[Watching the Market's Ghost Fight and the Monkey's Predictions]

[Watching the Market Fight Ghosts and the Monkey's Predictions] February 24, 2022 CLEC Investment and Financial Education Academy

Before the U.S. stock market opened, futures and pre-market individual stocks fell sharply, with indices down 3.x% in pre-market trading. Tesla dropped more than 7%. From this, we can see that the market has reached extreme panic. Many investors who lack confidence will sell off their holdings once the market opens. This is caused by market fear. QQQ opened down $10.58, a drop of 3.2%. After extreme fear-driven selling, QQQ closed up 3.36% at $340.49, with volatility reaching 6.5%. Investors must remember not to follow market fear. If you sell your holdings when the market is most fearful, you will be a loser in investing. Moreover, yesterday before the market opened, many so-called market pundits, who claim to be experts, were talking in clubhouse, giving various reasons to predict the market and making strange suggestions, such as setting stop-losses, exiting first, or preparing option protection. These are like advice from monkeys surviving after throwing pennies – they seem very reasonable. It's like when we go mountain climbing and experts say we should prepare well, run if we see a bear, or retreat when there is danger. These actions seem correct by human nature, but in investing, they are indeed genuinely and truly wrong.

The United States and the G7 have already imposed the harshest sanctions on Russia, including blocking and sanctioning Russia's five major banks, and freezing all Russian funds in the United States. The United Kingdom followed the United States in sanctioning Russia. The United States has imposed comprehensive sanctions on Russia, except for the aluminum industry, where imports from Russia account for 10%, which is the only industry not sanctioned by the U.S. in Russia. Whether the sanctions against Russia will be effective in the future, or how Russia as a country will evolve, is worth everyone's attention. The future changes in global politics and finance will be enormous. The confrontation between Eastern and Western power groups and the blockade against Russia will, in the end, become humanity's greatest experiment.

Let me share an aside: due to my business dealings at Acer, I had the opportunity to travel on a business trip to the Soviet Union in 1989, before the Soviet government collapsed (at that time, it was a very confidential matter). The area around the Moscow International Hotel in the Soviet Union was filled with the KGB (Committee for State Security of the Soviet Union, equivalent to the FBI in the United States). The company helped me obtain a Soviet visa through a Japanese trading company to enter the completely closed-off country. The Soviet Union at that time was indeed extremely underdeveloped. When landing at the airport, the airport hall was dark, and only when a staff member, presumably a customs officer, came by were the lights turned on, indicating a severe lack of personnel and very few entries into the country.

What impressed me, however, was the Soviet subway. The Soviet subway was originally built underground more than 50 meters to prevent bomb attacks. Looking down from the escalator from above, you could only see a light spot beneath the subway. It took two to three escalators to reach the subway platform. The entire subway station was extremely magnificent and luxurious. You can imagine how powerful the Soviet Union was at the time. All the subway walls were decorated with murals, resplendent and splendid. However, when I picked up my camera to take photos, I was stopped by the security personnel nearby.

At that time, the Soviet Union's national power was no longer what it used to be, and not everyone could own a car. If you wanted to buy a car, you first had to register, and it was said that you would have to wait more than ten years before it was your turn. So even if you had money, you still couldn't purchase a car, and it would take more than ten years from registration to actually get the car.

At that time, colleagues from the Japanese trading company gave me a calendar and a few playing card-like calendars. One side of the playing card calendar was a calendar, and the other side had a photo of a beautiful woman. The people from the Japanese trading company told me that I could just use this to give to the driver when I returned to the hotel. I didn't really understand, but that night I took a taxi back to the hotel and gave the driver the calendar instead of paying the fare. The taxi driver gladly accepted it. The next day, the Japanese trading company people asked me how it went, and I said it went very well—I gave him a calendar and he actually accepted it. The Japanese company friend told me that I didn’t actually need to give so many; just one playing card-like calendar would have been enough. This surprised me greatly, because at that time, the Soviet Union had strict controls on printed materials, so a calendar was very valuable. This was also another very special experience.

Actually, at that time, Soviet cities were very clean. In Moscow, I saw a very magnificent building that left a deep impression on me; it was the Ukrainian government building in Moscow at the time. This is like how each province has an office in Beijing. So during the Soviet period, Ukraine was the largest federation, which is why Putin says that Ukraine exists because of Russia. In other words, without Ukraine, Russia would be like lacking its own spirit, just as China would be if it lost Beijing. Therefore, from the perspective of Putin, a KGB chief who is extremely patriotic, he absolutely cannot tolerate Ukraine being Westernized.

When I attended a meeting at the Soviet Ministry of Agriculture, there was no toilet paper in the restroom; there were only pieces of manure paper cut with scissors beside it. Toilet paper was only available in international hotels. All shopping required standing in line, not because there were too many shoppers, but because the staff inside were civil servants. If there were three staff members, only three customers were allowed into the store at a time, which caused the lines. All shops and department stores had no signs or neon lights. If you were not a local, you would have no idea what was inside the building. All offices, department stores, and restaurants looked exactly the same on the outside, with absolutely no signage. If you were a tourist and not a local, you would have no idea what was inside this city.

At that time, trade was conducted through Japanese trading companies selling goods to the Soviet Union. It was a barter system between Japanese trading companies and the Soviet Union. For example, when a Japanese trading company sold computers to the Soviet government, they received iron ore, aluminum, or mining rights in return. Only Japanese trading companies were capable of global trade in various products at that time, which allowed them to sell Soviet minerals and goods worldwide. This barter-based trade was what was referred to as Soviet trade under the circumstances of global economic blockade.

I remember at that time I used US dollars at the bank to exchange for Soviet currency, rubles, at a rate of 1 dollar for 0.85 rubles. But on the black market, I could exchange 1 dollar for 8 rubles, nearly a hundred times difference. Many Soviet people who wanted to buy imported goods had to exchange dollars on the black market to obtain the dollars needed to purchase imported goods. I remember seeing a painting by an artist on the street; I wanted to pay him in rubles, but he quietly asked me if I had dollars, which shows how sought after dollars were at that time. Of course, the current sanctions on Russia may still deal a huge blow to Russia. In our lifetime, we should be able to see what kind of outcomes and consequences such comprehensive sanctions will have on Russia in the long term.