one year. Obviously, before the mainland market opens, the Hong Kong stock market is very strong.

With the strong trend before the holiday, the market sentiment that continued to ferment during the National Day, the funds that rushed into the market, the investors who flocked to open accounts and worked overtime, and the Hong Kong stock market that continued to rise sharply during the National Day, with so many conditions, what will the market trend be after the market opens on October 8th? On the evening of October 7th, when we asked ourselves this question, we naturally gave the answer: of course, it will rise.Even the opening of A-shares might directly hit the market-wide limit-up, and then, due to the market-wide limit-up and the inability of funds to buy stocks, some funds might rush to the Hong Kong market, which does not have a limit-up and limit-down system, driving the Hong Kong market to continue rising: after all, the Hang Seng Index rose by 15.8% in the 5 trading days before the National Day holiday, and then rose by another 9.3% in the 4 trading days during the holiday, with a total increase of 26.6% in just 9 trading days.

On October 8th, at 9:30 AM when the market opened, the A-share market indeed hit the limit-up, with the Shanghai Composite Index opening nearly 10% higher! At this time, the investment masters' teaching of "never judge short-term market fluctuations" has been forgotten, and no investment has been made based on it, not even a penny.

As a result, the Hong Kong market quickly fell after opening flat, with the Hang Seng Index plummeting by 9.4% for the whole day, and on October 9th, it continued to fall by 1.4%. A-shares also gave up a lot of the gains at the opening on October 8th, with the Shanghai Composite Index only closing up by 4.6% for the whole day, a huge loss compared to the nearly 10% gain at the opening, and then it continued to fall by 6.6% the next day.

When we hold a market situation that is almost one-sided and try to judge the market trend of a trading day, it seems easy, but the result is far from correct. If we can't judge the market situation correctly, and if no value investment masters in history have made money by judging short-term market fluctuations, then why should we try to judge the short-term market fluctuations in the future? This vivid investment practice lesson teaches us again: only focusing on real value growth and forgetting the short-term fluctuations of the market is the king's way of investment.